Issuu on Google+

HONG KONG

BUSINESS

ANNUAL’11 HONG KONG BUSINESS ANNUAL 2010 HI-FLYERS

High-Flyers HONG KONG’S OUTSTANDING ENTERPRISES 8 pages key economic statistics 13 top industries reviewed

Challenges for the CEO in 2011 Hong Kong’s ‘Dim Sum’ RMB market Is Hong Kong ready for competition law? 2011 a new dawn for china governance ?

HK$48


Opportunity and risk portunity and Opportunity and risk in risk perfect harmony perfect harmony in perfect harmony

Wherever there is trade, there is that customers ever there is trade, there isAtradius, Wherever ensuring there is trade, there is the world over wonÕt fall prey to payment us, ensuring that customers Atradius, the ensuring that customers the default and bad debt. over wonÕt fall prey to payment world over wonÕt fall prey to payment lt and bad debt. default andby bad Supported ourdebt. expertise and market

is freeand to look orted by our expertise and intelligence, Supported market bybusiness our expertise market ahead with conÞdence composed, gence, business is free to look intelligence, business isÐfree to look ßexible andconÞdence resilient. Ð composed, with conÞdence Ð composed, ahead with e and resilient. ßexible and resilient. ItÕs the perfect balance of managing

risk andperfect enabling trade, of of managing safety and e perfect balance of managing ItÕs the balance freedom, of insurance and assurance. nd enabling trade, of safetyrisk and and enabling trade, of safety and om, of insurance and assurance. freedom, of insurance and assurance. Seize the opportunity to discover more.

the opportunity to discoverSeize more. the opportunity to discover more. www.atradius.sg www.atradius.com.hk atradius.sg www.atradius.sg

credit insurance | debt collection | business information debt collection credit insurance | business| information debt collection | business information 2 | HONG KONG BUSINESS ANNUAL 2011

02538-3 ATR Gymnast Ad Global SingaporeBusinessReview 280x210 Hoop.indd 1

22/3/10 15:34:09


Contents Annual 2010 2011 OUTLOOK 08 10 12 14 16 18 20 22 24 26 28 29

2011 The year of living poorly Hong Kong’s ‘Dim Sum’ market poised for take-away growth The ‘goldilocks’ minimum wage Challenges for the CEO in 2011 2011 Is all about risk management The Changing Role of Finance Accountant’s View of 2011 Challenges vs. Opportunities 2011 - A change in financial reporting? How to avoid being double taxed in china 2011 a new dawn for china governance? Is Hong Kong ready for competition law? Peacock today, feather duster tomorrow ?

14

MOST READ IN 2010 30 A month-by-month review of Hong Kong’s top stories in 2010

COMPANIES AND INDUSTRY 38 40 42 44 46 48 50 52 54 56 58 60 62

Jewellery: A golden performance Electronics: Surge in consumption Clothing Industry: Shrinking revenues Information Technology Equipment: Driven by Innovation Processed Food and Beverages: A healthy relationship Medical and Healthcare equipment: Needing a boost Travel Goods and handbags: Exploring new markets Household Appliances: Efficiency is key Lighting Sector: Sparks are flying Auto Parts and Accessories: Swift production Machinery: Design-driven Sporting Goods: Forward looking Packaging Materials: Packed with features

16

BY THE NUMBERS 64 Hong Kong and China economic Performance in 2010, in numbers 130 Index of tables and featured companies

29

SPECIMEN

18 HONG KONG BUSINESS ANNUAL 2011 | 3


Contents Annual 2011

74

High-Flyers 2010

72 Profiles of Hong Kong’s outstanding enterprises and business leader’s 74 78 80 82 84 86 88 90 92 94 96 98 100 102 104 106

AIA Pension & trustee Co. Ltd. ABN AMRO Private Banking AGEAS Insurance Company (Asia) Ltd Altruist Financial Group Ltd Atradius Canadian International School of Hong Kong Cathay Pacific Airways Chiram Strategic Group Crystallize.ME Decor House Dentro Fuji Xerox (Hong Kong) Ltd GODIVA Chocolatier Henderson Real Estate Agency Ltd Hong Kong Matchmakers HSBC Insurance

4 | HONG KONG BUSINESS ANNUAL 2011

108 JIA International Ltd 110 Kadriden Interior Design/ Architecture 112 Lan Kwai Fong Hotel @ Kau U Fong 114 Luxury Living 116 SA SA International Holdings Ltd 118 Sound Concepts Ltd 100 Starworld Hotel & Casino 122 OneMBA, Global Executive MBA Program – The Chinese University of Hong Kong 124 Thomas, Mayer & Associes 126 Ultra Active Technology Ltd 128 Zung Fu Company Ltd

96

84

114

82

128

106


HONG KONG BUSINESS ANNUAL 2011 | 5


HONG KONG

BUSINESS

Annual

2011

Established 1982 Editorial Enquiries: Charlton Media Group 19/F, Yat Chau Building, 262 Des Voeux Road Central Hong Kong. +852 3972 7166 Publisher & EDITOR-IN-CHIEF Associate Publisher Assistant Editor Art Director

Tim Charlton Louis Shek Jason Oliver Niyasuthin Batcha

Editorial Artist

Regina Goloy

Editorial Assistant

Queenie Chan

Media Assistant Editorial Assistant contributing Editor ADVERTISING CONTACTS

Ann Marie Aquino Alex Wong Ajay Shamdasani Louis Shek +852 60999768 louis@hongkongbusiness.hk Laarni Salazar-Navida lanie@charltonmediamail.com Alyz Katherine Tenorio alyz@charltonmediamail.com Rochelle Romero rochelle@charltonmediamail.com

ADMINISTRATION

Jaclyn Ganila jaclyn@charltonmediamail.com

Advertising Editorial

advertising@hongkongbusiness.hk editorial@hongkongbusiness.hk

SINGAPORE Charlton Media Group 15B Stanley Street Singapore 068734 +65 3152 0147 +65 6223 7660 www.charltonmedia.com PriNting Gear Printing 19th Floor, Yat Chau Building, 262 Des Voeux Road Central Hong Kong

Can we help? Editorial Enquiries If you have a story idea or just a press release please Email: editorial@hongkongbusiness.hk and our news editor will read it. Media Partnerships Please Email: editorial@hongkongbusiness.hk and put “partnership” on the subject line and it will forward to the right person. Subscriptions Email: subscriptions@charltonmedia.com Hong Kong Business is published by Charlton Media Group. All editorial is copyright and may not be reproduced without consent. Contributions are invited but copies of all work should be kept as Hong Kong Business can accept no responsibility for loss. We will however take the gains. Sold on newstands in Hong Kong, Macau, Singapore, London and New York *If you’re reading the small print you may be missing the big picture 

6 | HONG KONG BUSINESS ANNUAL 2011

  


HONG KONG BUSINESS ANNUAL 2011 | 7


OPINION

TImothy charlton 2011 the year of living poorly

2

timothy charlton Publisher & Editor -inChief, Hong Kong Business Magazine

011 is shaping up as one of the best in a long time for Hong Kong based businesses thanks to cheap and available money and recharged Asian economies. Just how long this can last is anyone’s guess, but signs are that the potent mix of foreign liquidity, estimated at US$1 trillion which flowed into Asia in 2010 will only intensify, and China’s economy will only continue to hot up as its customers in America and Europe recover. Hong Kong’s economy is forecast to grow 4.7 % by a consensus of economists, but HSBC reckons it will post a 5.2 % gain. Barring unforeseen disasters, it could do even better. What this means for Hong Kong is tension, in both the living conditions of the salaried workers who face higher living costs without the wage rises to go with it, and tension in real estate markets as hot money continues to chase real assets to park itself in. More tension The Hong Kong government has so far resisted more overt intervention measures to quell speculative bubbles in property, merely increasing a bit of stamp duty in 2010 which was as useful as a sponge to plug the gap on the Titanic. There were no China style ‘administrative measures’ requiring banks to cease and desist lending for real estate and other ventures; no changing of reserve ratios overnight to reduce banks abilities to lend. Philosophically Hong Kong government has usually been laissez faire by heart and leaves monetary policy to the US Federal reserve. This magazine has called for the peg to be dropped, but it is unlikely the powers that be will have the political will to change Hong Kong’s system for fear of breaking it. So where does this leave Hong Kong in 2011 ? Most likely with still higher property prices and a higher stock market. So the biggest concern for the working man in Hong Kong will be inflation. There is just no way that Hong Kong can keep inflation tames when the cost of consumable products from food to fuel is rising rapidly, and the cost of fixed assets and rent is rising likewise. The pain may not be as bad as in the post 97 crash when average wages were cut almost 50 % in the ten years to 2007, but while nominal wages in Hong Kong continue to lag behind inflation a growing chorus of discontent will be heard loudly. Never mind that the poorest of the poor finally got a minimum wage, the reality is that for the average Hong Konger life will be tougher in 2011 as many search for a living wage. So what will the government do? There are growing signs that the government, which passed the minimum wage law, 8 | HONG KONG BUSINESS ANNUAL 2011

will move to more actively intervene in labour market outcomes by supporting lower income earners or families in need. Hitherto this has been mainly done through affordable housing, but the new reality is that even with affordable housing many in Hong Kong are finding it, well, unaffordable. That will only increase the clamour for more direct government support for those earning less. More social welfare on the cards A creeping social welfare policy that began with the minimum wage is the most likely outcome through 2011 as Hong Kong battles to balance being the world’s freest economy whilst protecting the living standards of its citizens. How may this be done ? We could see a mixture of direct payments to people not earning a living wage as they do in Singapore, or more subsidies in fuel and living costs to the more disadvantaged. Might Hong Kong even introduce a version of the food stamps program ? Such radical ideas may have seemed outlandish just a few years back, but they may be necessary to keep Hong Kong a vibrant and happy place for its citizens as Adam Smith’s free hand begins to shake and the heavy hand of the state finds it desirable to intervene in the economy. Hong Kong is still a long way from having 5 year plans, but it is highly likely more government intervention in the economy and not less will be the flavor of 2011.

No running out of puff for Hong Kong in 2011.


HONG KONG BUSINESS ANNUAL 2011 | 9


OPINION

David Cohen

Hong Kong’s ‘Dim Sum’ market poised for take-away growth

A

significant development currently unfolding is evolution of the CNY into a more international currency. China has begun relaxing historically tight restrictions on convertibility, and use of CNY outside of its borders. One motive for liberalization is their hope to encourage increased use of CNY when settling trades with China, still largely settled in USD, EUR, and JPY. Beijing last year unveiled new measures permitting increased CNY balances in Hong Kong, allowing Hong Kong to play the role of offshore money market for CNY. By permitting CNY to circulate in the interbank market, and facilitating emergence of a CNY-denominated bond market, Hong Kong will serve as a laboratory for Beijing to test the waters before establishing full currency convertibility. PBoC-HKMA accord in July 2010 allowed banks to offer CNY loans and deposits, while freeing them from previous restrictions on CNY conversion. Relaxed rules are boosting offshore CNY circulation in HK, though they can still only flow freely cross border through trade settlement or via 20,000 CNY daily conversion cap. Yuan deposits in Hong Kong more than tripled to 280 billion CNY by November from 89.7 bln CNY in June, and should surpass 1 tln CNY by 2013. Together with allowing CNY to accumulate in Hong Kong, has been opening up channels for investors to access Chinese domestic market. Historically, overseas investors have needed special quotas to buy mainland assets, but last August, China said it would allow overseas financial institutions to invest yuan accumulated outside the country in China’s interbank bond market. These facilitated emergence of an offshore market in CNY-denominated debt, the so-called “dim sum” bond market in Hong Kong. Foreign investors, prevented from buying domestic CNY debt by strict

was welcomed as helping establish a benchmark yield curve in Hong Kong, and highlighted disparity with the onshore market - - HK coming in over 100 bps inside the on-shore curve, reflecting appeal of CNY assets to foreign investors. For borrowers, the offshore CNY bond market provides an opportunity to fund on-shore operations at an attractive rate. Last year saw offerings by government-related issuers as China Development Bank, and Export-Import Bank of China, along with Asian Development Bank and World Bank’s IFC unit. McDonald’s last August became first nonfinancial foreign company to issue CNY-denominated bond in HK to finance Chinese expansion, followed in November by Caterpillar, to fund its mainland leasing subsidiary. Total offerings totaled 40.7 billion CNY in 2010, according to Bloomberg, which could more than double to exceed 100 bln CNY this year. Another aspect of currency liberalization is emergence of an offshore fx market, after trading in CNY had been confined to the state-run exchange in Shanghai. ICAP and Thomson “For borrowers, the offshore CNY bond Reuters electronic trading platforms have market provides an opportunity to fund onbegun accommodating offshore yuan, quoted under the symbol CNH (for HK) shore operations at an attractive rate.” rather than the standard CNY, legally distinct capital controls, face no such obstacles here, providing from fx on the mainland. As there is no free flow of a new way to bet on CNY appreciation, enhancing yuan between the two markets, spot yuan in Hong appeal amid expectations for continued appreciation. Kong has consistently traded at a premium to onshore Bloomberg put the amount of outstanding yuanyuan. Outlook for the offshore market appears bright denominated debt in Hong Kong at about 55 billion as continued inflow of yuan into Hong Kong will yuan in early December. support growth in CNY-denominated debt issuance Beijing signaled intention to promote development and offshore fx-trading. Reforms implemented of offshore market last November by issuing 8 bln last year represent notable steps in evolving CNY of government bonds of various maturities. This internationalization of the CNY. 10 | HONG KONG BUSINESS ANNUAL 2011

David Cohen Director Asian Forecasting, Action Economics

CNY VS basket and USD-CNY.


HONG KONG BUSINESS ANNUAL 2011 | 11


ECONOMICs

OPINION

Ian Perkin The ‘goldilocks’ minimum wage

12 | HONG KONG BUSINESS ANNUAL 2011

“Goldilocks” minimum wage, one that is neither too hot, nor too cold.

Labour Wages 6

4

2

0

Month / Year

3/2010

9/2009

3/2009

3/2008

9/2008

9/2007

-2 3/2007

Ideological debate The idea of a “minimum wage” has always been a hot political, ideological and social issue, but its economic impact has rarely been significant. It says more about how a community views itself, or wants to feel about itself, rather than being a determinate of its economic prospects. The basic economic questions remain, however. Set the minimum wage too low and it benefits no-one, so why do it? Set it too high though and there is the risk of lower employment, the failure of firms and economic stagnation. Happily, Hong Kong seems to have been able to steer a middle course through this minefield. It has seemingly established – at least for now - a “Goldilocks” minimum wage, one that is neither too hot, nor too cold.

Most forecasts suggest there may be a small minority of workers positively impacted by the minimum wage to be introduced next year and some firms may see their wage costs rise somewhat more than others. This is especially the case in the lower paid service industries such as restaurants, retail and tourism. But the overall impact will be micro-economic and modest, not macro-economic and broad-based. Where there are impacts they may be unintended and unexpected. Over time, the existing market rate for lower paid work may drift down to the “minimum wage” level as the “minimum” provides a baseline for future negotiations. This would not be the positive outcome employees might have expected from the introduction of a “minimum wage”. On the other hand, were the level at which the “minimum” has now been set be pushed up over time through political and social pressure this would have a negative medium term impact for employers (in terms of higher costs) and employees (higher unemployment). In the wider debate, it should not be forgotten that Hong Kong’s economic success over the past 60 years was based on the efficient (and profitable) use of capital and labour to produce the goods and services demanded by others. Hundreds of thousands of people were lifted out of poverty as a result and quite a few of them became rich beyond their wildest expectations. Set against these successes, the debate in Hong Kong over enshrining a “minimum wage” in local law seems something of a sideshow, but perhaps an important one to have nonetheless.

Year-on-year % change in nominal terms

T

he Hong Kong SAR economy, with its close links to the Mainland in trade and finance, has recovered well from the global financial crisis with annual Gross Domestic Product (GDP) growth running at a healthy 6 to 6.5%. But wages have lagged the overall recovery, with the average wage rate up a nominal 2.2% in the 12 months to June (the latest figures available) and declining one per cent in real terms after taking account of consumer price inflation. New figures have also emerged showing that the Hong Kong SAR’s Gini co-efficient – a measure of inequality in wealth – has risen to 0.53, the highest in the Asian region, which has an average disparity of 0.39. Legislation for the introduction of a “minimum wage” passed through the Legislative Council (Legco) mid-way through last year. It is due to come into effect next year at the recently announced rate of HK$28 (US$3.60) an hour. The announcement of the rate predictably brought outrage from both sides of the debate with worker and union representatives decrying the “low” rate and business warning that it could put some firms out of business. The truth, as is often the case, is less dramatic. The debate over the merits (or otherwise) and the effects of a “minimum wage” (and its close cousin, the idea of a “livable wage”) is as old as the capital-labour divide. Worldwide, some sort of “minimum wage” is now the norm rather than exception (new Zealand first introduced the idea in 1894) and this fact might have been expected to limit the ferocity of the debate in the SAR. (Even Hong Kong has had a minimum wage for many years in the minimum set for domestic helpers.) Instead, the local debate has acquired an added edge to it because of Hong Kong’s recent economic performance and its long (and often over-stated) history as a bastion of laissez-faire capitalism.

IAN PERKIN Independant Economic Consultant perkin888@hotmail.com


HONG KONG BUSINESS ANNUAL 2011 | 13


Challenges for the CEO in 2011 CEOs are feeling a bit more optimistic, at least more so than since the global financial crisis, about what’s in store for 2011. Globally, however, the conditions are not in yet place for a strong consumer-led economic recovery. That means CEOs must continue to galvanise their organisations for an environment characterised by modest growth and undeniable downside risk. By Honson To, Advisory Partner, KPMG China

I

t used to be said that when America sneezes, the world catches a cold. In our region, arguably that is no longer the case as China’s domestic consumption levels are rising and other economies such as Brazil and Russia are now significant trading partners, alongside the US and EU. Nevertheless, CEOs in Asia cannot ignore the potential sources of global instability and the fact that sentiment is still very weak in the West. Moreover, head offices are looking to their Asian operations to significantly contribute to growth during 2011. Many regional CEOs and CFOs are being set stiff growth targets by their boards or head offices. Many are being challenged to significantly raise revenues against a static cost base. 14 | HONG KONG BUSINESS ANNUAL 2011

This year will not be an easy ride for Asianbased businesses.

This can naturally be a source of frustration for regional executives, who may struggle to convey back to head office the risks and challenges they face on the ground. Rising costs of labour and raw materials, as well as difficulties in refinancing, could have a potentially dramatic impact on margins during 2011. This year will not be an easy ride for Asianbased businesses. Five considerations for the CEO Against this backdrop of uncertainty, we see five issues that are preoccupying CEOs. These are things which many executives are thinking about as they consider how to build lasting, resilient businesses. The first consideration is to understand your competitors and your competitive environment. We know

that many CEOs are very interested in understanding how they are performing against key competitors. While this is useful to know, not all executives deeply understand how peers’ business models put them at an advantage or a disadvantage. CEOs should not become so obsessed with competitors that they overlook the potential for disruptive influences from beyond their peer groups. A strengthening renminbi or a tightening supply of labour are potentially game-changing trends which could change the competitive landscape and China’s position in it over the coming year. A second consideration is how to sustain and embed cost reduction. Many organisations succeeded in dramatically reducing cost in response to the global financial crisis. Now, with signs of recovery, they must avoid slipping back into bad habits. Over the next 12 months we will be able to judge which organisations responded to the downturn by seizing the opportunity to transform and innovate. Leading organisations have used the downturn to focus on streamlining that goes far beyond routine cost-cutting. Their efforts are helping them focus more of their energies upon areas that create the most value. The benefits can be felt in improved margins and also in better decisions and performance.


2011 outlook Another rising priority is business resilience. Markets remain jittery and CEOs need to understand how they may be exposed by further shocks. In addition they need to understand whether cost-cutting or layoffs have left their organisation vulnerable, or more efficient. In the two years since the collapse of Lehman Brothers, there has been a lot of rhetoric about risk management rising up the agenda. In practice, leading companies are now determinedly focused on achieving a single view of risk across their organisation. What that means is that they are looking at how to gain visibility over risk and manage it in a way that will not diminish their entrepreneurialism and commercial ambition. The events of the last three years have shown that the effects of the

business. A fourth point is that CEOs need to understand the externalities of the business model and the changing regulatory landscape, to a degree that was not necessary before. The CEO needs to be clear who is tasked with scanning the landscape for new taxes and regulatory changes, whether industry-specific, such as capital adequacy, or more widely drawn, such as carbon emissions. It is important to understand how the business is changing and how it may be affected by new policies or tax regimes. Specifically, the sustainability agenda is creating both uncertainty and new growth opportunities in many sectors. The fifth consideration for the CEO is how he or she can set the right tone at the top. Now, more than ever, the CEO needs to lead by ex-

In the West, we have seen that charismatic and successful leaders can be brought to their knees by scandals. loss of a key client or an unforeseen disruptive event need to be assessed and fully understood, not only in terms of operational continuity but also impacts on critical metrics such as cash flow, across all parts of the

ample. In the West, we have seen that charismatic and successful leaders can be brought to their knees by relatively innocuous scandals. In Asia, perhaps there is not quite the same expectation upon CEOs to act as a

Honson To, Advisory Partner, KPMG China

“Executives are increasingly under pressure to combat fraud, empower employees to report misconduct, and comply with globally relevant laws such as the US Foreign Corrupt Practices Act.�

moral compass, but undeniably we are being swept along and affected by this trend. Leaders need to ensure that senior management are suitably incentivised and that their conduct is sending the right message to peers, stakeholders and the rest of the organisation. Executives are increasingly under pressure to combat fraud, empower employees to report misconduct, and comply with globally relevant laws such as the US Foreign Corrupt Practices Act. As the business environment changes, people may view stricter rules or guidelines as temporary and thereby dismiss them, particularly if their peers and managers are doing the same. At this point, policies and procedures need to be reinforced and reviewed to ensure their ongoing relevance. Conclusion: Embedding change As organisations prepare not only for further volatility but also growth opportunities, it is important that CEOs consider whether they have really embedded or institutionalised the things done during the downturn for the long-term benefit of the organisation. More importantly, it must be stressed that those impositions were, and continue to be, part of a strategy to build a stronger business for the long term. In doing this, management needs to set the right tone at the top and no senior executive can be beyond reproach. This strategy can have external dividends as well. After the volatility of the past two years, many investors are looking for companies that can demonstrate sound management and generate more stable earnings. Recent disruptive events are a reminder that even the largest and most reputable of companies can come unstuck if they set overly ambitious quarter-by-quarter earnings targets and are blind to the accompanying risks. Perhaps 2011 will see a further shift in attitudes as people think about longer term business resilience and success. Honson To is KPMG’s Asia Pacific Head of Advisory and Lead Partner for Transactions and Restructuring in China. HONG KONG BUSINESS ANNUAL 2011 | 15


2011 outlook

2011 is all about risk management

By Philip Rodd, Partner in Ernst & Young Financial Services - Advisory practice

R

isk continues to be a hot topic among the financial services industry, and we are increasingly seeing financial institutions globally and in Asia, revisiting their ‘three lines of defence’ model, with particular emphasis on the importance of front line staff. While many of these conversations are focusing on risk, the real value lies in considering the balance between risk and reward and explicitly engaging the front line in active management. A number of common issues caused risk management failure When we say that failure in corporate governance and risk management was a root cause of the financial crisis, what we really mean is that in many cases executive management

16 | HONG KONG BUSINESS ANNUAL 2011

“A new class of senior risk management professionals with direct operational experience is emerging. These new risk professionals build “

had limited visibility of the risks being taken across the business. Risks were either not properly understood or their potential impact across the entire organisation was unclear. There were a number of common issues across the financial services sector that contributed to this situation. Risk management frameworks and processes had been developed but not adopted effectively across the whole organisation. Data was kept in silos in various operational units without common naming conventions or methods to easily consolidate information across the group, which made it difficult to understand the cumulative impact of issues across an institution. Reports were either too detailed for management to absorb or failed to flag key exposures. Roles and responsibilities for managing risks

were poorly defined or understood, so accountability was unclear. What is clear is that risk management activities tended to focus on a cycle of processes, systems and compliance rather than assisting in understanding the consequences of risks and their potential impact on business outcomes. Most financial institutions have been investing heavily to resolve many of these issues. However, fixing systems, reports and processes is much easier than effecting lasting change within the workforce. Building the confidence of front line staff to take risk, while ensuring this is done within clearly defined tolerance levels, is a key challenge that financial institutions must address to grow and prosper. Getting back to the basics There is evidence to show that Boards and CEOs are no longer just relying on risk management and the audit functions to build world class frameworks and provide independent assurance. They are also reinforcing risk management accountabilities and re-embedding risk into frontline operations.


2011 outlook This refocusing of activity can take many forms but common initiatives include revisiting risk appetite and associated tolerance levels that underlie business decisions to ensure front line staff can understand and interpret them; and developing risk reports that provide appropriate analysis of the many risk data sources across an organisation. Reports now focus on giving executives a single version of the truth across the organisation and contain appropriate commentary so organisations can develop contingency plans that take into account extreme events and emerging risks. Most institutions will be well aware of these elements and will be working towards improving them. However, many are still grappling with the

model to corporate governance. The first line of defence lies within every risk-taking business unit. On the first line, ownership and accountability for any risks taken resides with the executives of each business unit. The second line is the risk management and compliance functions that coach and provide oversight and challenge to operations. The third line of defence includes internal audit, which provides independent assurance to the Board and various Board Audit and Risk Committees. Whilst this is not a new concept, some companies are re-invigorating this structure. In the past, the model was relatively unsuccessful in ensuring frontline staff understood the trade-off between risk and reward.

“While management has long had nominal responsibility for risk they have often struggled to link their implicit understanding of commercial risk to the risk management framework. “

Some financial institutions are revisiting the ’three lines of defence’ approach. behavioural change that will ensure these tools and processes are embedded and used appropriately by staff across the organisation. Some financial institutions are revisiting the ’three lines of defence’ approach to corporate governance to do this, an approach that firmly places risk management responsibility and accountability with front line staff, and clarifying the roles of risk management teams and independent audit professionals. Three lines of defence Most financial institutions broadly operate a ‘three lines of defence’

Roles and responsibility for managing risks were unclear and accountability for the effectiveness of controls was ambiguous. Clear roles and responsibilities While management has long had nominal responsibility for risk they have often struggled to link their implicit understanding of commercial risk to the risk management framework. As a result, there has been confusion between the role of risk functions (the second line) and accountability within business units themselves. Many chief executives are now

Philip Rodd

clearly delineating responsibilities between front line staff, who must understand and manage day-to-day risk, and divisional risk and compliance teams that provide coaching, supervision and oversight. Clear boundaries are now emerging between each line of defence with information flowing freely between them. Individual performance incentives are now being explicitly linked to risk based measures, so these accountabilities are clearly understood. This change in behaviour is also being enforced by global regulators. The right people with the right skills Many organisations are now reinforcing the need for their leadership teams to provide clear direction and to challenge the business on risk management related activity. A new class of senior risk management professionals with direct operational experience is emerging. These new risk professionals build strong rapport across frontline teams, focus on making risk management relevant to the business, and provide more comfort that staff understand and operate within agreed risk appetite and tolerance levels. Senior risk managers are shifting their focus from measuring past performance to providing real time measures of key risk limits and tolerances to understand if they are under stress or may be exceeded. Teams are discussing the impact of evolving risk exposures and trends more regularly and addressing issues proactively as they discuss business opportunities. A more risk aware first line of defence is now being seen as an enabler of growth that can be used to help banks, insurers and other financial institutions to understand the environment within which they operate and as a mechanism to support competitive advantage. In addition, organisations that can effectively embed risk awareness and management will be better positioned to convince regulators, shareholders and rating agencies that their governance and risk management initiatives are strong and are aligned to both internal and external thinking. Embedding risk management in the first line of defence should now be a key focus for all Boards. HONG KONG BUSINESS ANNUAL 2011 | 17


SPECIMEN

The Changing Role of Finance By Egidio Zarrella, Partner, KPMG Advisory

W

e continue to live in turbulent times. Soon within Asia, we will be entering the year of the Rabbit. It is still a time of uncertainty. Many organizations will not be spending big. It will be a year of caution. In these times, the on-going role of the CFO and the Finance team becomes critical. We see, leading finance functions continue to distinguish themselves by supporting business management in a way that allows them to respond quickly to macro-economic developments. Such a response should be based on a deep understanding of the business and how each area is impacted by global market and industry forces. Only when an understanding is in place can finance leaders deliver the robust contingency and scenario planning that businesses require to make the right decisions. An adequately informed finance function will help to keep the inves-

18 | HONG KONG BUSINESS ANNUAL 2011

“A deep understanding of what drives business value is largely absent within many finance functions.“

tor community “on-side” by demonstrating an ability to predict and adapt quickly to changing events. In this coming year, organizations will need to prepare for any potential scenario for good or bad. Struggling Yet many finance functions are struggling, however, to provide the required level of business support. There are many barriers – complex system architectures, poor quality data, non-standard processes, multiple business metrics misaligned to underlying data sets, to name only a few. The barriers result in finance functions performing large quantities of downloading and rework, and hampers their ability to effectively predict fast moving economic shifts. A deep understanding of what drives business value is largely absent within many finance functions. Key questions for this year include what lessons can a leading finance

function impart for those still striving to grow or continue to survive? And possibly more importantly, how can challenged finance functions improve to better support their business leaders? This year is a call to action for finance leaders, whether Group CFOs, Divisional Finance Directors, or finance managers. Regardless of whether the business is struggling in today’s turbulent times, the finance function must look forward and focus on providing accurate and insightful enterprisewide information. It must simplify business complexity and make the structural changes necessary to better align business processes. Finally, it must ensure that any changes are implemented in a way that sustains business performance rather than merely reducing short term costs. Adapting the finance function is now more urgent than ever, by providing the right information at the right time to help business leaders navigate through turbulent times. This year is on to consolidate and prepare for any outcome. It is interesting given the above, Finance teams are looking to improve the finance dashboards and systems that they have used in the past. There is a lot more granularity that is required. What they had before will not


2011 outlook suffice anymore. Influence is also key. Top performing businesses have trusted finance leaders actively involved in defining the future direction of the organization by influencing business leaders to make better decisions across all functions. The top performers have learned that influence has to be earned by continually meeting or exceeding business expectations. Influencing This year finance functions still has work to do in enhancing their level of influence with the functions that arguably drive the most value through the organization (e.g. R&D, sales & marketing). Developing a much deeper understanding of how these functions drive business value will help the finance function broaden their influence across the whole suite

are understood, forecasts can be adjusted quickly and appropriately, and robust and appropriate guidance on key business decisions can be backed up by solid scenario planning. The ability to meet loan covenant terms has also become an important issue for many organizations. There is severe pressure on the finance function to provide meaningful, timely and reliable information for businesses to manage their risk. Real business intelligence is rare. Under performing Finance functions can spend too much time downloading and reworking non standard data in an attempt to supply meaningful information to business leadership. Spreadsheets remain a key business tool for piecing together data from multiple applications. In addition, many finance functions have not taken the time to understand the busi-

This year finance functions still has to influence the functions drive the most value through the organization. of business leadership. Economic uncertainty has exacerbated the need for the right information at the right time Finance functions that lack influence will struggle in the current environment as boards and investors look for clarity on the impact of market changes on sales, EBITDA, liquidity and cash flows. Boards and investors need reassurance that the impacts of changing market forces

ness value driven by different parts of the business, which inhibits their ability to provide the necessary information to influence the right business decisions within these functions. Finance functions from top performing organizations have recognized the importance of Business Intelligence. They have spent time understanding the different business drivers of value, aligning data sets to

Egidio Zarrella, Partner, KPMG Advisory

“Finance functions from top performing organizations have recognized the importance of Business Intelligence.�

be consistent with key business metrics and investing more in the kinds of technologies that provide the right data to the business decision makers. Effective BI works best when the finance team understands real business issues and references them to external thought leadership, and industry and commercial experts. Business leaders crave an external perspective when making key decisions, and it is incumbent on finance professionals to provide that perspective. Finance executives will be under intense pressure to advise business leaders on the impacts of ever changing and unpredictable factors: Consumer demand is falling, commodity prices are showing unprecedented volatility, exchange rates are less predictable, and the availability of finance has shifted from being plentiful to being scarce in the extreme. What lies ahead? Finance leaders will need to take time to support their businesses with every tool at their disposal. But what lies ahead? Top performing finance leaders know that they must be better prepared for whatever the future holds. CFOs should take clear action to: truly understand what drives business value; simplify data structures and end to end processes and systems to deliver quality, reliable and timely business intelligence; better identify enterprise risk, and use information to assist business leaders to better manage it; transform the forecasting and planning processes to enable flexible scenario planning that assists businesses’ navigation through uncertainty; and make tough decisions to balance internal experience with the fresh ideas of newer talent, to ensure that the finance function is well positioned to support business leaders in making informed business decisions. Supporting better business decisions through the provision of right information at the right time, delivered by the right people, can help place CFOs and their teams at the heart of business strategy. Influence across the business can grow and the relationship between finance and business leadership can strengthen. The year ahead is going to be one of doing more with less and refining and improving how Finance interacts with the business. HONG KONG BUSINESS ANNUAL 2011 | 19


2011 outlook

Accountant’s View of 2011 Challenges vs. Opportunities By Charles W. D. Chan, Co-Chairman and CEO, Crowe Horwath CPA Limited

O

n the back of a strong recovery last year from the Lehman crisis, historically low interest rates partly due to the various measures adopted in the US (eg. QE2), and the government debt woes experienced in Ireland, Portugal and Greece, the emerging markets have been awashed with huge liquidity as global investors converged in Asia (exJapan), particularly in Hong Kong looking for safer and more stable environment to invest. Against this backdrop, many companies have chosen Hong Kong as the ideal destination for initial public offerings (“IPO’s”) of their shares. In fact, the Stock Exchange of Hong Kong (“SEHK”) was ranked the top fund raising market globally in 2010 with HK$837 billion raised by various companies from all over

20 | HONG KONG BUSINESS ANNUAL 2011

“The yuan has appreciated over 20 percent over the last 6 years.“

the world, the notable ones being AIA Group Limited (stock code: 1299) having raised HK$135 billion and Agricultural Bank of China Limited (stock code: 1288) having raised HK$93 billion as H-share in Hong Kong. Companies from all over the world such as Rusal PLC (stock code: 486) from Russia, L’Occitane (stock code: 973) from France and Vale S.A. (stock code 6210) from Brazil chose Hong Kong to raise capital by initial public offerings of their respective shares . Last year, the capital markets in Hong Kong were also very active with transactions relating to mergers and acquisitions (“M&A”) amongst the publicly listed companies (“PLC’s”), particularly the ones with major operations in mainland China. Many analysts have observed that mainland Chinese enterprises have

moved away from the trend of keeping US dollars in its foreign reserves to the trend of hunting globally for viable projects to invest such as in mineral resources and energy sectors, which resulted in many M&A transactions last year. The yuan has appreciated over 20 percent over the last 6 years. It is expected to appreciate gradually as the economy in mainland China continue to expand with its GDP growth targeting to be over 9% this year. In fact, as the yuan products (eg. bonds and funds) launched in 2010 were widely subscribed, it is expected that there will be an introduction of yuan shares or issuance of REIT in yuan. For example, Cheung Kong (Holdings) Limited (stock code: 0001) is at the planning stage of spinning off one of its investments in yuan. Looking ahead to year 2011, ma-


2011 outlook jor investment banks are anticipating the capital markets in Hong Kong to continue to be very active. The M&A and IPO’s amongst the major conglomerates will cause some ripple effects in that these activities will invariably whet the appetite of, and stir up the interest of the smaller players to also consider various fundraising exercises. Professionals such as investment bankers, CPAs and lawyers will be direct beneficiaries of such active capital markets. The new stock exchange rule announced recently allows mainland auditing firms to sign off on the financial statements of H-share or A+H share PLCs’. Based on the information released by the Hong Kong Institute of CPAs (“HKICPA”), there are 164 H-share companies in Hong Kong, including 64 that are also listed on the A-share market. In a move to attract more mainland Chinese companies to list in Hong Kong, the SEHK has relaxed the rule so that under the new rules, H-share companies may choose to switch from Hong Kong financial reporting standards to Chinese accounting standards when preparing their financial statements, while du-

Kong CPA firms in turn will be allowed to sign off on audited accounts for Hong Kong companies desiring

The new stock exchange rule announced recently allows mainland auditing firms to sign off on the financial statements of H-share or A+H share PLCs’. al-listed companies may simply issue their A-share financial statements and no longer need to prepare two sets of financial statements. Hong

to list in Shanghai. A good example of this arrangement of working jointly is our audit of an H share company, Harbin Pow-

Charles W. D. Chan, Co-Chairman and CEO, Crowe Horwath CPA Limited

“The year 2011 shall unfold to be a very challenging year for CPAs in Hong Kong.“

er Equipment Company Limited (stock code: 1133). According to the HKICPA, these 12 mainland Chinese accounting firms, together with their affiliated practices, already audit 90 percent of all H-share companies, and nearly 85 percent of the A-share accounts of dual-listed companies even before the rule change. Therefore, in practical terms, the new rule has little impact on smaller CPA firms as these firms would not have had many PLC’s as their audit clients. The year 2011 shall unfold to be a very challenging year for CPAs in Hong Kong. Finding, retaining and ensuring adequate and timely trainings of qualified auditors prove to be a challenge amidst rising costs of operating CPA practices; financial reporting standards are more stringent; and social expectations of auditors as the “watch dog” for fraudulent acts while misplaced, are more and more widespread. As auditors, we also anticipate to be kept even more busy starting this year as under the new rule, the reporting deadline imposed on main board PLC’s has been revised from within four months (from the fiscal year end) to within three months. HONG KONG BUSINESS ANNUAL 2011 | 21


2011 - A change in financial reporting? By Dr Nigel Sleigh-Johnson, Head of Financial Reporting Faculty, ICAEW

F

or many years now accountants have enthused about the prospects for a single set of high-quality global accounting standards. Little by little we have moved closer to that goal, with more than 100 countries around the world now requiring or allowing the use of International Financial Reporting Standards (IFRS) - including the EU, Australia and Hong Kong - and many more on track to do so in 2011 and 2012. But there remain nagging doubts about the ultimate success of this historic project. There are continuing questions about the legitimacy of the IASB, its governance and accountability, and over the degree to which consistent implementation and enforcement will be achievable around the world. More immediately, there is continuing uncertainty about whether or not the US will join the IFRS party.

22 | HONG KONG BUSINESS ANNUAL 2011

“There are continuing questions about the legitimacy of the IASB”

The US Securities and Exchange Commission (SEC) will, we’re assured, make an initial decision this year on whether (or not) to require or allow US public companies to switch from using US Generally Accepted Accounting Principles (US GAAP) to using IFRS. Some, such as IFRS Foundation trustee Harvey Goldschmid, have claimed that if they fail to commit it could have ‘tragic consequences’. In such circumstances Goldschmid recently suggested two competing doomsday scenarios: the coalition of nations supporting IFRS falling apart, leading to a return to pre-2000 fragmentation of accounting standards, or the coalition holding strong, thus forcing the US into inglorious isolation. It is true that neither scenario is very appealing. But it’s important to remember that whatever decision the SEC makes, the next twelve months will see significant progress in the

project to converge IFRS and US GAAP, and that in itself will move us a major step closer to a global set of accounting standards. Despite some recent paring back of the convergence programme, it still heralds little less than a transformation of key elements of both IFRS and US GAAP. As Leslie Seidman, the new chair of the US Financial Accounting Standards Board explained on her appointment in late 2010, ‘we are at a crucial point in our convergence programme, and my fellow board members and I are working in close partnership with the International Accounting Standards Board to improve the comparability of financial information around the world’. With many key convergence projects scheduled for completion by June 2011, it looks like Ms. Seidman is in for a busy first six months in her new job. Responding to the financial crisis A number of the key convergence projects stem from the financial crisis that engulfed most of the globe in recent years. At their London Summit in April 2009, the leaders of the ‘G20’ nations called for standard-setters to ‘take action to reduce the complexity of accounting standards for financial instruments’ and to address issues arising from the credit crunch. Ever


2011 outlook since, work has been taking place towards this goal. This year will see in particular finalisation of new standards on financial instruments. Work has been progressing independently - rather too independently - on either side of the Atlantic and the two boards are struggling to reach a consensus on this important issue, with fundamental disagreements on issues such as which instruments should be carried at fair value and how hedging should be accounted for. It will be very interesting to see whether common ground can be found; we remain cautiously optimistic that it can. Another important project is looking at which entities should be consolidated, with the focus on ensuring that all entities under the parent company’s control are included onbalance sheet. In the past, companies

related project is looking at fair value measurement. This project aims to establish a common definition of fair value and to create a robust measurement framework. In doing so it may reduce the current diversity of practice and prevent a repeat of the confusion that arose during the crisis as people struggled to determine what exactly was meant by ‘fair value’ in the chaotic market of the time. Other major joint projects due for completion in 2011 There are two other particularly- significant joint projects scheduled for completion this year that all IFRS reporters in Hong Kong and elsewhere need to be aware of . Firstly, revenue recognition. The core principle of the proposed standard is that an entity should recognise revenue from con-

In the past, companies such as Enron are said to have used off-balance sheet entities to pump up their results such as Enron are said to have used off-balance sheet entities to pump up their results rather than for legitimate business purposes. It is hoped that the new standard will crack down on such alleged abuses. And finally, a third financial crisis-

tracts with customers when it transfers goods or services. Revenue is recognised as the amount of consideration the entity receives, or expects to receive, from the customer. At first glance this may not sound very different from how revenue is currently

Dr Nigel Sleigh-Johnson, Head of Financial Reporting Faculty, ICAEW

“we are at a crucial point in our convergence programme, and my fellow board members and I are working in close partnership with the International Accounting Standards Board to improve the comparability of financial information around the world.”

recognised, but a closer look at the proposals reveals that in many cases the timing of revenue recognition will differ from current practice. The impact of the changes is likely to be most pronounced for entities that currently use the stage of completion method or who enter into multiple element arrangements. The second project looks at leases. Under current guidance, leases are classified as either finance or operating. Finance leases appear in the lessee’s balance along with a related lease liability. Operating leases are off-balance sheet in the lessee’s accounts, with rental costs expensed over the life of the lease. The proposals remove this distinction. Instead a ‘right-of-use’ approach is proposed, which means for the first time all assets and liabilities arising from lease contracts will be recognised on the lessee’s balance sheet. The proposals are complex and would affect almost any entity that enters into a lease. The impact of the changes will be most pronounced for entities that currently have significant operating leases of high value assets including transport companies, such as airlines or shipping businesses, miners, construction companies and businesses with significant leased premises, such as retailers. Beyond 2011 As indicated above, there is a momentous amount of change in the pipeline. In some sense this is the second fundamental reshaping of IFRS, following the frantic rush to prepare a ‘stable platform’ of improved standards for 2005 adopters. Thankfully, the new standards will not necessarily be implemented overnight. Consultations are currently underway to determine the exact implementation dates, which may be phased over a number of years. But IFRS reporters in Hong Kong and beyond would be wise to begin planning for these changes sooner rather than later. After 2011, whatever the US decides, the IASB should surely aim for a more manageable process of change, focused very clearly on implementation issues and the quality of its standards. The goal of convergence - with US or any other GAAP - will need to play second fiddle in the brave new world of global IFRS reporting. HONG KONG BUSINESS ANNUAL 2011 | 23


2011 outlook

SP

EC

IM

EN

HOW to avoid being double taxed in china

By Berin Chan and Jacky Chu, Partners of PwC International Assignment Services (Hong Kong) Limited

I

t has been 12 years since the Arrangement for the Avoidance of Double Taxation ( the “DTA”) entered between the Governments of Mainland China (the “Mainland”) and the Hong Kong Special Administrative Region came into effect. Despite one of the key objectives of the DTA being to “eliminate” double taxation on employment income earned by Hong Kong residents working across the border, in practice, there are indeed situations where double tax has been paid on the same income. In this article, we will look into this issue closely and provide suggestions as to how these circumstances could be eliminated. The Problem Let us take the example of a Hong Kong resident with a permanent

24 | HONG KONG BUSINESS ANNUAL 2011

“Another typical scenario which may give rise to significant double taxation is where a cross-border employee receives an annual bonus.”

home and family in Hong Kong who is employed by a Hong Kong company and seconded to work full time on the Mainland, say, as a general manager of a factory on the Mainland. His travel details are as follows: On the Mainland, he would be subject to individual income tax (“IIT”) in full on his employment income even though he returns to Hong Kong during weekends and holidays and occasionally (say two days in each month) reports duties to his boss in Hong Kong. This is because he only has one job and in general, IIT will be imposed on his full income regardless of whether his salary is fully paid inside or outside of the Mainland as virtually all services required by his position (except for the twice a month reporting meetings held in Hong Kong) are rendered on the Mainland.

On the other hand, in Hong Kong, he would need to apply for income tax relief (commonly known as “Section 8(1A) (c) claim”) as he spends more than 60 days in Hong Kong in a year of assessment and performs services (i.e. the reporting meetings) in Hong Kong. While the Section 8(1A)(c) claim is intended to exempt the portion of employment income attributable to services rendered in another tax jurisdiction where income tax on the same income has been paid, the calculation method is not clearly specified in the Inland Revenue Ordinance (“IRO”) and therefore it is the prevalent practice of the Hong Kong Inland Revenue Department (“IRD”) to generally adopt a “physical day basis” to apportion the income that would be subject to Hong Kong salaries tax (“HKST”).


2011 outlook Workdays spent on the Mainland

226

Non-workdays spent on the Mainland

10

Workdays spent in Hong Kong (i.e. two meetings per month)

24

Non-workdays spent in Hong Kong

105

Total days in a year

365 Hong Kong

Under current practice Total employment income

Mainland

HK$1,000,000

Percentage of income allocated to each location (based on 365 days)

(365 - 236) days = 35%

Portion of income subject to tax in each location

HK$350,000

Portion of income being double taxed

100% HK$1,000,000

HK$350,000 Hong Kong

Suggested approach Total employment income

Mainland

HK$1,000,000

Percentage of income allocated to each location (based on total workdays)

Portion of income subject to tax in each location

226 days

(250 - 226) days

= 90%

= 10%

HK$100,000

Portion of income being double taxed

In the above example, if the employee receives an annual income of HK$1,000,000 (assuming there is no bonus), his tax position on the Mainland and Hong Kong under the current practice would be as follows: As you will see from the above, even if his total employment income has already been fully taxed (i.e. 100%) on the Mainland, he is still subject to HKST on about 35% of his employment income because the IRD would normally exclude 65% of

IIT on employment income is assessed on a monthly basis .

HK$900,000 NIL

to resolve the problem according to the established procedures set out in the DTA. However, in our view, the adoption of the “workday basis” to apportion the employment income may be a simpler and workable solution to eliminate the double taxation issue and it is also in line with the sourcing principle currently adopted by international practice (including the UK and US tax authorities). Under the “workday basis” meth-

There are in fact many real life examples of significant double taxation on bonuses . his income from HKST on the basis that he only spends 236 days out of 365 days (or 65% of his time) on the Mainland. The problem of double taxation exists because the State Administration of Taxation (“SAT”) and IRD have different interpretations based on their respective domestic laws in determining the source of income and yet taxpayers are often unable to ask the respective tax authorities

odology, it is suggested that both the Mainland and Hong Kong will impose IIT and HKST according to the actual workdays spent in the respective locations as shown below: Following from the above, only 90% (as opposed to 100% in the previous example) of his income would be taxable on the Mainland; while only 10% (as opposed to 35% in the previous example) would be taxable in Hong Kong. Accordingly,

Berin Chan

Jacky Chu

the issue of the 35% of income being double taxed would be eliminated. For the ease of comparison, the above analysis is prepared on an annual basis. However, unlike HKST which is assessed on an annual basis, IIT on employment income is assessed on a monthly basis. Hence, when applying the above workday basis methodology on the Mainland, the nominator and denominator of the apportionment formula should reflect the workdays in the Mainland and the total workdays of the month respectively. Despite this, the principle and outcome of the above analysis should be the same. Another typical scenario which may give rise to significant double taxation is where a cross-border employee receives an annual bonus. According to the IIT law, despite the monthly salary being able to be time apportioned under certain circumstances, bonuses cannot be time apportioned on a day-in-day-out basis. Instead, it is only when the employee does not spend a single workday on the Mainland in the complete calendar month(s), that the portion of the bonus that is attributable to such calendar month(s) can be excluded from IIT. There are in fact many real life examples of significant double taxation on bonuses where the Hong Kong employee only spends minimal workdays on the Mainland but is subject to IIT because he fails to meet all the requirements in order to qualify for income exemption under the DTA. Let us take the example of a Hong Kong employee who is also registered as a chief representative in a representative office on the Mainland. Assuming he only spends four work days each month (i.e. a total of 48 working days a year) on the Mainland and receives a big annual bonus of HK$2,000,000, his tax position of the bonus on the Mainland and Hong Kong would be as follows: In the above example, the bonus is double taxed because the SAT seeks to tax the bonus in full if the taxpayer spends even a day a month on the Mainland over the period during which the bonus is earned. Hence, again, the issue can be resolved if the SAT and IRD agree to apportion the bonus according to the workdays spent in the respective locations. HONG KONG BUSINESS ANNUAL 2011 | 25


2011 outlook

2011 a new dawn for china governance? By Patrick Lo, Partner of RSM Nelson Wheeler

B

efore the big decision to go international, China has been a closed economy from the rest of the world for a long period of time. The culture of proper accountability, the concept of good business ethics, proper corporate governance and risk management to protect the interests of the stakeholders were lacking or at least not up to international best practices amongst business leaders of Chinese companies during the closed economy period. Bribery, corruption and illegal business activities have been the biggest threats to foreign investments. The main fear to the foreign investors was that investing in China carried a significant risk of capital losses from illegal business acts, embezzlement of company assets by locals, and for the MNC’s, damages to their global cor26 | HONG KONG BUSINESS ANNUAL 2011

“The new IPO’s in Hong Kong have been dominated by Mainland companies of all sizes.”

porate image and reputation. This situation has improved considerably in the last decade following investments by large MNC’s, resulting in expertise on new management concepts and methodologies being brought into the board rooms of the Chinese companies with enhancement to the profitability and image of these enterprises. Concerns remain Despite the gradual improvement in the enterprise control environments in China, there are still many businessmen in Hong Kong with hesitation and worries in investing in Chinese companies due to internal control concerns. In recent years, the new IPO’s in Hong Kong have been dominated by Mainland companies of all sizes, and subscriptions to the IPO’s of large State-Owned-

Enterprises (SOE) continue to break all time highs. For instance, the IPO of The Agricultural Bank of China in 2010 raised a world record of over HK$170 billion. This IPO market provides a good channel for Hong Kong investors with no connection in China like the tycoons to take part in the growth of the Chinese companies. As the IPO process in Hong Kong is subject to stringent scrutiny and due diligence by professional parties before listing in accordance with the requirements set out by the Hong Kong Stock Exchange, the investments through this channel are perceived to carry a higher assurance of the quality of corporate governance and enterprise internal control in the listing applicants. Nonetheless, there are still concerns on this subject for direct investments in Chinese companies by some Hong Kong investors. From the experience gained over the years, the Chinese government recognizes the importance of developing a high standard of corporate governance in China to enhance the reliability of financial reporting and management controls, and also the


2011 outlook benefit of having an independent audit to ensure compliance with the standard. As a result, a task force comprising 5 supervisory government bodies has been formed to formulate standards and guidelines on this subject for adoption by Chinese companies. These 5 supervisory government bodies, collectively referred to as the “Issuing Authority”, consist of: • Ministry of Finance (MOF) • China Securities Regulatory Commission (CSRC) • National Audit Office (NAO) • China Banking Regulatory Commission (CBRC) • China Insurance Regulatory Commission (CIRC) In 2008, the Issuing Authority formulated and published the “Basic Standard for Enterprise Internal Control”, which aimed at promoting

terpretations of some of the standards and guidelines, especially on those not clearly understood. Very often, comparisons were made to similar requirements for listed companies in US under their Sarbanes Oxley Act (“SOX”) enacted in 2002 following the major corporate failure of Enron and WorldCom. Although there are inevitably differences between the two legislative requirements partly due to cultural differences, the Chinese standard has a similar structure to SOX and is therefore commonly known as China SOX (“CSOX”). Following close to 3 years of consultations, the Issuing Authority has decided to introduce and enforce implementation of the standards. In April 2010, a number of Application Guidelines which include “Guidelines for Enterprise Internal Control”, “Guidelines for Assessment of Enter-

“With the due implementation of the CSOX from 2011, we expect to see significant improvement in the corporate.” the establishment, implementation and assessment of enterprise internal control and regulating the performance of an audit of internal control by an accounting firm. Throughout the period of 2008 to 2010, there have been considerable consultations, reviews and enquiries by business leaders and professional parties on the in-

prise Internal Control” and “Guidelines for Audit of Enterprise Internal Control” were issued, and these 3 guidelines are collectively known as “Implementation Guidelines”. Furthermore, the Issuing Authority has stipulated the following timetable for implementation by the listed Chinese companies:

Mr. Patrick Lo, Partner of RSM Nelson Wheeler

“Hong Kong and foreign investors, they will have less worry on management control risks when they are considering investment opportunities in China.”

• For companies listed both domestically and abroad, effective 1 January 2011 • For companies listed on the main board of the Shanghai Stock Exchange and Shenzhen Stock Exchange, effective 1 January 2012 • For companies listed on the Small and Medium Enterprise Board and ChiNext Board, in due course There have always been comments regarding government policies in China not being effectively enforced since it is easy to write up policies with reference to practices prevailing elsewhere, but enforcement needs determination, genuine buy-in of the concept, and the latter is generally perceived as lacking in many cases. This time, for CSOX, the situation appears different. We have seen enormous effort from the Issuing Authority and professional parties in the preparation of the standards and establishing understanding and buy-in from business leaders. Extensive training and seminars have been organized by the Ministry of Finance and the Accounting Society of China on this subject. In one of the 5-days training course that we attended, we were impressed by the thorough understanding of the subject by the speakers who are government officials, their willingness and patience in answering questions from the audience and their determination in enforcing implementation of the standards by the due dates. With the due implementation of the CSOX from 2011, we expect to see significant improvement in the corporate governance and enterprise control environment of Chinese companies. Although we all recognize that the Great Wall was not built in one day and there will be obstacles along the way, we are optimistic that the implementation of the Basic Standard for Enterprise Internal Control can raise the awareness of Chinese business leaders on the importance of good business ethics, proper corporate governance and adequate internal control which are fundamental elements in securing long term success. For Hong Kong and foreign investors, they will have less worry on management control risks when they are considering investment opportunities in China. HONG KONG BUSINESS ANNUAL 2011 | 27


Report

Is Hong Kong ready for competition law? David Cox & Lucas Niedolistek, DLA Piper Hong Kong

A

long-awaited bill After more than a decade of discussions, the Hong Kong Government published last summer the long-awaited Competition Bill which is intended to introduce a general competition law in Hong Kong. The Bill is quite similar to the competition laws of several other major developed jurisdictions: such as the EU, the UK or Australia; it also bears many resemblances to the recent Anti-Monopoly Law which came into force in mainland China in August 2008. Prohibited behaviours “The Conduct Rules” The First Conduct Rule prohibits agreements, concerted practices and decisions which restrict competition in Hong Kong. This provision essentially prohibits hardcore anti-competitive behaviours such as price fixing, market or customer sharing, quota restrictions or joint boycotts entered into by companies and/or business associations. The Second Conduct Rule prohibits abuses by companies that have “a substantial degree of market power” (similar to “dominant positions” in other jurisdictions) where such conduct restrict competition in Hong Kong. This will include predatory behaviour towards competition and limiting production, markets or technical developments to the prejudice of consumers. Exemptions and Exclusions The First and Second Conduct Rules will not apply to the Hong Kong Government or to statutory bodies in Hong Kong The Bill also provides general exclusions for: • Agreements aiming at complying with legal requirements • Agreements that bring about economic efficiencies. • Agreements or unilateral conduct by undertakings entrusted by the Government with the operation of services of general economic interest. • Individual and block exemptions will also be possible. Penalties The Competition Tribunal may impose fines of up to 10% of the world-wide turnover. Furthermore, the Competition Tribunal can order the disgorgement of illegal gains and disqualify individuals from acting as a director in Hong Kong for up to 5 years and may make a declaration that a person has contravened a competition rule which could have serious consequences for an individual who is involved in related cases overseas. The Competition Tribunal will also have the power to require any person or undertaking to dispose of operations, assets or shares of any undertaking. These powers could have far-reaching consequences in cases where the Tribunal finds an abuse of substantial market

28 | HONG KONG BUSINESS ANNUAL 2011

power. For example, such a power could be used to break up dominant enterprises that have abused their market power. The Competition Commission will only be able to impose pecuniary penalties of up to HK$10 million for minor violations. Lastly, the Bill provides for various criminal penalties for presenting misleading information or obstructing investigations. What are the implications for business inHong Kong? The Bill is only a legislative proposal at the moment, but it gives a much clearer view of Hong Kong’s likely new competition regime. Legco’s Bills Committee has scheduled some 37 meetings to review the Bill which is not expected to be voted on before May 2012. Although some provisions may still be modified, we believe that the fundamentals are unlikely to be changed. So, what should companies in Hong Kong begin to do? Below, we give suggestions for some preparatory steps: • Review major contracts or business practices to see whether they involve arrangements which could infringe the First Conduct Rule, in other words: - price fixing or bid rigging; - market sharing or allocation of markets; - output restrictions; - joint boycotts; - resale restrictions - resale price maintenance or use restrictions. • In negotiating all new contracts ensure that they would comply with the provisions of the First Conduct Rule; • Conduct reviews of all businesses in which the company holds substantial market shares for example, over 35% to 40% to identify potential issues of substantial market power; • Consider whether any agreements or arrangements which are typical to a particular business sector should benefit from a block exemption. This may be a matter to raise with the relevant trade association with a view to making an application to the Commission at the appropriate stage; • Plan for training employees and the introduction of an effective compliance programme which should be carefully adapted to the culture and size of the organization and the particular business sector. Companies are advised to begin this process well in advance of the publication of Guidelines by the Commission. Experience in the European Union has shown that it usually takes several years to instil a new compliance culture into an organization.


opinion

Tim hamlett tim hamlett Former Editor of Sunday Standard and Associate Professor of Journalism

Peacock today, feather duster tomorrow ?

M

any years ago I attended a meeting of the Court of the University of Lancaster. This was not a court in the legal sense, merely a very large advisory body on which numerous local worthies sat. It had no real power and only met once a year. Its most interesting feature in some ways was that it also had a lot of student members. Lancaster U was a democratic place in those days. The local worthies tended to dress up for the occasion. The students did not. Sartorial cultures clashed visibly. Naturally the proceedings opened with a speech from the Vice Chancellor. This gentleman wished to reassure the local worthies that there was nothing seriously wrong with the exotic creatures in their midst, so he inserted a few words on the tendency for students to follow the latest young fashions, and all dress the same way. I think Afghan goatskin coats were all the rage at the time. Anyway after the Vice Chancellor had finished one of the students rose to his feet, pointed at the platform and observed that the people on it were actually much more uniform in their dress than the students. And of course he was right. Every man, there were no ladies, alas was wearing a two-piece business suit, a shirt in a respectably pale colour, and a tie. On the other hand by Hong Kong standards they were a herd of peacocks. The other week I was invited to a do in the Convention and Exhibition Centre. It was a Saturday night, so there were plenty of other get-togethers in progress. Naturally the halls were full of couples heading for the shindig of their choice, and in every case the man was not just wearing a two-piece business suit, but was wearing one in virtually the same shade of charcoal grey. The big shots at Lancaster University were comparatively enterprising: one or two had pale grey, some wore blue, the man from the Buildings Office was wearing a sort of brick colour. In Hong Kong everyone goes for the same funereal near black. This is depressing. In bygone eras, it seems to me, rich people were expected to display their wealth in an interesting and aesthetically pleasing way by dressing up. Exotic fabrics were encouraged, precious metals welcomed, large feathers admired. What is the point of being rich if you can’t flaunt it? Creeping monochrome The idea of monochrome for men seems to have crept in during the 19th century. I fear it probably originated in the UK, where displays of wealth were branded vulgar, possibly because the sort of landed aristocrats who dominated taste in these matters were running short of the money required to pay for it. There was a rebellion of sorts in the 60s. Men’s clothes took on a wider range of colours. Ties, if worn at all, became big fat things in violent shades. Jackets and trousers flared in places where they had not flared before and I even had a shirt with lace cuffs which fell over my hands in a rather 17th century way. And this was a massA grey flannel suit ? Never !

produced shirt. People were wearing this sort of stuff. Hair was worn over the shoulders. Colours vibrated. Somehow, though, this all fizzled out. And I suppose it never reached Hong Kong in the first place. In old pictures of the place local bigwogs are kitted out in the sort of long gown now seen only at Chinese music concerts. Although the photos are black and white I presume the gowns actually came in a variety of colours, as they still do. But this tradition, along with the Mao jacket over the border, has been trampled in the dust. The boring business suit in boring off-black has pretty much conquered the world. Only in Iran is the president not required to wear a tie, and that’s not the sort of association which is going to help the cause of liberation. Unsuitable in Hong Kong Liberation, actually, is what we need. The suit is totally unsuitable for Hong Kong. In summer it is too hot, even if you get a lightweight model ... and if you do get it in a really lightweight cloth it will look awful. In winter the damned thing is not warm enough, and you have to wear a coat. The get-up is uncomfortable and difficult to work in. Indeed one of the ways you can tell when work gets serious is that the workers start discarding the uniform. Jackets are thrown over the backs of chairs, ties are loosened, collars unbuttoned. When people get home we see another give-away - the uniform comes off and is replaced with something cheap, comfortable and cheerful, like a pair of jeans and a tee-shirt. There are it is true a few exceptions. Many uniformed bodies have a ceremonial summer uniform which is at least white. The Governor used to have a very nice formal white suit with gold trimmings, though for some reason Mr Chris Patten refused to wear it and insisted on turning out in the same boring gear as everyone else. For many years the chief Bomb Disposal Officer of the Hong Kong Police wore outrageous clothes, including a top hat. It seems that a man who is required to play with explosives for a living can choose the clothes he wants to be blown up in. Elsewhere there are no signs of resistance to the business uniform. Indeed I suppose some people may welcome it. In one of C.S. Forester’s books the hero, freshly demobbed from the Royal Navy, reflects on his sudden need to choose clothes, after years in which he could answer to any criticism of his dress that it came with the job. It seems most local businessmen are quite happy to go into Sam’s once a year, ask for another of the usual, shut their eyes and let the tailors get on with it. Their highest ambition is to look like everyone else. This is disappointing. We would like our young people to think that business is an exciting, vibrant career which rewards initiative and individualism. Then we dress like a herd of penguins. Think peacocks.

HONG KONG BUSINESS ANNUAL 2011 | 29


News from hongkongbusiness.hk

MOST READ JUNE 2010

ASM to snap Siemens AG’s assembly systems business ASM, a semiconductor assembly and packaging equipment supplier, aims to explore opportunities in the SMT equipment business. ASM Pacific Technology Limited has proposed to acquire Siemens Electronics Assembly Systems Business from Siemens AG, according to an ASM report. ASM said its extensive sourcing network in Asia and its in-house capabilities could substantially improve SEAS’ cost structure. It also said it targets to help SEAS to explore further revenue opportunities; and expand its product offerings and customer base in the Asian region by drawing on ASM’s knowledge of the Asian markets and existing customer relationships. According to Mr. Lee Wai Kwong, Chief Executive Officer of ASM, ASM believes that the synergistic effects of the combined strengths of the advanced technologies and knowledge in cost-efficient manufacturing and marketing networks in Asia will serve to push this new SMT business unit and the whole ASM Group to new heights.

30 | HONG KONG BUSINESS ANNUAL 2011

Hong Kong legislation passes minimum wage bill Fate of labor groups’ HK$33 per hour floor proposal depends on Chief Executive Donald Tsang’s decision. Hong Kong lawmakers approved the territory’s first minimum wage, which may increase costs for employers including Dairy Farm International Holdings Ltd. and Sun Hung Kai Properties Ltd. Legislators passed the government’s minimum wage bill after a 41-hour debate, according to an e-mailed statement. Secretary of Labor and Welfare Matthew Cheung said that the law is expected to take effect in the first half of next year. The bill provides the framework for a legal minimum wage that will be decided by Chief Executive Donald Tsang as early as October, lending protection to Hong Kong’s 3.67 million-strong labor force. Labor groups have proposed a floor of HK$33 per hour. South China Morning Post reported Dairy Farm’s 7-Eleven convenience store chain’s wage of HK$20 per hour, citing Hong Kong People’s Alliance for Minimum Wage’s survey.

StanChart and HSBC to launch higher-yielding RMB products Regulators sealed agreement allowing HK financial institutions to offer higher returns on yuan savings accounts. Standard Chartered Plc and HSBC Holdings Plc plan to offer higher-yielding yuan products in HK after regulators agreed to encourage the city’s residents to invest using the currency. The Hong Kong Monetary Authority and the People’s Bank of China signed an agreement allowing financial institutions to offer higher returns on yuan savings accounts in the city, which currently pay interest of less than 0.5 percent. Deposits in China’s currency in Hong Kong rose 4.7 percent in May to 84.7 billion yuan, HKMA figures show.

HSBC enables RMB payment for Wealthsave Protection Plan Following the announcement on renminbi settlement arrangement by the Hong Kong Monetary Authority (HKMA), HSBC Insurance has enhanced its WealthSave (Renminbi) Protection Plan to provide new individual and corporate customers the option to settle their premium in either renminbi (RMB) or Hong Kong dollars (HKD), starting 21 July 2010. Paul Menzies, Deputy Regional Head of HSBC Insurance, said: “WealthSave (Renminbi) Protec-

tion Plan, offering a guaranteed return of as high as 1.6% has been well received by the market as sentiment and outlook for RMB appreciation remain favourable. In the first two months of its launch, the plan has contributed around 20% of our non-linked life insurance businesses in terms of annualised premium. We expect the product to remain attractive to customers who aim to diversify their savings pool and capture new opportunities to grow their wealth.

Offshore renminbi products take off The People’s Bank of China and Hong Kong Monetary Authorities have extended a scheme allowing companies to settle trade contracts in renminbi with their counterparts in China from just those in Hong Kong, Macau and ASEAN to companies in all countries, and domestically from five cities originally (Shanghai, Guangzhou, Shenzhen, Dongguan, and Zhuhai) to 20 provinces. On 19 July, the PBoC and Bank of China (HK) Limited (BOCHK), the Renminbi Clearing Bank, inked an agreement lifting the last restrictions on Hong Kong’s renminbi inter-bank market. This gave the green light to non-bank financial institutions to open renminbi accounts without limits, enabling corporate, institutional and individual retail investors to transfer funds between renminbi accounts held in different HK banks, for any purpose. In the first year of the original scheme total volume of renminbi trade transactions jumped to more than RMB10bn in March 2010 from less than RMB2bn in 2H09.


News from hongkongbusiness.hk

MOST READ JULY 2010

Hong Kong and China strike deal on Renminbi business Cooperation eliminated restrictions on Hong Kong banks in establishing renminbi accounts for financial institutions. Chief Executive of the Hong Kong Monetary Authority (HKMA), Mr Norman Chan, and Deputy Governor of the People’s Bank of China (PBoC), Ms Hu Xiaolian, signed a Supplementary Memorandum of Co-operation on Monday on the expansion of the renminbi trade settlement scheme. Following the expansion of the renminbi trade settlement scheme, the HKMA and the PBoC have agreed to strengthen co-operation and further promote Hong Kong’s status and role as a renminbi market platform in the process of developing renminbi business outside the Mainland. This is a milestone in the development of offshore renminbi business in Hong Kong and a very crucial step in the implementation of the two guiding principles set out in the HKMA circular issued in mid-February. The PBoC and the Renminbi Clearing Bank, Bank of China (Hong Kong) Limited, also signed a revised Settlement Agreement on the Clearing of Renminbi Businesses.

Hong Kong SMEs to invest in the next 6 months HSBC’s Small Business Confidence Monitor revealed the vast majority of small and mediumsized enterprises in HK plan to increase (29%) their capital expenditure (CAPEX) or maintain (53%) their current CAPEX levels in the next six months. HK and Asia are demonstrating steady signs of recovery by maintaining their levels of confidence in the first half of 2010, said the report. Shaun Wallis, Global Head of Business Management, Commercial Banking, said: “Our research indicates confidence levels in the emerging markets are stable and are back to pre-financial crisis levels. Whilst it may be tempting to argue that emerging nations will be affected by the weakening Western economy, we think that there are three important channels that suggest Asia will continue to grow. Emerging nations are now trading more with each other and are therefore less exposed to the Western economy. The low return on Western assets is also encouraging investors to put more money into the emerging world. Finally, there is major redistribution of income from Western markets into emerging nations due to high commodity prices.”

Hong Kong unemployment stays at 4.6% The seasonally adjusted unemployment rate stood at 4.6% in the April-June quarter, matching the March-May period, the Census & Statistics Department says, adding the underemployment rate also remained unchanged at 2%. Decreases in the unemployment rate were mainly observed in the construction, social work, and financing sectors. Increases were more apparent in the postal and courier activities, manufacturing, and education sectors. Total employment grew by 8,800 to 3,492,100. Over the same period, the labour force grew by 8,300 to 3,664,000. The number of unemployed fell by 600 to 171,800. Underemployed fell by 1,000 73,700.

The opening bid was said to be at $8 billion. The site has an area of about 23,312 square metres and is designated for private residential purposes. A minimum gross floor area of 18,109 square metres must be completed. The maximum gross floor area is 30,180.4 square metres. The auction was conducted at Tsuen Wan Town Hall by the Deputy Director of Lands, Graham Ross and Chief Estate Surveyor Tony Moyung.

Lot at The Peak sells for $10.4 billion

Mongolian Mining plans raise HK$5.44bln via SEHK listing Mongolian Mining Corporation (“MMC” or the “Company”), the largest privately held highquality coking coal producer and exporter in Mongolia in the first half of 2010, on Monday announced its plan to raise up to approximately HK$5.44 billion, including approximately HK$4.51 billion from the issue of its new ordinary shares (“Shares”) and approximately HK$0.92 billion from the sale of existing Shares by the Selling Shareholders (“Sale Shares”), through a listing on the Main Board of the Stock Exchange of Hong Kong (“SEHK”), according to a Mongolian Mining report.

Market Prospect Limited buys the 23, 312 sq. m. area designated for private residential purposes. The Lands Department on Wednesday held the fourth land auction of the 2010-2011 financial year. A government lot at with an address of Inland Lot No. 9007 at 103 Mount Nicholson Road, The Peak, Hong Kong, was sold to Market Prospect Limited at $10.4 billion, according to a report from the Lands Department.

Offering details The global offering initially comprises 719,424,500 Shares to be sold at an offer price between HK$6.48 and HK$7.56 per Share. The Global Offering consists of a public offering in Hong Kong of 71,942,000 new Shares and an international placing of 647,482,500 Shares, including 525,180,500 new and 122,302,000 Sale Shares that are subject to the Over-allotment Option.

HONG KONG BUSINESS ANNUAL 2011 | 31


News from hongkongbusiness.hk

MOST READ AUGUST 2010

HSBC launches mobile banking operations Provides instant banking, investment and insurance services as it offer secure internet banking via mobile platform. HSBC on Tuesday announced the launch of HSBC Mobile Banking which enables customers to access investment and insurance services, in addition to other popular banking services, through a simple and secure mobile banking platform. Customers can access the service by logging on to www. hsbc.com.hk via Apple iPhone, Apple iPad and Apple iPod Touch. By launching the service, HSBC is the first bank in Hong Kong to provide the choice of two log-on modes – Security Device mode and Dual-password mode. Additionally, through these enhanced mobile banking solutions, HSBC customers can perform instant Hong Kong and US stock trading, buy and sell a broad range of foreign currencies and purchase travel insurance simply. The new service is available to both. Ada Chiu, HSBC’s Head of Direct Channels Personal Financial Services in Hong Kong, said, HSBC Mobile Banking enriches their service channels and empowers their customers. 32 | HONG KONG BUSINESS ANNUAL 2011

RIM Introduces BlackBerry Torch smartphone in Hong Kong Research In Motion (RIM) on Thursday introduced the new BlackBerry® Torch™ 9800 smartphone in Hong Kong. The new handset is the world’s first smartphone to combine a BlackBerry® keyboard with a full touch screen experience. It is also the first to feature the new BlackBerry® 6 operating system and Chinese handwriting software, according to a RIM report. “The new BlackBerry Torch is one of RIM’s most important product launches in Hong Kong. This powerful smartphone builds on the industry-leading strengths of the BlackBerry platform with a new handset design that offers top-of-the-line features and elegant styling,” said Norm Lo, Vice President of Asia Pacific, Research In Motion. “With its new operating system, including an enhanced user interface and rich WebKit browser, the highly anticipated BlackBerry Torch smartphone delivers smoothly integrated and uncompromising capabilities for both business professionals and consumers.”

ICBC executive faces bribery charges HK Anti-Graft Agency claims Derick Chan Po-fui received total of HK$3.3mln from United Win major shareholder. According to the anti-graft agency, an executive from Industrial & Commercial Bank of China (Asia) Ltd. and two other people were charged in a bribery case brought by Hong Kong’s Independent Commission Against Corruption.The ICAC said it had brought charges against Derick Chan Po-fui, 50, head of the corporate banking department, Chan Yick-yiu, 43, former head of real estate and finance at the bank and Zeng Wei, 47, a major shareholder of United Win Holdings Ltd. The investigation, code-named operation “Thunderbolt” was assisted by the bank.

Mercedes-Benz launches StarElite The sub-brand targets the premium used car market in Hong Kong through the StarElite Certified Pre-Owned Program. Dr Claus Weidner, Chief Operating Officer of MercedesBenz Hong Kong Limited, said, “Our certification process and some exclusive benefits of the program are unprecedented – for example our 150-checkpoint Quality Inspection is the most comprehensive certification process in the premium market to date; the complimentary 12-month or 20,000-kilometer

warranty and the special financing offers from MercedesBenz Financial Services Hong Kong Limited are totally exceptional. Together they make the StarElite Certified PreOwned Program unique and preeminent.” The announcement added a car not only has to be purchased from the authorized dealer Zung Fu Company Limited to qualify for the certificate, it also has to be maintained and serviced at Mercedes-Benz authorized service centres.

Stock Exchange of Hong Kong lists Midas Holdings Move to take advantage of company’s enhanced corporate profile in China and Hong Kong. Midas Holdings Limited (“Midas”), manufacturer of aluminium alloy extrusion products for the passenger rail transportation sector in the PRC, on Wednesday commenced trading on the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”). Midas’ shares gained 7.4% from its offer price of HK$5.43 per share to close at HK$5.83 per share; and, an aggregate turnover of approximately HK$417 million. Mr. Patrick Chew, Chief Executive Officer of Midas, said, “Our Hong Kong listing marks another important milestone for Midas. We would like to thank all our investors for your support. With this successful Global Offering, we aim to capitalise on our enhanced corporate profile in the PRC and in Hong Kong and capital position to significantly expand production capacity and strengthen our leading market position. We are committed to delivering the best value and maximising returns for our shareholders.”


News from hongkongbusiness.hk

MOST READ SEPTEMBER 2010

Swire Properties invests $800,000 in electric vehicles Swire Properties Limited has confirmed the purchase of two new Nissan LEAF electric vehicles for its transport fleet as one of the developer’s initiatives to reduce its carbon footprint and develop environmentally friendly business practices. The company sent representative to test-drive the LEAF at Nissan’s headquarters in Yokohama, Japan. The two new electric vehicles will enter into service in February next year as replacements for vehicles in the company’sexisting fleet at a cost of $420,000 per car. The measure will lead to a 70% reduction per vehicle in greenhouse gas emissions and cleaner roadside air quality with zero tailpipe emissions in comparison with the equivalent petrol cars. Cary Chan, Head of Technical Services and Sustainability Department, said: “…we recognize that we can make a significant difference by minimizing our carbon footprint and influencing our stakeholders to do the same. Replacing some of our existing vehicles with electric cars lets us reduce our environmental impact in a visible way, which we hope will encourage others to follow suit.”

HSBC unveils financial educational programme for children HSBC launched a new community banking initiative for primary school children called ‘Save For Your Dreams’, a programme designed to help parents promote financial literacy and encourage saving at an early age. The new initiative consists of a piggy bank competition for primary school children, fun online learning modules and a money management guide, according to an HSBC report. Francesca McDonagh, HSBC’s Head of Personal Financial Services Hong Kong, said: “HSBC is committed to enhancing our community banking initiatives by developing products and programmes that benefit the HK community. Financial literacy is a vital skill that needs to be developed and taught from an early age. To support this pivotal social initiative HSBC’s financial educational programme is created specifically for primary school children, encouraging saving and prudent management of money. To maximise impact, we are working closely with parents and teachers to spread this programme throughout schools across Hong Kong.”

Mongolian Mining’s Hong Kong IPO 9.92 times subscribed The company’s offer price fixed at HK$7.02 per share. Mongolian Mining Corporation (“MMC” or the “Company”), on Tuesday announced its share offer allotment results. The Hong Kong Public offer shares were approximately 9.92 times over-subscribed and the International Placing shares have been well over-subscribed. The Offer Price has been fixed at HK$7.02 per share. The shares of MMC will commence dealing on the Main Board of The Stock Exchange of Hong Kong Limited on October 13, 2010, 9:30 am, and will be traded in board lots of 500 shares under the stock code 975.

HSBC appoints Rakesh Bhatia Global Head of Trade and Supply Chain Rakesh Bhatia will be moving back to Hong Kong as appointed by HSBC to be the Global Head of Trade and Supply Chain on January 1 2011. A former Country Head and CEO of The Hong Kong and Shanghai Banking Corporation Limited in Indonesia, his position will be taken over by Michael Young, pending regulatory approval. Peter Wong, CEO of The Hongkong and Shanghai Banking Corporation Limited,

said “Rakesh was instrumental in the acquisition of Bank Ekonomi last year, which has given HSBC a controlling interest in a well-run bank that is strong in the domestic SME and mass market segments. We look forward to Rakesh’s return to Hong Kong to head up our flagship commercial banking capability as Global Head of Trade and Supply Chain, a business of increasing importance given the shifting trade flows towards emerging markets.

Dragonair eyes to recruit 300 more flight attendants Dragonair announced that it will organize another cabin crew recruitment day at the end of October. Dragonair is inviting more high-caliber candidates to join its professional team, after the former batch of trainees has started in flight duty. The upcoming recruitment day is organized to cope with the growing volume of passengers, flight frequency increase as well as future business development. They are expecting 300 flight attendant recruits from now until next year, according to a Dragonair report. Interested applicants are welcome to register in-person. All qualified candidates will be registered and invited for a first interview. Dragonair General Manager Inflight Services Cecilia Leung said: “Airline business is a dynamic and challenging industry. To young people interested in joining the service industry, cabin crew offers an attractive career in terms of salary and benefits, the experience and exposure gained on the job, as well as the training opportunity provided”.

HONG KONG BUSINESS ANNUAL 2011 | 33


News from hongkongbusiness.hk

MOST READ OCTOBER 2010

HK and India agree to expedite tax-cut plan Chief Executive Donald Tsang invited Indian companies to list in HK bourse as he asked Indian authorities to consider granting visa-free access to HK visitors. Chief Executive Donald Tsang has begun the first leg of his visit to India, with the Hong Kong and Indian governments agreeing to expedite the conclusion of a comprehensive avoidance of double taxation agreement. Meeting Minister of Finance Pranab Mukherjee in New Delhi on Wednesday, Mr Tsang highlighted the unique advantages of Hong Kong as a global financial centre at the meeting, according to a government report. Noting that so far no Indian companies have listed in Hong Kong, the Chief Executive invited them to do so and take advantage of the growing range of renminbi businesses Hong Kong is allowed to undertake. He also proposed increasing the frequencies of flights between the two places, and asked Indian authorities to consider granting visa-free access to Hong Kong visitors, and recognising Hong Kong’s arbitral awards.

34 | HONG KONG BUSINESS ANNUAL 2011

HK sets initial minimum wage rate at $28/hr Statutory minimum wage will protect grassroots workers and ensure their pay is commensurate with hours worked. The Chief Executivein-Council has adopted the recommendation of the Provisional Minimum Wage Commission to set the initial statutory minimum wage rate at $28 an hour.The Minimum Wage Ordinance (Amendment of Schedule 3) Notice 2010 will be published in the Gazette and tabled at the Legislative Council. Chief Executive Donald Tsang said legislating for a minimum wage is a major labour policy of the government. It is also a milestone in the protection of low-income workers’ rights.He said since the statutory minimum wage is new to HK, various sectors should work together in preparation for the legislation’s implementation. The Labour Department will strengthen employment services for young people, middle-aged people and the disabled, and formulate guidelines to help employers and employees better understand their respective obligations and entitlements.

HSBC completes renminbi trade settlement in Brazil The lender has settled in RMB across six continents with the deal in the South American country. HSBC announced the completion of its first renminbi (RMB) denominated trade settlement transaction in South America, which took place in Brazil for Groupo Tellerina. In settling this transaction, HSBC stands as the leading bank globally offering customers RMB trade settlement services in Asia Pacific, Europe, Australasia, Africa, North America and South America. HSBC’s market setting RMBdenominated transaction in South America demonstrates China’s growing economic influence globally and demand for the RMB as a settlement currency across all continents.

Survey shows climate change top concern in Hong Kong Yet only 15% in HK said they understand a lot about climate change compared to 36% global average. The results of HSBC’s fourth Climate Confidence Monitor, revealed that climate change is one of the top three concerns globally, on a par with economic stability and terrorism. For the first time, climate change was ranked the number one concern in Hong Kong, according to an HSBC report.

The Hong Kong research results show that for the first time, one in four (25 percent) Hong Kong respondents ranked Climate Change as the number one concern in their lives, topping the Hong Kong people’s agenda. Hong Kong has shown the highest level of general awareness (83 percent) of the issue and has demonstrated the strongest personal commitment to reducing impacts of climate change, saying they’d rather combat Climate Change rather than save money.

Cathay Pacific staff to avail annual salary increase of 4.5% The airline also gives year-end salary increment, 13th month pay and further profit share after seeing remarkable growth. Cathay Pacific Airways on Tuesday announced the yearend salary increment for its Hong Kong-based staff together with details of a discretionary 13th month payment and a further profit share in light of the company’s continued strong performance this year, according to a Cathay Pacific report. The airline announced that eligible Hong Kong staff will receive an average salary increase in the range of 4 to 4.5%. The company also confirmed that all eligible staff in Hong Kong will receive a discretionary 13th month payment together with their December salary payment. Barring adverse circumstances, staff can expect to receive a profit share of at least another three weeks’ salary after Cathay Pacific announces its full-year results next March, in addition to the two weeks paid in advance in August this year after posting a record interim profit.


News from hongkongbusiness.hk

MOST READ NOVEMBER 2010

Swire Properties completes 50% stake sale in PCCW Tower The company was able to increase its holding in PCCW Tower from 20% to 50% that ensured a stable future for the building. Swire Properties announced on Monday that it has completed the sale of a 50% stake in PCCW Tower at TaiKoo Place, Island East to Grosvenor, the international property development, investment and fund management group; thereby, ensuring a stable future for this long-term asset. Swire Properties will retain a 50% interest in the office tower which was valued at HK$4,388m. Martin Cubbon, Swire Properties’ Chief Executive, said: “We are pleased to have completed the process of increasing our interest in PCCW Tower to 50%, a level which we feel will safeguard our interests in one of our core assets in Hong Kong. We are excited to partner with Grosvenor, a company with an excellent track record in property development and management. Sharing the same vision, we trust that this joint venture lays a solid foundation for a strong and successful partnership in the future.”

HSBC unveils Risk Controlled Greater China Fund HSBC remains committed to providing customers with the most diligent investment solutions amidst market volatility of Hong Kong investors. HSBC on Tuesday announced the launch of its HSBC Risk Controlled Fund Series – Greater China Fund, in Hong Kong. The Fund will provide investors with opportunities to capitalize on the growth potential of the Greater China markets through a unique risk controlled mechanism. HSBC Global Research forecasted that the Greater China, being one of the world’s fastest growing regions, will grow by 7.5 and 6.2% for 2010 and 2011, respectively. The growth prospects for Greater China will be significantly higher than the 2.4% and 1.8% that HSBC forecasts for global developed markets in 2010 and 2011. The Fund’s attractiveness is supported by equity markets in this region that have delivered consistently stellar performances, providing investors with an average return of 74.4 per cent since 2009. Additionally, Hong Kong and Taiwan alone rose by over 80 per cent during the same time period.

Hang Seng Bank keen on setting up China wealth management unit The bank seeks partner for wealth management, insurance and asset management through a joint venture or by buying a stake in another company. Hang Seng Bank Ltd., the Hong Kong lender controlled by HSBC Holdings Plc, is seeking a partner in China to offer wealth management services, trying to expand in the world’s fastest-growing major economy without competing directly with local lenders. According to Dorothy Sit, China’s Chief Executive Officer, Hang Seng Bank aims to get into strategic partnerships with companies in the insurance, asset management and securities industries.

ShangPharma appoints J.P. Morgan as depository bank ShangPharma issued 5.8 million ADSs at $15 per ADS, raising $87 million via a listing of ShangPharma’s American Depository Shares on the New York Stock Exchange. “We are pleased with the success of our ADS listing in the United States,” said Lan Xie, Vice President of Finance and Operations, ShangPharma. Kenneth Tse, Asia Pacific Head of J.P. Morgan’s depositary receipts group, commented: “ShangPharma is a market

leader in the global pharmaceutical and biotech contract research organization industry, and we are pleased to have been mandated as ShangPharma’s depositary bank. Leveraging our extensive DR experience and ability, we were able to execute a seamless solution that helped achieve ShangPharma’s capital raising objectives. We look forward to building a long-term relationship with ShangPharma as it continues to broaden its investor base.”

Hong Kong unemployment rate down 4.1% Yet global financial crisis in US and Europe seem to affect employment even as labour demand is seen to continue as Lunar New Year nears. According to the Census and Statistic Department, the jobless rate for the September - November period dropped to 4.1 percent while the underemployment rate stood at percent. Drops in the unemployment rate were mainly observed in the hotels, warehousing and support activities for transportation, and cleaning and similar activities sectors; while, underemployment rate decrease were mainly seen in the arts, entertainment and recreation, and manufacturing sectors, offsetting increases in the construction and education sectors. Secretary for Labour & Welfare Matthew Cheung said in an interview, “…with the seasonal upsurge in business activities in the run-up to the Lunar New Year, labour demand is expected to stay firm and newly created jobs will help absorb job-seekers. The unemployment rate is expected to remain at the currently low level.”

HONG KONG BUSINESS ANNUAL 2011 | 35


36 | HONG KONG BUSINESS ANNUAL 2011


HONG KONG BUSINESS ANNUAL 2011 | 37


company and industry - jewellery

A golden performance Despite stiff competition from other Asian countries, Hong Kong remains to be one of the world’s top exporters of fine jewellery

H

ong Kong ranks fourth in the global list of fine jewellery exporters and is the only Asian country on the list. In the first nine months of 2010, Hong Kong’s total exports of precious jewellery expanded by 26% year-on-year, after dropping by 23% in 2009. The top three markets of Hong Kong’s precious jewellery exports are the US, the EU and Switzerland, collectively accounting for 64% of the total. Sales to the US and Switzerland saw strong rebound of 30% year-on-year and 32% yearon-year, respectively in the first nine months of 2010, while exports to the EU only grew by 12% year-on-year during the period. On the other hand, Hong Kong’s exports of precious jewellery to Chinese mainland, another major export market which accounted for 7% of the total, slowed to 9% year-on-year, after surging by 68% in 2009. Hong Kong’s exports of pearls, gem-stones and rough diamonds, along with global economic recovery, also rebounded strongly by 39% year-on-year in January-September 2010, after dropping by 17% in 2009. Hong Kong’s jewellery exporters are facing intensifying competition from suppliers in the Chinese mainland and other countries, particularly India and Thailand. This, together with the price fluctuation of precious metals, diamonds, precious stones and materials, has somewhat trimmed down their profit margins. Yet, compared with other industries, jewellery makers are still in a better posi-

tion to pass cost increases onto buyers and end users if they are caused by price surges of precious materials, which make up the most part of a jewellery article’s value. Yet, overseas retailers and importers often press Hong Kong suppliers for extended credits, exchange for unsold items, shorter delivery lead time and better designs. The impact of the RMB’s appreciation in recent years has been rather modest compared with other industries because mainland content only accounts for a relatively small part of a jewellery article’s value, compared with costs of precious materials, which are primarily imported into the mainland for export processing. On the other hand, Chinese government’s policy on encouraging consumption has shored up the purchasing power and import appetite of Chinese residents, and this may somewhat facilitate the sales of jewellery articles to the mainland, as well as retail sales in Hong Kong contributed by Chinese visitors. Meanwhile, Hong Kong is the world’s largest exporter of imitation jewellery. In 2009, total exports of imitation jewellery amounted to HK$7 billion. Unlike fine jewellery, imitation jewellery is rarely domestic-made but re-exported from origins outside Hong Kong, notably the Chinese mainland, which accounts for some 95% of all exports from Hong Kong. In the first eight months of 2010, exports of imitation jewellery increased by 21% yearon-year, after shrinking by 17% in 2009.

“Jewellery is also following more closely with the fashion trend and targeting at the younger, middle income level market segment. ”

Industry Trends Articles of jewellery are getting more fashion oriented. Innovative designs are important for moving up-market. In doing so, it is necessary for manufacturers to have more metallurgical knowledge. New technology also allows the development of new or innovative designs. Jewellery, which used to target the high-end market, is also following more closely with the fashion trend and targeting at the younger, middle income level market segment, some in the form of brand jewellery. Recent technological development allows massive production of jewellery products with good quality and competitive prices. While Hong Kong’s jewellery industry remains basically a handicraft industry, a number of larger establishments have made use of sophisticated and automated production equipment. These manufacturers integrate advanced production techniques, such as electroforming, with handicraft skills to enhance their efficiency. They install computer-aided design and manufacturing (CAD/CAM) systems, as well as computer numerically controlled (CNC) machine tools in their product design and manufacturing processes. New technologies also enable Hong Kong manufacturers to develop new materials for fashionable jewellery items other than fixing defects and to increase the accuracy of the designed output. On marketing and distribution, some Hong Kong jewellers have built up their own branded jewellery or licensing agreements. While this is an effective strategy to enhance long-term competitiveness, it may also require local jewellery manufacturers to move into distribution. Apart from establishing direct retail outlets, the rapid development of online shopping in recent years is also noteworthy. It is expected that the application of e-commerce in 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. Product Trends In terms of materials, white metal will remain the mainstream, while there has been a renewed interest and demand for colour stone jewellery. Demand for yellow gold is on a rise again, albeit with a fashionable twist. Titanium is gaining popularity for its light weight, strong nature and non-sensitivity to

38 | HONG KONG BUSINESS ANNUAL 2011


jewellery - company and industry Performance of Hong Kong’s Jewellery Exports^ 2008

January-September 2010

2009

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn

Growth %

8,851

+3

5,789

-35

5,082

+32

Re-exports

28,222

+12

22,718

-20

18,870

+25

of Chinese Mainland Origin

19,789

-1

15,421

-22

13,051

+30

Total Exports

37,073

+10

28,507

-23

23,952

+26

(HK$ billion) Domestic Exports

by Markets

2008

January-September 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

US

37.5

-8

35.7

-27

35.0

+30

EU

24.3

+13

24.1

-24

21.5

+12

United Kingdom

6.8

-3

6.8

-24

5.8

+18

France

5.3

+27

5.4

-21

5.6

+25

Italy

4.1

+33

4.2

-22

3.9

+9

Switzerland

7.5

+59

6.9

-25

7.8

+32

Chinese Mainland

3.3

+30

7.1

+68

6.7

+9

ASEAN

4.8

+18

4.7

+9

4.6

+13

Japan

3.7

-2

3.8

-21

4.3

+42

Macau

1.7

+509

2.9

+30

3.6

+46

2008 by Categories Articles of Jewellery, of Precious Metal Articles of Pearls, Precious or Semi-precious Stones Goldsmiths’ & Silversmiths’ Wares, Precious Metal

January-September 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

96.4

+9

95.4

-24

96.4

+29

3.4

+32

4.4

-2

3.2

-19

0.2

-20

0.2

-13

0.3

+58

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant

human body. Meanwhile, some buyers have traded down their merchandise amid a sluggish global economy. Lower-priced items with more creative use of karat gold and alloys may also become more popular with less affluent customers. The number of younger consumers has increased over the past few years. They are fashionconscious and putting a great stress on the design element. In many cases, they are influenced by the trends in clothing fashion,

mainly through magazines, TVs or movies. In Asia, for example, the biggest jewellery buyers are the rising numbers of women entering the workforce, according to De Beers. In terms of product trends, jewellery designs have been increasingly influenced by clothing fashion. Consumers, especially women, are opting for more accessories like jewellery to express their sense of style. Feminine, romantic pieces, meanwhile, are expected to be

“The development of internet shopping represents a new direct sales method for Hong Kong jewellers in promoting their products.”

sought-after in the luxury market. This reflects in the increasing trend to wear jewellery with jeans in a mix-and-match fashion. Costume jewellery is making a return. Increasingly, more garment boutiques offer jewellery as accessories complementing their new lines of fashion. Such development would contribute to an increased demand for elegant and romantic diamonds, which are expected to top the list of jewellery buyers. HONG KONG BUSINESS ANNUAL 2011 | 39


company and industry - electronics

Surge in consumption Hong Kong remains a popular sourcing centre for electronic products for customers here and abroad.

H

ong Kong’s electronics exports surged by 33% in the first 4 months of 2010, after an 8% decrease in 2009. Exports of AV equipment, IT equipment, telecommunications equipment and semiconductor items all reported a double-digit growth during January-April 2010. Exports to the Chinese mainland, which accounted for nearly two-thirds of the total electronics exports, grew by 37% during January-April 2010. Exports of electronic parts and components, the major items of Hong Kong’s electronics exports to the mainland, were buoyant on the back of expansion of mainland’s outward processing production. Meanwhile, electronics exports to the EU and the US both performed well, amid the resurgence of consumer demand for electronic products. Elsewhere in Asia, exports to ASEAN, which constituted mainly of parts and components, grew by 35% during January-April 2010, amid the revival in export production in the region. Exports to Japan also rebounded by 25% in the period. Industry Trends Despite intense competition from other Asian suppliers, Hong Kong continues to be a popular sourcing centre for higher-end consumer products. This is because competition from less advanced suppliers is confined to low-end mass-market items and simple products, while more advanced competitors like Taiwan and Singapore have different

40 | HONG KONG BUSINESS ANNUAL 2011

product mixes from Hong Kong. Though the Chinese mainland has a strong pool of well-established indigenous manufacturers of domestic electronics items and poses obvious threat to Hong Kong exporters in the international market, competition is mainly on the OEM business. While maintaining their OEM production, Hong Kong companies focus more on ODM and provide a variety of value-added services to their customers. The strength of Hong Kong’s ODM business lies in product design and development, as well as quality assurance and timely delivery, while knowledge of world product trends and different consumer tastes and preferences in different markets are also their edge. While parts and components for consumer electronics are selling well in Asia, major players have re-positioned to supply parts and components for commercial and industrial equipment like computers, telecommunications and navigation systems. For example, many PCB manufacturers have shifted to the production of fine pitch multilayer boards for sophisticated products. Hong Kong companies are well known for their adaptability and responsiveness to the rapidly evolving consumer tastes and technological changes. These manufacturers tend to adopt a strategy of higher degree of vertical integration to increase value-added. PCB layout, schematic drawing, tool-making, production and/ or quality assurance are all done under one roof.

“Hong Kong companies are well known for their adaptability and responsiveness to the rapidly evolving consumer tastes and technological changes.”

On the other hand, the fast changing consumption pattern has resulted in low inventory levels in major export markets, requiring quick response for inventory replenishment. Product life cycles have also shortened amid the advancement in technology, leading to the need for more frequent changes to product features and cosmetic designs in order to lure consumers. In this respect, Hong Kong companies are well known for their adaptability and responsiveness to the rapidly evolving consumer tastes and technological changes. They have constantly upgraded their capability in product and aesthetic designs. Some companies have also re-engineered their procurement and production management systems, in a bid to shorten delivery lead times. Product Trends On the back of technological advancement and falling prices amid keen competition, conventional IT products like personal and notebook computers have become mass products. Now, the industry is focusing on further technological enhancement to sustain their business. Notably, small and relatively low-cost computers with wireless connectivity like netbooks, tablet computers such as iPad and other mobile internet devices are getting popular in the market. The design of computer peripherals such as mouses, webcams, speakers, printers, scanners and USB flash drives is getting fancier with multifunction. For instance, a USB flash drive can also be a calculator, and a printer can also be a scanner and photocopier. There is also a steady demand for trendy music/video playback gadgets such as iPods and MP3/MP4 devices. With the popularity of mobile telecommunication, sales of mobile phones with advanced features like smart phones are also on the rise. A number of enhanced features have been added on to some mobile models, such as digital camera, radio, MP3 and movie playback functions, GPS, video conferencing and Internet surfing, which have effectively lured demand especially from youngsters. As regards consumer electronics, one of the developments is digital imaging. In particular, the market for digital camcorders and digital cameras has expanded robustly. DVD recorders/players are also expected to be gradually replaced by Blu-ray disk recorders/players in the next few years. On another development, demand for large-screen TVs making use of LCD display is rising rapidly.


electronics - company and industry Performance of Hong Kong’s Exports of Electronics ^ 2008 Domestic Exports Re-exports of Chinese Mainland Origin

Total Exports Total Exports by Major Markets

January - April 2010

2009

HK$mn

Growth %

HK$mn

Growth %

HK$mn.

Growth %

18,665

-13

15,022

-20

4,896

+6

1,420,489

+7

1,305,236

-8

483,919

+33

914,487

+12

837,836

-8

303,824

+30

1,439,155

+7

1,320,258

-8

488,815

+33

2008

January - April 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

Chinese Mainland

60

+8

63

-3

64

+37

EU(27)

10

+4

8

-25

8

+18

Germany

2

+7

2

-22

2

+25

Netherlands

2

-2

2

-20

2

+26

US

8

-1

8

-15

7

+13

ASEAN

7

+9

6

-21

6

+35

2

+2

2

-26

2

+26

4

+3

4

-11

4

+25

Singapore Japan Total Exports by Categories

2008

January - April 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

Finished Products

26

+11

26

-9

26

+20

Parts & Components

74

+5

74

-8

74

+38

Share%

Growth %

Share%

Growth %

Share%

Growth %

AV Equipment & Parts

18

-5

16

-18

13

+12

IT Equipment & Parts

19

+7

19

-11

20

+42

Telecom. Equipment &

16

+24

17

-2

15

+12

27

+8

30

+2

32

+39

Total Exports by Products

2008

January - April 2010

2009

Parts Semiconductors, Electronic Valves & Tubes Source: Hong Kong Trade Development Council

As for the future, digital TVs making use of LED display technology with 3D effect are expected to become popular. With increasingly stringent environmental protection policies in place in many parts of the world and higher consumer demand for eco-friendly products, electronic products now contain fewer hazardous chemicals and many have energy saving

features. Consumer electronic products with similar or even more “green features” will gradually capture larger market share in the future. Sales Channels Hong Kong manufacturers of finished electronic items mostly produce on OEM and ODM basis for reputable brand names in overseas markets. Local com-

“A USB flash drive can now be a calculator, and a printer can also be a scanner and photocopier. “

panies also sell to specialised importers and traders in North America and Europe, who distribute the merchandise under their own channels or re-sell to their clients for further distribution. V-Tech, Group Sense, Venturer, GP and ACL are some of the arge Hong Kong companies marketing electronic products under their own brand names. HONG KONG BUSINESS ANNUAL 2011 | 41


company and industry - clothing industry

Shrinking revenues

“Consumers gradually resume spending on fashion products, but still opt for items that offer comfort, function and value-for-money.”

Hong Kong’s total exports of clothing shrank year-on-year by 8% in the first four months of 2010 Macy’s, Marui, Mitsukoshi, Nieman Marcus

D

uring January-April 2010, Hong Kong’s domestic exports of clothing remained stale, and registered a further 51% decrease, after showing a decline of 80% in 2009. In the meantime, re-exports also fell by 6% during the first four months of 2010, after decreasing by 12% in 2009. In a bid to sidestep the safeguard quotas imposed by the US and the EU on mainlandorigin clothing products after the expiry of the quota regime under WTO’s Agreement on Textiles and Clothing (ATC), many Hong Kong manufacturers have relocated their production back to Hong Kong, and devised intricate outward processing arrangements (OPAs) with the mainland to maximise quota utilisation. However, the importance of OPAs has decreased in view of the surprisingly low utilisation of China’s quotas since the second semester of 2006, and more importantly, the expiry of the quota regime in the US and the double checking surveillance system in the EU, starting 1 January 2009. While Hong Kong’s clothing exports to the EU decreased by 11% in the first four months of 2010, those to the US dropped by 3%. Clothing exports to major EU markets including the UK, Germany, Netherlands, France and Italy fell by 4-13%. Taken together, sales to the EU and the US accounted for about 70% of Hong Kong’s total clothing exports. Product wise, Hong Kong’s exports of woven wear fell by 11% in the first four months

42 | HONG KONG BUSINESS ANNUAL 2011

of 2010, with woven wear for women/girls and men/boys falling by 11% and 13%, respectively. Meanwhile, knitted wear fell by 2%, with items for women/girls and men/ boys falling by 3% and 1%, respectively, while clothing accessories declined by 9%, other apparel articles, for their part, decreased by 5%. Online shopping is increasingly popular in overseas markets, particularly in the US. According to Cotton Incorporated’s latest survey, 73% of American women browsed the internet for clothes and 25% shopped for apparel online in 2009. The mushrooming of social media marketing and mobile retailing is expected to continue in 2010 and beyond as on-the-fly comparison shopping continues to gain popularity among consumers. Private or house labels, in essence, have become an increasingly effective marketing tool among garment retailers. In order to differentiate as well as upgrade the image of their products, major retailers have started to put a stronger emphasis on their own labels. Renowned retailers such as H&M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their private labels. Hong Kong’s fashion designers have been gaining worldwide reputation for their professional expertise, sensitivity to current trends and ability to blend commercialism with innovation. Medium to high-priced fashion clothing bearing Hong Kong designer labels is being sold/have been sold in renowned department stores overseas such as Bloomingdale’s, C&A, Harrod’s, Isetan,

and Seibu.

Product Trends Value-for-money: Consumers gradually resume spending on fashion products, but still opt for items that offer comfort, function and value-for-money – and nothing too radical. Longevity remains an important element. Not unexpectedly, denim’s position as a staple item continues, as it is deemed to have a long life span that can be put on in different occasions. Teenager market: One of the major driving forces of clothing market appears to be the teenagers in the coming years, particularly in the US. The number of teenagers in the US is expected to increase from 31.6 million in 2001 to 34.1 million in 2010. A recent survey by Teenage Research Unlimited found that teens are saving money by value shopping. But styles and labels are important to teenagers, as they follow closely how the celebrities are dressed. Most teenagers shop at independent stores and department stores such as H&M, Old Navy’s, J.C. Penny and Sears. Despite limited budget, they still look for clothing that is different and unique. Silver market: Ageing population becomes a common phenomenon in many developed countries in Europe, Japan as well as the US. Elderly people constitute a major market segment called ‘silver market’. Supported by savings, social security benefits and pensions, many elderly people have rather strong spending power. A survey conducted by the Japanese government also shows that people who are 60 years old and above possess almost three times the financial assets of those in the 40 – 50 age group. In the US, those aged at or above 65 amounted to 181 million in 2001, and the number is expected to swell to 26 million in 2015. Plus-size market: The plus-size market has been an area of growth for many years, and the trend is expected to continue, particularly in the US. It is forecast that the market for plus-sizes in the US will exceed US$70 billion by 2014, accounting for some 28% (compared to nearly 20% in 2008) of overall US clothing sales. Some renowned brands have already responded to the trend by offering merchandise of larger size; these companies include Liz Claiborne, Ralph Lauren and Tommy Hilfiger. Male market: Men are increasingly concerned about the clothes which come to their


clothing industry - company and industry Performance of Hong Kong’s Exports of Clothing^ 2008

January-November 2010

2009

Value

Growth %

Value

Growth %

Value

Growth %

22.3

-43

4.5

-80

3.0

-30

Re-exports

195.0

+5

172.5

-12

168.5

+

of Chinese Mainland Origin

188.9

+5

167.5

-11

162.4

+6

Total Exports

217.3

-3

176.9

-19

171.5

+5

(HK$ billion) Domestic Exports

2008

by Markets

January-November 2010

2009

Share%

Growth %

Share%

Growth %

Share%

36.5

+4

36.7

-18

34.7

11.0

-1

10.6

-21

9.6

8.4

+9

8.7

-15

8.5

3.6

+13

3.5

-20

3.6

France

3.5

+7

3.6

-16

3.5

Italy

3.2

+3

3.5

-11

3.4

+4

35.6

-8

35.7

-19

37.2

+9

Japan

5.9

-5

7.1

-2

6.4

-5

Chinese mainland

5.0

-24

3.2

-48

3.5

+16

Canada

3.6

+1

3.6

-19

3.5

+2

Australia

2.4

+5

2.7

-10

2.6

+1

Share%

Growth %

Share%

Growth %

Share%

Growth %

35.4

-6

34.2

-21

33.0

+2

For Men or Boys

11.5

-3

11.4

-20

11.4

+6

For Women or Girls

23.8

-7

22.8

-22

21.5

*

15.3

-3

15.8

-16

16.4

+10

4.4

+2

4.7

-13

5.0

013

For Women or Girls

10.9

-5

11.1

-17

11.4

+8

Clothing Accessories

7.4

-6

6.5

-28

6.9

+12

Of Textile Fabrics

2.3

-10

2.0

-29

2.1

+8

Of Non-textile Fabrics

5.1

-5

4.5

-28

4.9

+13

Other Apparel Articles

42.0

*

43.5

-16

43.6

+6

EU United Kingdom Germany Netherlands

US

by Categories Woven Wear

Knitted Wear For Men or Boys

2008

Growth %

+4

January-November 2010

2009

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant

wardrobes. Not only women, but men are also interested in comfort and fashion of the clothing, especially in summer. With reference to Cotton Incorporated, there is growing popularity of cotton-made clothing. Besides

its softness, durability and inexpensive prices, cotton clothing is lightweight and breathable, which comes in various styles, ranging from high-end suits to casual wear. Due to the trend, some famous brands like Frankie

“The plus-size market has been an area of growth for many years, and the trend is expected to continue, particularly in the US.”

Morello, Charles Tyrwhitt and Lands’ End increase their production for cotton-made menswear accordingly. Easy-care clothes are also now gaining in popularity and the trend is expected to continue. HONG KONG BUSINESS ANNUAL 2011 | 43


company and industry - IT equipment

DRIVEN BY Innovation

“The emphasis of Hong Kong companies on the collection of market intelligence enables them to start the development of new products at the earliest stage”

Manufacturers are adopting a strategy of vertical integration to enhance value-added content to their products Kong companies emphasise quick response

H

ong Kong’s IT equipment industry is characterised by heavy dependence on imported parts of key components. Given its free port status and the advanced telecommunications infrastructure, Hong Kong allows companies to source freely world-wide. For example, CPU chips, memory chips and other integrated circuits are mainly sourced from overseas suppliers like the US, Japan, Taiwan and South Korea. For other parts and components, such as printed circuit boards, passive components, mechanical parts and connectors, Hong Kong companies may source from other local manufacturers, or local enterprises in the mainland. According to latest available statistics, Hong Kong was the world’s second largest exporter of computer parts and accessories in value terms in 2007. Hong Kong exports a wide range of information technology (IT) products, especially computer parts and accessories like motherboards, keyboards, computer cases, cooling fans, power supplies, display cards, memory cards, LAN cards and other add-on cards for multi-media applications as well as cables and harnesses. Some companies also manufacture computer peripherals such as mice, USB flash drives and audio-visual items for multimedia applications. Besides, some companies conduct trading and/or manufacturing business of complete set computers such as notebook computers, desktop computers, netbooks and tablet computers, while some

44 | HONG KONG BUSINESS ANNUAL 2011

others dealing with LCD monitors, hard disk drives and optical disk drives. Some Hong Kong manufacturers still maintain certain production and quality control of high value-added items in Hong Kong. But most of the companies have relocated their production facilities to the Chinese mainland, where labour intensive processes like component insertion, plastics injection moulding and sheet metal working are carried out. Their Hong Kong offices focus mainly on product design and development, industrial engineering, management, logistic support and marketing, etc. In the wake of this relocation, most of the companies have been re-classified as non-manufacturing establishments, despite the fact that they have manufacturing activities across the boundary. There are an increasing number of Hong Kong manufacturers adopting a strategy of vertical integration to enhance value-added content to their products. Product design and development, software programming, tool-making, production and/or quality assurance are all done under one roof. In view of the short product life cycles of IT products, Hong Kong companies place much emphasis on the collection of market intelligence. This enables them to start the development of new products at the earliest stage to catch up with the fast changing market environment. The success of Hong Kong’s IT equipment industry also lies in efficient management. Against the fast changing markets, Hong

to ensure effective marketing services to their customers, and to monitor the changing product trends. Many Hong Kong companies have also further strengthened their quality assurance systems and are accredited with ISO 9000 --- an internationally recognised standard for quality management system, and ISO 14000 --- a standard for environmental management system, amid the growing concerns for environmental protection. Hong Kong’s exports of IT equipment rebound by 42% during January-April 2010, after an 11% decline in 2009. Exports of computer parts and accessories, complete computers and office machines surged by different degrees in the first four months of 2010. The Chinese mainland was the largest export market for Hong Kong’s IT equipment industry, absorbing over two-thirds of the total IT equipment exports. Exports to the mainland, mainly parts and accessories, increased strongly by 55% in the first four months of 2010, amid the robust expansion in outward processing production. Sales to other major markets like the EU also grew by double digits, although exports to the US only edged up by 1% during January-April 2010. Elsewhere in Asia, exports to ASEAN and Japan also performed well. Industry Trends Exports from certain Asian countries increasingly pose competition to Hong Kong’s exports of IT equipment. But this mainly affects low-end OEM products with relatively high labour content. Some products from Taiwan and South Korea, such as motherboards, are also competing with Hong Kong’s exports to some extent. In any event, increasing competition from Asian suppliers has long been a threat to Hong Kong. In response, many manufacturers have shifted the more labour-intensive processes across the border. They have also changed their product mix to strengthen their competitiveness, moving towards higher value-added and more sophisticated products. Moreover, they have focused more on ODM business, rendering increased valueadded services to overseas customers. Although this would normally require more investment in technical design than OEM production, developing ODM business is deemed to be an important strategy for Hong Kong’s IT equipment companies to enhance


IT equipment - company and industry Performance of Hong Kong’s Exports of IT Equipment ^ 2008

January-April 2010

2009

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.

Growth %

1,623

-45

1,187

-27

368

-8

Re-exports

278,157

+8

248,510

-11

99,146

+43

of Chinese Mainland Origin

199,528

+10

174,484

-13

70,337

+42

Total Exports

279,780

+7

249,697

-11

99,514

+42

(HK$ billion) Domestic Exports

2008

January-April 2010

2009

Total Exports by Major Markets

Share%

Growth %

Share%

Growth %

Share%

Growth %

Chinese Mainland

62

+10

67

-4

69

+55

US

7

*

7

-17

6

+1

EU(27)

8

-4

7

-24

6

+14

Netherlands

2

-19

2

-12

2

+29

Germany

2

+5

2

-15

2

+13

ASEAN

9

+10

7

-32

6

+23

Japan

4

-2

3

-17

3

+31

Total Exports by Categories

2008

January-April 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

Computer Parts & Accessories

53

-2

50

-16

50

+40

Computers

27

+22

30

-4

29

+32

Office Machines

19

+14

20

-6

21

+70

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant

their competitiveness. The most important attribute of their success in ODM business is product design and development capability, while knowledge of world product trends and consumer preferences in different markets are also their edge. On the other hand, the fast changing consumer pattern has resulted in low inventory levels in major export markets, requiring quick response for inventory replenishment. Product life cycles have also shortened amid advancement in technology, leading to the need for more frequent changes to product features and cosmetic designs in order to lure consumers. In this respect, Hong Kong companies are well known for their adaptability and responsiveness to the rapidly evolving consumer tastes and technological changes. They

have constantly upgraded their capability in product and aesthetic designs. Some companies also re-engineer their procurement and production management systems, in a bid to shorten delivery lead-times. Product Trends On the back of sustained popularity of the Internet, IT and multi-media products continue to be star performers in the market. Due to falling prices amid keen competition, conventional IT products like personal and notebook computers have become mass products. More options have become available to customers on a budget. Now, the industry is focusing on further technological enhancement to sustain their business. Notably, small and relatively low-cost computers with

“Exports from certain Asian countries increasingly pose competition to Hong Kong’s exports of IT equipment.”

wireless connectivity like netbooks, tablet computers such as iPad and other mobile Internet devices are getting popular. On another development, the industry is exploring business opportunities by applying 3D display technology to computer products. Indeed, a number of industry players are in the pipe line to introduce their 3D computer devices, such as shutter glass 3D monitors, naked-eye 3D monitors, 3D digital frames and 3D webcams. Also, a number of industry players are heading towards the application of USB 3.0 specification, which, when compared with USB 2.0 interface, can enhance the transmission bandwidth and improve stability and compatibility for the communications between the computers and external USB devices. HONG KONG BUSINESS ANNUAL 2011 | 45


company and industry - processed food and beverages

A healthy relationship

“Health and wellness offerings are increasingly adapted to meet the expectation of consumers on processed food and beverages.”

Food and beverage companies are taking heed of consumers’ clamor for better food choices by introducing healthier alternatives. GM food labelling is mandatory in countries

T

he food and beverages industry in Hong Kong is largely related to re-export activities. In 2009, Hong Kong’s re-exports of food and beverages accounted for more than 90% of Hong Kong’s total exports of food and beverages. In terms of market, the Chinese mainland accounted for one-third of Hong Kong’s total re-exports. Hong Kong is a major gateway through which the Chinese mainland’s growing demand for Western food is met. In the first four months of 2010, Hong Kong’s total exports of processed food and beverages enjoyed 26% growth to reach HK$11 billion. Following Mainland China, the next two largest markets for Hong Kong’s processed food and beverages are the ASEAN and Taiwan. 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 play a pivotal role to introduce Western food to mainland consumers through Hong Kong, and to assist smaller producers in Hong Kong and the Chinese mainland in selling overseas. Many Hong Kong brands have successfully entered overseas markets. Garden (biscuits, cakes and candies), Doll (instant noodles), Vitasoy (soft drink), Amoy, Lee Kum Lee (cooking sauces) and Lam Soon (edible oils) are the leading local brands. Many of these brands appoint distributors and/or establish

46 | HONG KONG BUSINESS ANNUAL 2011

overseas offices to promote overseas sales. These Hong Kong brands have expanded vigorously to the overseas markets and received increased international recognition. In order to establish connections and explore market opportunities, processed food and beverages manufacturers and traders can join trade fairs and missions organised by HKTDC such as the Food Expo in Hong Kong. Industry Trends Health and wellness offerings are increasingly adapted to meet the expectation of consumers on processed food and beverages. In particular, ageing populations and rising health consciousness are creating a receptive environment for products that aid the “maintenance” of health, such as cholesterol-lowering spreads and high calcium milk. While health issues are creating new openings, microwave and packaged foods also provide a promising growth for the sake of convenience. As many crops and livestock are already genetically modified (GM), and many food products are made from genetically modified organisms (GMO), consumers have paid more attention to GM food labelling. The Codex Alimentarius Commission of the United Nations is working towards a consensual policy on GM food labelling. However, it is unlikely to be able to set internationally agreed standards in near future. At present, policies on GM food labelling vary in different countries and areas. For example,

such as the EU, Japan, New Zealand, Australia, South Korea and Taiwan. In China, only five categories of GM crops including soya bean, corn, cotton, rapeseed and tomato, as well as some of their products are required to be labelled. In the US and Canada, labelling of GM foods is only required when the food is significantly different from its conventional counterpart in terms of composition, nutrition and allergenicity. In Hong Kong, prepackaged food items with 5% of more GM materials in their respective food ingredients are recommended to be labelled. The use of online shopping has become increasing popular for grocery shopping in Asian countries. In Taiwan and Japan, many working housewives would place their orders via internet to buy food, including fresh fruits and vegetables. On the Chinese mainland, online grocery shopping is relatively new to the shoppers, and they prefer buying packaged/processed foods and snack rather than fresh food items online.

Product Trends In developed economies like the US and the EU, there has been a shift in taste in favour of healthy foods, partly as a result of the aging population who seek easy-to-prepare, high quality nutritional foods to compensate for their lowered taste sensitivity. According to the Health and Dietary Survey (2004 & 2005) conducted by the US FDA, many consumers tried to avoid intake of sugar, sodium, fats, carbohydrates, cholesterol and calories. The government’s 2005 Dietary Guidelines for Americans also upheld healthy eating habits. Food manufacturers are introducing low cholesterol/carbohydrate/added sugar foods e.g. cane sugar has substituted syrup as an ingredient of some drinks, and the ice cream’s calories and fats contents are reduced. For quest for slimness has given rise to the development by Danone, Unilever and Kraft etc of “dietary foods”, which added certain fibres to make the food more filling and delay digestion. This trend requires higher R&D capabilities and advanced production technology on the part of food manufacturers. Ethnic Asian cooking – including cuisines from China, Japan, India, Thailand, Korea, Vietnam, Malaysia and Indonesia – has become popular either on its own or blended with Western dishes in recent years in Western countries. High quality exotic foods have


processed food and beverages - company and industry Performance of Hong Kong’s Exports of Processed Food and Beverages 2008 (HK$ billion) Domestic Exports Re-exports of Chinese Mainland Origin

Total Exports by Markets

January-April 2010

2009

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.

Growth %

1,892

+5

1,899

*

612

+31

27,253

+36

29,325

+8

10,492

+26

3,594

+16

3,372

-6

1,203

+9

29,145

+33

31,224

+7

11,103

+26

2008

January-April 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

Chinese mainland

48.1

+47

34.3

-24

34.2

+31

ASEAN

12.9

-13

20.9

+73

24.8

-10

Vietnam

10.3

-17

18.3

+92

22.9

-10

Taiwan

15.9

+148

22.5

+52

18.4

+154

Macau

10.6

+8

11.4

+16

11.9

+21

USA

4.3

+9

3.7

-7

3.2

+9

EU

2.7

+9

1.8

-29

2.1

+24

Canada

1.5

+6

1.5

+7

1.2

+20

Australia

0.9

+13

0.9

+5

0.7

+49

by Categories

2008 Share%

January-April 2010

2009 Growth %

Share%

Growth %

Share%

Growth %

Processed food

85.5

+39

86.0

+8

85.2

+27

Poultry cuts and offal, (other than liver) frozen

14.0

+21

14.9

+15

18.0

+58

Edible offal of swine, frozen

16.5

+147

13.7

+11

13.7

+11

Edible offal of swine, frozen

5.6

+56

6.8

5.9

+11

Pistachios, fresh or dried

2.2

-3

2.8

+32 +40

3.4

+42

Almond, fresh or dried

1.3

+36

3.2

+157

14.5

+8

Spirits obtained by distilling grape wine/marc

5.4

Other spirit and distilled alcoholic beverages

3.4

Beverages

3.1

+99

14.0

+3

14.8

+19

+5

5.7

+14

5.8

+18

+23

2.9

-8

3.6

+9

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant

been well received. Ingredients such as rice noodles, basmati and jasmine rice, coconut milk, ginger root and curry pastes are all popular items in supermarkets in the US and Canada. Food aimed at attracting kids has become more colourful in recent years. Heinz started the fad in 2001 with green ketchup

(purple has since been added). Parkay now has neon pink and blue squeeze margarine, and Dannon Sprinkl’ins includes “sparkle packets” to stir into cups for boldly coloured yoghurt. In beverages, energy drinks are taking young consumers by storm, while ordinary soft drinks and other drinks are lag-

“Food manufacturers are introducing low cholesterol/ carbohydrate/added sugar foods, and the ice cream’s calories and fats contents are reduced.”

ging behind. Consumers are now preferring drinks with added benefits and not just fizz. They are drinks added with vitamins, minerals and caffeine and other ingredients. Drinks that claimed beauty or health effects are also being introduced. They include fruit juices, flavoured water and herbal or floral teas. HONG KONG BUSINESS ANNUAL 2011 | 47


company and industry - medical and healthcare equipment

Needing a boost

“Hong Kong manufacturers are becoming increasingly involved in product design and development, engineering, modelling, tooling and quality control.“

Companies are racing against each other to come up with innovative medical tools as the industry struggles to rise from a year-long slump care goods are exported under OEM ar-

I

n 2009, Hong Kong’s total exports of medical and healthcare equipment decreased by 5%. Exports to the Chinese mainland, the largest market for Hong Kong’s medical and healthcare equipment exports, grew by 4%. Amid economic slowdown, Hong Kong’s exports to the US and the EU decreased by 13% and 21% respectively. In the first 2 months of 2010, Hong Kong’s total exports of medical and healthcare equipment industry increased by 3% year-on-year, showing a sign of picked up demand from the Chinese mainland (+15%) and the EU(+1%). Among different product categories, Hong Kong’s exports of miscellaneous medical instruments and appliances which include sight testing instruments and veterinary science appliances, decreased by 2% in 2009. Exports of electro-diagnostic apparatus dropped 20%, while exports of mechanotherapy appliance and massage apparatus drop 21%. Outsourcing is growing in popularity among overseas manufacturers of medical and healthcare equipment in recent years. Hong Kong companies stand a good chance in acting as contract manufacturers or sourcing partner given their edges in quality assurance and IPR protection. Though the cost of regulatory compliances is high for Hong Kong companies, this helps differentiate Hong Kong companies from other low-cost competitors and reinforces the role of Hong Kong companies as a partner providing high-quality products and services.

48 | HONG KONG BUSINESS ANNUAL 2011

The medical and healthcare equipment industry has two distinct markets - household consumer market and professional or institutional market (hospitals and clinics). Most medical and healthcare equipment companies in Hong Kong are engaged in OEM business, mainly producing massagers, temperature and blood pressure monitors. Taiwan is traditionally Hong Kong’s main competitor. In recent years, with increased competitiveness in price and product development, the Chinese mainland is increasingly putting pressure on local companies, inducing them to strive for product and company re-positioning. Many local companies have undertaken to develop innovative and multifunctional products to enhance their competitive edge. 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. 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 specialty shops. Many Hong Kong’s medical and health-

rangements with supplied product specifications and designs. Recently, Hong Kong manufacturers are increasingly involved in product design and development, engineering, modelling, tooling and quality control. In order to differentiate from low-end products, many Hong Kong manufacturers apply different international certifications for their products. Apart from producing for OEM customers, some Hong Kong manufacturers also have their own R&D department 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 also act as agents to provide after-sale services. It is advised that manufacturers / distributors take out insurance or make other arrangements to minimize the risk of product liability claims. To further explore overseas market opportunities, medical and healthcare equipment manufacturers and exporters are encouraged to join the 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 According to World Health Report released by the World Health Organisation, the world average life expectancy will rise to 73 years by 2025 – a 50% improvement on the 1955 average of only 48 years. Currently, there are more than 700 million people aged 60 or above which accounting for 11% of the world’s total population. According to the United Nations, this proportion is projected to increase to 22% by 2050. These trends have resulted in an increasing demand for medical and healthcare products designed for the ageing population. The total global expenditure for health is now more than US$4.7 trillion a year according to the World Health Organisation and the health expenditure as a percentage of GDP has been increasing among all major economies, including the Chinese mainland. 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


medical and healthcare equipment - company and industry Performance of Hong Kong’s Exports of Medical and Healthcare Equipment^ 2008 (HK$ billion) Domestic Exports Re-exports of Chinese Mainland Origin

Total Exports by Markets

January-February 2010

2009

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.0.9

Growth %

46

-14

29

-36

4

-24

10,061

+23

9,569

-5

1,220

+3

4,266

+9

4,000

-6

490

-5

10,107

+23

9,598

-5

1,223

+3

2008

January-February 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

Chinese mainland

49.3

+41

54.0

+4

55.3

+15

US

14.5

+17

13.3

-13

11.6

-16

EU (27)

11.2

+6

9.4

-21

10.5

+1

Germany

3.3

*

3.1

-11

4.1

+21

Netherlands

2.1

+23

1.6

-27

1.8

-25

Japan

9.2

+103

7.4

-23

6.6

-35

South Korea

2.5

+22

2.2

-17

2.9

+6

ASEAN

3.8

+8

3.1

-23

2.8

-22

Macau

1.1

+1

1.8

+65

2.3

+74

2008

January-February 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

Miscellaneous Medical Instruments and Appliances

30.8

+14

31.7

-2

25.9

-21

Miscellaneous ElectroDiagnostic Apparatus

20.2

+33

17.0

-20

20.6

+18

15.6

-3

12.9

-21

13.3

+4

by Categories

Mechano-Therapy Appliance/Massage Apparatus

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant

products. Meanwhile, growth of public health expenditures in the more industrialised countries is slowing down which, however, creates opportunities for home medical equipment targeting at patients undergoing recuperation and therapy processes. Product Trends As a result of the ageing population, treatments for cardiopulmonary disease, diabetes, and neurological disorders will see rapid growth, so as orthopaedic devices and pharmaceuticals that can help ageing baby

boomers stay active. In addition, increased consciousness in personal health and fitness in developed countries is boosting the demand for home-based or self care equipment such as massagers, body-mass-index (BMI) calculators, body-fat scales, ionizers, commode chairs, shower chairs, walkers, canes and patient lifts. These equipments facilitate the prevention, detection and control of diseases. Modern technology is playing a major role in the medical and healthcare equipment industry. Innovations such as micromin-

“Increased consciousness in personal health and fitness in developed countries is boosting the demand for home-based or self care equipment such as massagers and body-mass-index (BMI) calculators.”

iature and remote surgery techniques, DNA-based diagnostics, tissue-engineered organs, 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, the bluetooth technology also gives rise to new medical devices such as a patient-worn pulse oximetry and a portable patient monitor. Technology has also given rise to telemedical services and lessinvasive procedures. HONG KONG BUSINESS ANNUAL 2011 | 49


company and industry - travel goods and handbags

Exploring new markets Bag manufacturers are setting their eyes on foreign markets and on the affluent Chinese who travel for business and pleasure

H

ong Kong companies export a wide range of travel goods and handbags, which accounted for 45.6% and 54.4% respectively. Major products include handbags with plastics/textiles sheeting (33%), cases for binoculars, cameras, musical instruments and spectacles (27%), leather handbags (21%) and wallets and purse (15%). During Jan – May 2010, the value of Hong Kong’s total exports of travel goods and handbags was about HK$15.6 billion. Total exports dropped slightly by 1% during the same period of 2009. The US was the largest export market for travel goods and handbags in Jan – May 2010 (accounting for 29% of total), followed by the EU (23%), Japan (11%) and China (10%). In terms of product categories, exports of travel goods dropped by 3%, while handbags remain the same. Many Hong Kong manufactures have relocated their production base to the Chinese mainland to capitalise on the cheaper wages and rents. Domestic exports now account for only a very small share of total exports of travel goods and handbags. With a good cluster of supporting industries, the competitiveness of Hong Kong exports in terms of productivity, quality, reliability and delivery has been enhanced. Many handbags and luggage fittings (like clips and buckles) are supplied by nearby factories specialising in metal and plastic parts. Some other Hong Kong and mainland manufacturers are vertically integrated, which further enhances quality control and flexibility in production

and creates synergy. Facing keen competition from suppliers in the Chinese mainland and developing countries, some local manufacturers have shifted to high-end/niche markets. Others have developed ODM/OBM business and domestic sales in the Chinese mainland. The worldwide luggage market encompasses a wide range of products with differences in product quality and prices. At one end of the market are high-quality, full-featured products that have prestigious brand names, higher prices and selective distribution. Beneath this ‘‘luxury’’ market is a broad middle market in which products are differentiated by features, brand name and price. Within this market, sales are largest at mid and low product price levels. Product differentiation decreases and breadth of distribution increases at lower price levels. At the lower end of the luggage market, unbranded or private label products with few differentiating features are sold in significant volumes and at low margins, competing primarily on the basis of price. Sales Channels Many Hong Kong’s travel goods and handbags are exported under OEM arrangements with overseas manufacturers. Buyers usually provide product specifications and designs. Yet, Hong Kong manufacturers are increasingly involved in product design and development, engineering, modelling, tooling and quality control.

“With a good cluster of supporting industries, the competitiveness of Hong Kong exports in terms of productivity, quality, reliability and delivery has been enhanced.”

Apart from producing for the OEM customers, some Hong Kong manufacturers also have their own R & D undertakings to develop new models and produce their own branded products. However, due to the difficulties of reaching individual sellers, most of the local manufacturers prefer selling to overseas importers and distributors, who in turn market to the wholesalers and retailers. Apart from online shopping, retail channels of distribution of the travel goods and handbags industry primarily include department and specialty stores, national and mass merchant retailers, warehouse clubs, and company-owned retail stores. In order to establish connections and explore market opportunities, travel goods and handbags manufacturers and traders can join trade fair missions organised by the Hong Kong Trade Development Council (HKTDC) and to participate in various international trade fairs such as Style Hong Kong, Tokyo International Gift Show and JFW International Fashion Fair (IFF) in Tokyo. HKTDC also organises from time to time study or match-making missions for Hong Kong manufacturers, in particular those OEM manufacturers, to visit specific markets for exploring business potential and establishing new business relations. Industry Trends Sales of travel goods are largely influenced by the number of travels people undertake. With the rising income and easy access to travel visa/permit, Chinese tourists are the fastest-growing group of international tourists in the world. Due to closer economic ties with the rest of the world and rising affluence, more Chinese people are planning to travel overseas for either business or leisure purposes. Yet, most of them are looking for value-for-money luggage and other travel goods, which offer a huge market potential for Hong Kong manufacturers. Product Trends Today’s travellers are not only seeking increased comfort and convenience while travelling, but are searching for products that also offer fashion and functionality, according to the Travel Goods Association in the US. R&D is focused on ease of use, interior organisation, portability, durability, shock absorption and mobility. For example, many travel goods manufacturers are moving away from black in their luggage and accessories

50 | HONG KONG BUSINESS ANNUAL 2011


travel goods and handbags - company and industry Performance of Hong Kong’s Exports of Travel Goods and Handbags 2008

January-May 2010

2009

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.0.9

Growth %

24

-5

14

-44

8

+33

Re-exports

44,933

+5

38,135

-15

15,623

-1

of Chinese Mainland Origin

39,071

+2

31,078

-21

12,092

-6

Total Exports

44,958

+5

38,149

-15

15,631

-1

(HK$ billion) Domestic Exports

by Markets

2008

January-May 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

US

32.5

-1

28.6

-25

29.1

+2

EU (27)

28.2

+3

26.2

-21

23.0

-19

Italy

6.8

+10

6.6

-18

5.3

-32

United Kingdom

5.8

-4

5.7

-17

4.7

-10

Germany

4.2

+2

4.0

-21

3.5

-22

Japan

9.8

*

10.3

-11

10.5

-1

China

6.2

+45

8.1

+11

10.0

+39

South Korea

6.4

+25

8.9

+19

9.3

-6

ASEAN

2.7

+8

2.8

-9

2.7

+2

2008

January-May 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

Travel Goods

49.6

+2

46.0

-21

45.6

-3

Handbags

50.4

+9

54.0

-9

54.4

*

by Categories

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant

offerings toward bright, funky colours. In addition, many new fabrics and materials have been introduced, including micro fleece grid fabric, crinkle nylon/ polyester blends, suede skin etc. Nowadays, many consumers preferred cheaper and more casual softside bags and luggage (whose production is labour intensive), in particular for hybrid luggage, instead of hardside luggage (capital intensive). As electronic gadgets are becoming more popular, demand for cases for electronic gadgets such as iPod/MP3, Blackberry, mobile phones and portable game player (for example PSP and NDS) is increasing significantly. Besides the consumer market, many companies will order them as corporate gifts for their clients, creating a new mar-

ket niche for the industry. With more women in the workplace, many of the new travel goods are being specifically designed for women, including portfolios, computer bags and wheeled totes for female professionals. In addition, there are new luggage lines that feature special sections for toiletries, cosmetics, shoes and other items that enable female travellers to travel more conveniently. Meanwhile, ergonomicallydesigned items continue to be in high-demand, with new items including luggage with handle systems that can be alternated for left-handed and right-handed people; products with weightbearing, push-button retractable handles and four swivel wheels that allow bags to pivot 360 degrees; luggage with a shock-

“Today’s travellers are not only seeking increased comfort and convenience while travelling, but are searching for products that also offer fashion and functionality.”

absorbing wheel system that adjusts to surface changes for smooth rolling; and a collection that features a removable wheel and handle system for numerous travel options, etc. For handbags, styles and colours are closely aligned with the trend in the fashion industry. Some of the current trends in handbag design include: handbags made out of lamb/ deer skin, denim and wool that almost imitate clothing, use of unconventional materials like canvas, emphasis on delicacy in details, leather bowling bags, handbags made of faux fur and vintage design with beading and embellishment. As handbags become accessories to fashion, their life cycles have shortened, and new items are introduced all year round. HONG KONG BUSINESS ANNUAL 2011 | 51


company and industry - household appliances

Efficiency is key Companies are spearheading the production of household appliances based on original designs and loading them with multiple functions

H

ong Kong produces and exports a wide range of household electrical appliances, including: (1) kitchen appliances ranging from food grinders, mixers and juicers to thermic appliances like coffee makers, toasters, electric knives, electric kettles and ovens; (2) home care appliances like electric fans, air conditioning machines, vacuum cleaners, floor polishers, space heaters and irons; (3) personal care products like hair dressing and hand drying apparatus, shavers, hair clippers, massagers, face steamers and electric toothbrushes; and (4) household lighting products. Hong Kong’s total exports of household electrical appliances surged by 19% in the first three quarters of 2010. Sales of major products like household lighting products, thermic domestic appliances and hair dressing/hand drying apparatus all performed well in the period. The US and the EU were the largest export market, together constituting over half of Hong Kong’s total exports of household electrical appliances. While sales to the US rose rapidly by 26%, exports to the EU expanded by 9% during January-September 2010. Exports to other markets like Japan, the Chinese mainland and Canada also performed well, growing by 29%, 11% and 7% respectively in the period. Apart from original equipment manufacturing (OEM), a large portion of Hong Kong companies have their principal business based on original design manufacturing

52 | HONG KONG BUSINESS ANNUAL 2011

(ODM). These cover product design and development, mechanical drawing, prototyping and sampling, tool-making and production, with buyers providing the industrial/conceptual design only, such as cosmetic drawings and features. In some cases, the industrial/ conceptual designs are undertaken by Hong Kong companies. There are an increasing number of Hong Kong manufacturers adopting a strategy of higher degree of vertical integration to increase value-added. In addition to product design and development, tool-making, plastics injection moulding, metal parts manufacturing, production and/or quality assurance are all done under one roof. Hong Kong companies emphasise quick response to ensure effective marketing services to their customers, and to monitor the changing product trends. Moreover, due to the growing concern of quality conscious buyers, more and more companies have strengthened their quality assurance systems. This is evidenced by the growing number of Hong Kong companies certified as complying with ISO 9000, which is an internationally recognised standard for quality management system. Industry Trends Hong Kong exporters of household electrical appliances are subject to fierce competition from other Asian suppliers. Particularly in the case of simple appliances involving lesser technological input, Hong Kong companies have long been competing with Southeast

“It has become increasingly critical for Hong Kong exporters to observe laws and regulations in relation to consumer protection and product liabilities in overseas markets.”

Asian suppliers and local Chinese enterprises. As more design works are being undertaken by Hong Kong companies, there is a tendency of overseas importers to shift liabilities arising from defective products to local manufacturers and traders. It has thus become increasingly critical for Hong Kong exporters to observe laws and regulations in relation to consumer protection and product liabilities in overseas markets. On the other hand, the fast changing consumption pattern has resulted in low inventory levels in major export markets, requiring quick response for inventory replenishment. Product life cycles have also shortened amid the advancement in technology, leading to the need for more frequent changes to product features and cosmetic designs in order to lure consumers. In this respect, Hong Kong companies are well known for their adaptability and responsiveness to the rapidly evolving consumer tastes and technological changes. They constantly upgrade their capability in product and aesthetic designs. Some companies also re-engineer their procurement and production management systems, in a bid to shorten delivery lead times. Product Trends Household electrical appliances carrying a single function are much sought after in Western Markets. These include heatingbased products, like coffee/tea makers and toasters; and motor-based appliances such as food choppers, blenders and juice-extractors. Yet many electrical appliances are now featured with electronic controls and LCD/ LED displays. To enhance user friendliness, some wired appliances have evolved into wireless versions powered by charged batteries, including wireless coffee makers, electric irons and vacuum cleaners. Hong Kong manufacturers also bring out new products with cooking methods traditionally not done electrically, such as electric grillers, bread and waffle makers, deep fryers, stewers and steamers. Regarding household lighting products, aesthetic design is among the major elements of manufacturers to tap the market demand. A wide range of lighting sets for domestic uses, such as track lights, linear lights and spotlights, are offered in a great variety of novelty designs in order to meet different consumer preferences. Along with the growing concern on envi-


household appliances - company and industry Performance of Hong Kong’s Exports of Household Electrical Appliances ^ 2008

January-September 2010

2009

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.0.9

Growth %

137

-42

57

-59

42

-3

Re-exports

22,447

-4

17,896

-20

15,584

+19

of Chinese Mainland Origin

21,409

-5

16,923

-21

14,917

+20

Total Exports

22,585

-5

17,953

-21

15,626

+19

(HK$ billion) Domestic Exports

Total Exports by Major Markets

2008

January-September 2010

2009

Share%

Growth %

Share%

Growth %

Share%

Growth %

US

27

-12

29

-15

31

+26

EU

31

-8

25

-36

23

+9

Germany

6

-10

6

-24

5

+21

United Kingdom

5

-19

5

-34

4

+21

France

4

+10

3

-47

3

+43

11

*

15

+5

15

+29

Chinese Mainland

6

*

7

-10

7

+11

Canada

5

+12

4

-33

4

+7

Japan

2008 by Categories

Share%

January-September 2010

2009 Growth%

Share%

Growth%

Share%

Growth %

Household Lighting Products

26

-8

24

-27

23

+10

Thermic Domestic Appliances

12

*

17

+8

22

+60

Hair Dressing/Hand Drying Apparatus

10

+24

10

-20

9

+5

Other Domestic Electric Appliances

6

-1

8

+3

7

+13

Domestic Electro-mechanical food mixer/grinder

7

+2

6

-34

6

+11

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant

ronmental protection, provision of environmentally appealing electrical appliances which comply with, for instance, European or North American eco-labelling and energy-saving schemes, is becoming a competitive edge of Hong Kong exporters of household electrical appliances. On the other hand, lighting models of high efficiency and longer lifetime are in demand.

In particular, a number of industry players are focusing on the development of LED lamps and lighting apparatus, which can reduce power consumption with an even longer lifetime than the electronic compact fluorescent lamps. In addition, the industry has continued to focus on Internet application and networking technology to develop the so-

“The industry has continued to focus on Internet application and networking technology to develop the so-called smart appliances, aiming at bringing the fully automated households to life.”

called smart appliances, aiming at bringing the fully automated households to life. Smart appliances for air-conditioning, security, entertainment, lighting, etc., can be remotely controlled via the Internet. Coupled with the mobile technology for Internet access, a touch of a button on the mobile phones will let consumers programme their recording and lighting apparatuses. HONG KONG BUSINESS ANNUAL 2011 | 53


Company and industry - lighting sector

Sparks are flying Hong Kong’s lighting sector is becoming increasingly vibrant, thanks to manufacturers’ willingness to experiment with new technology

T

he lighting industry of Hong Kong is largely made up of small- and medium-sized companies. Their products are usually meant for home improvement and domestic purposes. The largest export categories include batteryoperated portable lamps, such as torches, hand lanterns, hand-held incandescent lamps and LED lamps for outdoor, sports and/or diving uses. Total export of lighting products decreased slightly by 3% in 2008. Battery-operated portable lamps and electric lamps & lighting fittings formed the majority (62%) of Hong Kong’s exports and the remaining products were mostly table, desk, bedside or floorstanding lamps, chandeliers and discharge lamps. Electric lamps & lighting fittings, as well as discharge lamps, recorded moderate export growth in 2008. The US was among the largest export markets, accounting for around 25% of Hong Kong’s total lighting exports. Exports to most countries declined in 2008, including the US. There is a slight decrease of 1% for exports to the Chinese mainland, while exports to Japan, on the other hand, rose by 7% in 2008. Exports to emerging markets such as Poland, India and ASEAN countries also experienced moderate increase. There are a number of companies engaged in the business of electric table, desk, bedside or floor standing lamps. Other exports include wall and ceiling lighting, chandeliers and lighting fittings, as well as decorative

54 | HONG KONG BUSINESS ANNUAL 2011

items like Christmas tree lighting sets and lamp shades. Most Hong Kong lighting product manufacturers have relocated their production facilities to the Chinese mainland. Their offices in Hong Kong are mainly responsible for product development, management, marketing and logistic support. Amid intensified competition, most companies have focused on original design manufacturing (ODM) business, apart from original equipment manufacturing (OEM) orders. Many manufacturers are able to undertake product design, plastics injection moulding, vacuum coating, enamel plating and assembly production in-house. Industry Trends Hong Kong’s lighting industry is increasingly subject to challenges from other Asian suppliers. In the case of medium to high-end items, Taiwanese manufacturers, who are largely equipped with automatic production machines, are major competitors to Hong Kong in the region. As for simple and lowend articles that involve less technological and design inputs, Hong Kong exporters have been subject to fierce competition from other Southeast Asian countries and local Chinese enterprises. In response, Hong Kong manufacturers have differentiated their products by enhancing product features and aesthetic design, and enriched their product assortment by exploring new product lines. While preserving the traditional OEM products

“Taiwanese manufacturers, who are largely equipped with automatic production machines, are major competitors to Hong Kong in the region.”

and subcontract assembly works to maintain economy of scale, emphasis is placed more on design engineering as well as production quality. Hong Kong companies are well known for their adaptability and responsiveness to the rapidly evolving consumer tastes, and quick response has been among their keys to success. They are capable of offering items that appeal to both quality and priceconscious customers in a timely manner. As more product design works are undertaken by Hong Kong companies, there is a tendency of overseas importers to shift liabilities arising from defective products to the manufacturers and traders. Especially for electrical items, overseas buyers usually demand guarantee or warranty on product quality by the manufacturers. It has thus become increasingly critical for Hong Kong exporters to evaluate the likely impacts before making deals with their buyers, and observe relevant laws and regulations in relation to consumer protection, warranty and product liabilities in overseas markets. Meanwhile, overseas buyers have placed more pressures not only on prices, but also order quantity amid intensified competition in overseas retailing markets. Distributors and retailers tend to make smaller-sized orders with higher frequency in order to minimise inventory. This has resulted in smaller orders with shorter delivery lead times. Some Hong Kong companies therefore re-engineer their procurement and production management systems, in a bid to shorten their manufacturing cycle time and reduce costs. Product Trends Lighting products seem to be targeted first for reform in many countries environmetal protection plans. In the Chinese mainland, the National Development and Reform Commission (NDRC) and the Ministry of Finance launched a nationwide campaign to subsidize and promote the use of 150 million energy-efficient lamps since January 2008. The European Commission has also adopted regulations to improve the energy efficiency of household lamps and of office, street and industrial light products in March this year and to progressively phase out incandescent light bulbs from the market by 2012. Global shipment of LED streetlights is expected to surge 1.3-folds from 2008 to a total of 2.1 million systems in 2009. Many governments worldwide, as part of their environmental protection efforts and eco-


lighting sector - company and industry Performance of Hong Kong’s Exports of Lighting Products ^ 2006

2008

2007

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.0.9

Growth %

112

-15

214

- 53

99

-54

Re-exports

11,083

-6

11,215

- 19

11,003

-6

of Chinese Mainland Origin

10,166

-9

9,992

- 19

9,556

-4

Total Exports

11,195

-6

11,430

- 20

11,101

-3

(HK$ billion) Domestic Exports

Total Exports by Major Markets

2006

2008

2007

Share%

Growth %

Share%

Growth %

Share%

Growth %

US

33

-21

28

-14

25

-13

EU(27)

31

-1

33

+11

33

-3

Germany

8

-11

8

+5

7

-20

United Kingdom

6

+5

7

+19

6

-19

Netherlands

3

+27

4

+11

4

+5

15

+35

18

+19

18

-1

Japan

6

-8

5

-10

6

+7

Canada

4

-9

3

-9

3

-12

Chinese Mainland

2006

2008

2007

Share%

Growth %

Share%

Growth %

Share%

Growth %

Battery Operated Portable Lamps

33

-12

31

-17

32

-2

Electric Lamps & Lighting Fittings

22

*

28

+9.5

30

+3

Table, Desk, Bedside or Floor-standing Lamps

17

-25

14

-29

10

-27

Chandeliers & Wall Lighting

16

+2

14

-19

11

-25

2

-63

1

-52

1

+13

by Categories

Discharge Lamps

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant

nomic stimulus programs to combat the global downturn, have indicated plans to replace traditional streetlights with ecofriendly types to save energy in public work projects. It has been estimated that in 2009, around 2.5 million energy-efficient streetlights will be installed in the Chinese mainland. ‘Green’ is definitely the word for lighting products. The use of minimalist design, natural materials and green energy are some of the key

features of consumer lighting products in the next few years. There is a growing popularity of LED lighting for residential as well as commercial applications. Not only is LED more energy efficient than conventional light sources, it offers more colors which allows for more flexibility in lighting products design. However, the adoption of the costlier LED lamps among individual consumers might take some time.

“The use of minimalist design, natural materials and green energy are some of the key features of consumer lighting products in the next few years.”

Besides LED products, cold cathode fluroscent (CCFL) lamps are being considered for general lighting to cash in on the rising eco-friendly trend. CCFLs have long been commonly used as the backlight source in liquid-crystal display TVs, notebook displays and computer monitors. It has the potential of becoming the next-generation light source if a common interface standard could be agreed upon. HONG KONG BUSINESS ANNUAL 2011 | 55


company and industry - auto parts and accessories

Swift production

“Computer aided design has become a popular tool in many industries, and is getting mature in automotive geometric design.”

Companies are stepping up their manufacture of low-cost but highlyTrade Development Council (HKTDC) to efficient auto parts to catch up with the competition

I

n Hong Kong, the auto parts and accessories industry is in an initial stage of development, but more manufacturers are becoming interested in the production of auto parts and accessories, and higher value-added products are being developed. For example, Hong Kong car signal lights manufacturer is adopting super bright LED in its products. Hong Kong manufacturers are also competitive in producing higherend audio and security systems. Many local manufacturers are small electrical or metal work factories. Most of them actually carry out production in mainland, or have set up joint-ventures with Chinese or overseas companies there, to take advantage of the lower production costs and proximity to the mainland market. Hong Kong exports a great variety of auto parts and accessories, which cover different industrial sectors, ranging from electrical appliances and electronics to metal and plastics parts or mechanical components. Some products may have exported under categories of electronic products, and mechanical or plastic parts. But relevant trade statistics do not have detailed breakdowns for particular items exclusively used in automobiles. The above tables present trade statistics (under HS classifications) of products that are identified for vehicles or related uses to avoid misrepresentation. However, figures may also include a small amount of products that are not for use in vehicles, due to the aggregation of some HS codes.

56 | HONG KONG BUSINESS ANNUAL 2011

One salient feature of Hong Kong’s exports of auto parts and accessories is the dominance of re-exports, which account for about 99% of total exports. This may suggest the importance of Hong Kong as a trading centre and entreport for auto parts, in particular, for the Chinese mainland market. Sales Channels Most manufacturers produce on OEM basis for car assemblers or for their parts suppliers. However, some large manufacturers also pro¬duce under their own brand names and designs, and export either through exporters, agents or directly to overseas importers who buy in bulk and distribute to car dealers, service stations and department stores. There is an increasing trend for major US aftermarket chain-store retailers who are large enough to direct import from manufacturers. Apparently, co-operation with international auto component suppliers will help local manufacturers enter the international market and upgrade their technology standards. Establishing joint ventures with Chinese partners may also help in exploring the Chinese market. Participation in international trade fairs and exhibitions will not only help Hong Kong companies to know the latest technologies and the product trends, but also meet with potential business partners and overseas manufacturers. In order to establish connections and explore market opportunities, auto parts manufacturers can join trade fair missions organised by the Hong Kong

participate in international trade fairs such as AAPEX-Automotive Aftermarket Products Expo in Las Vegas and the Automechanika in Frankfurt. The HKTDC also organises from time to time study missions for Hong Kong manufacturers to visit specific markets for establishing new business relations.

Industry Trends Major players of the world auto industry have continued to shift production close to their markets to gain better access and to reduce costs. This trend has encouraged parts suppliers to follow suit. As many Asian countries have considered the development of auto industry as one of the major pillars of their economic growth, auto parts suppliers with a presence in the region will gain a definite advantage. For example, an increasing number of foreign automobile assemblers have formed joint ventures in the Chinese mainland. In the meantime, assemblers tend to rely more on a few first-tier suppliers, and require these suppliers to play a greater role in product design and innovation. These firsttier suppliers in turn need to subcontract out more of their production of less sophisticated components, leading to increased opportunities for competitive lower-tier manufacturers. With growing pressure on cost and quality, the automotive industry has increasingly adopted advanced information technology in design and manufacturing. Computer aided design has become a popular tool in many industries, and is getting mature in automotive geometric design. Computer aided manufacturing, which is largely related to numerical control machining, is also being adopted. Other new technology being adopted in the automotive industry includes rapid prototyping and virtual reality. Some auto parts and accessories suppliers have brought their operations in line with certain environmental management system requirements, especially the standards of ISO14000, which is particularly emphasised by certain first-tier manufacturers. This is because multinationals are promoting not only their “green” vehicles that are characterised by cleaner emission and energy saving, but also their overall “green” corporate image in view of the increasing concerns over environmental protection worldwide. In this regard, multinationals have increasingly required their supply chains to practise environmental friendly production.


auto parts and accessories - company and industry Export Performance of Hong Kong’s Auto Parts and Accessories Industry^ 2007 (HK$ billion) Domestic Exports Re-exports of Chinese Mainland Origin

Total Exports Total Exports by Major Markets

January-April 2009

2008

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.0.9

Growth %

217

+28

66

- 70

4

- 88

13,119

+10

13,469

+3

3,338

- 22

9,996

+11

9,772

-2

2,347

- 25

13,336

+10

13,535

+2

3,342

- 22

2007

January-April 2009

2008

Share%

Growth %

Share%

Growth %

Share%

Growth %

27.1

+9

23.5

- 12

26.0

- 14

Germany

8.3

+38

6.7

- 18

8.4

- 11

Netherlands

2.8

- 23

2.8

+1

4.9

+94

USA

20.8

+2

18.3

- 11

18.8

- 18

Chinese mainland

22.7

+7

26.2

+17

28.6

- 11

Japan

9.8

+55

10.4

+8

8.7

- 39

ASEAN

5.3

-3

5.8

+10

5.1

- 38

EU (27)

Source: Hong Kong Trade Development Council ^Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. Trade figures for different product groups are based on HS classification system and maybe different from values under the SITC system.

Product Trends Consumers in the developed economies have helped shape the industry’s development, as they are getting more concerned about passenger safety, driving performance and environmental friendliness. These areas may be the focus of future innovation by auto parts suppliers. The world, including developing countries such as China, is becoming more concerned about urban pollution, and is paying greater attention to reducing air pollution and raising fuel efficiency. More eco-friendly materials are replacing synthetic materials. Product development is a key priority as suppliers need to introduce improvements in performance and appearance regularly. Increasingly, more advanced and newly-developed features are incorporated in automobiles. To some manufacturers, building new models with different value-added functions or features is a core strategy. Examples include the wide range of car audio models and advanced electronic technology

to help monitor and manage the movement of vehicles. In fact, there is an increasing trend of using more electronic components in automobile, including engine control, instruments, safety electronic components, navigational components, security components and other related products. Among the vast range of accessories, high-end car audio products, in which Hong Kong is quite competitive, are becoming increasingly popular. Auto radio (with the same advanced features of home audio stereo products) and CD players are popular items. Car security systems which include remote-controlled alarm systems and lock systems also have good market potential in countries with high crime rates. Due to intense competition in the global car industry, new cars are usually equipped with these accessories as built-in features. Some manufacturers have responded by shifting their target customers from end-users to car assemblers on OEM basis. Meanwhile, there is a growing

“Product development is a key priority as suppliers need to introduce improvements in performance and appearance regularly.”

trend, especially among young drivers, to improve their automobiles’ appearance, resulting in greater demand for fancy designs for audio equipment, among others. Consumers are paying more attention to comfort and convenience. Vehicles are now equipped with all sorts of accessories ranging from telephones to more advanced items such as global positioning systems. Nowadays, the automotive accessories aisle in any store is filled with a wide range of product selections dedicated to comfort and convenience, meeting also every imaginable need while travelling in a vehicle. There is also an increase in the use of plastics for auto production. This trend is projected to continue further enabled by technology improvement and growing pressure on costs. This development implies considerable opportunities for plastic producers to diversify into the auto market. Local companies with proven plastics manufacturing capabilities could take advantage of this development. HONG KONG BUSINESS ANNUAL 2011 | 57


company and industry - machinery

Design-driven Manufacturers are constantly improving the design and technology behind their machines to remain the customers’ top choice

I

ndustrial machinery manufactured by Hong Kong companies mainly include plastic injection moulding machines, blow moulding & extrusion machines, pad printers, textiles dyeing & finishing machines, die-casting, electric discharge machining (EDM), wire cutting & other metal working machines, robotics as well as printing and packaging machines. Other more advanced machinery, such as die bonding machines and electronic processing machines, is also produced by Hong Kong. Direct current motors, electrical transformers, static converters & transformers, and electrical apparatus for circuits are the major export items for electrical machinery and parts. Hong Kong manufacturers are cost and quality competitive. They are able to handle small batches of orders and a large variety of designs at short delivery lead-time. They are having good access to overseas markets and information on the latest technology. Furthermore, Hong Kong has a strong cluster and high quality supporting industries, including accessories. Machines made by leading Hong Kong manufacturers usually bear local brand names. Small and medium-sized manufacturers prefer Hong Kong-made plastic injection, die-casting and pad-printing machines, as their prices are much cheaper than those of Japan and Europe. Machines made by Hong Kong companies also have an edge in providing prompt after-sales services, especially for those machines installed in the Chinese mainland.

Besides manufacturing, Hong Kong plays the role of a trading centre for machinery, especially for the mainland market, serving factories of both Hong Kong and mainland manufacturers. Hong Kong has good supportive infrastructure. Its machinery trading companies have long established trading or agency relations with their overseas and southern mainland counterparts. Well-established relationships and responsive aftersales services, combined with geographic and cultural proximity, have given Hong Kong’s machinery traders and manufacturers an upper hand in penetrating the mainland market. Sales Channels Industrial machinery produced by Hong Kong companies mainly caters to the need of other Hong Kong manufacturers. It is estimated that about 80% of the total output from small-scale machinery producers is sold to local manufacturers or factories set up by Hong Kong companies in the Chinese mainland. Large manufacturers usually deal directly with overseas agents or buyers. As industrial machinery products require good after-sales services, overseas agents are usually employed to provide maintenance and repair services. Some large companies have also set up service centres in the Chinese mainland to support customers. Marketing and promotion efforts usually include advertising in related industrial publications or magazines, and through participating in exhibitions.

“Well-established relationships and responsive after-sales services, combined with geographic and cultural proximity, have given Hong Kong’s machinery traders an upper hand in penetrating the mainland market.”

Industry Trends As a result of expanded capacity after Hong Kong manufacturers have set up plants in the Chinese mainland, competition among Hong Kong manufacturers has been increasingly keen.. Manufacturers have to compete with other Asian competitors such as Taiwan in the medium-level market, and with Chinese mainland enterprises in the lower-end market. The increasing application of plastic materials in electronic and telecommunications equipment, medical and auto-parts has stimulated the demand for high precision and more sophisticated plastic injection machinery. Since most customers of machinery need to remain competitive, the demand for higher quality and precision machinery and equipment has continued to increase. Such trend will result in more applications of computer technology in design and production. In order to explore overseas markets, there is an increasing need for manufacturers to develop the distribution network and provide after-sales services. At present, the general strategy for manufacturers is to upgrade quality, and some large manufacturers have also improved their operation efficiency. In the case of metal working machines, electronic setting units have been incorporated to control tool and material feeding. Plastic injection moulding machines have introduced programmable controllers and close looped designs for monitoring screw position, injection speed, temperature and pressure to reduce moulding defects. Safety features have also been upgraded, like introducing device to control mould opening. Product Trends Many Hong Kong manufacturers have tried to improve their product competitiveness by using higher quality components and precision parts, incorporating programmable or computer control features and enhancing safety features. They are looking for opportunities to diversify their products, particularly towards higher quality and performance. Energy saving and environmental friendly are increasingly important in designs of new machines. In this regard, several developments of machinery and techniques are note-worthy. These include the technique of co-injection for items such as two-colour pads, metal in-

58 | HONG KONG BUSINESS ANNUAL 2011


machinery - company and industry Performance of Hong Kong’s Machinery & Parts Exports ^ 2005

2007

2006

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.0.9

Growth %

8,390

+49

9,151

+9

4,742

- 48

Re-exports

224,498

+14

265,237

+18

303,885

+15

of Chinese Mainland Origin

138,571

+20

170,285

+23

199,334

+17

Total Exports

232,888

+15

274,388

+18

308,626

+13

(HK$ billion) Domestic Exports

2005

2007

2006

Share%

Growth %

Share%

Growth %

Share%

Growth %

Chinese Mainland

54

+16

54

+19

58

+20

USA

11

+10

10

+15

9

-2

EU (27)

11

+19

12

+22

11

+4

Germany

3

+15

3

+34

3

+11

United Kingdom

2

+14

2

+3

2

-4

ASEAN

8

+15

8

+15

8

+7

Singapore

3

+18

3

+7

3

+6

Japan

6

+14

6

+8

5

-3

by Markets

2005

2007

2006

Share%

Growth %

Share%

Growth %

Share%

Growth %

34

+23

36

+26

37

+14

20

+22

21

+21

22

+21

13

+11

12

+8

12

+8

Electricity

6

+5

6

+21

6

+11

Metal Working Machinery

4

+5

4

+13

4

+15

by Categories Electrical Apparatus for Electrical Circuits Electric Power Machinery & Parts Power Generating Machinery and Equipment Equipment for Distributing

Source: Hong Kong Trade Development Council ^Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessary reflect the export business managed by Hong Kong companies.

jection moulding for auto-parts and consumer products such as watches, injection compression for very thin parts and quality optical products, and gas-assisted injection for manufacturing items like auto-parts. The development of hybrid injection machine combining features of electric and hydraulic machines can have the benefit of precision, energy saving and high compression power. There is a trend towards in-

creasing use of electronic controls and instrumentation that can be applied to self-learning capabilities for machines. Based on the current level of technology like programmable logic control, more advanced controlling systems such as the CNC will increasingly be adopted with the development of more sophisticated and high precision machine tools. The developing trend is for machine tools to integrate de-

“The developing trend is for machine tools to integrate machining capabilities such as combining functions of boring, drilling, milling and tapping on machining centres.”

sign database with manufacturing, and to integrate machining capabilities such as combining functions of boring, drilling, milling and tapping on machining centres. There is also the tendency for modern machine tools to be capable of meeting the requirement for small batch and large variety production mode. With the development of modern logistics, there is also a rising demand for advanced sorting machinery. HONG KONG BUSINESS ANNUAL 2011 | 59


company and industry - sporting goods

Forward looking The unexpected popularity of collaborations between athletic brands and designers is changing the industry landscape.

H

ong Kong is one of the world’s leading suppliers of sporting goods. The production bases of Hong Kong’s sporting goods industry have largely moved to the Chinese mainland. Hong Kong’s sports apparel manufacturers receive strong support from ancillary industries. Hong Kong companies export a diverse range of sporting goods to the world market. Major categories include sports equipment and accessories (64.9% of the total), sports apparel (27.9%) and sports footwear (7.2%). Sports equipment and accessories cover a wide range of products, for example, sporting bags, bicycles, water-skis, surf-boards, skate-boards, golf equipment, fishing and hunting requisites, and tennis and badminton rackets. The majority of Hong Kong sporting goods are exported under OEM/ODM arrangement with overseas manufacturers and brand holders like Reebok, Nike, Adidas, Umbro, Timberland and Quiksilver. Only a few Hong Kong manufacturers have attempted to develop their own brands backed up with R&D undertakings. Notable examples include Neil Pryde (windsurfing sail), Super-X (sportswear) and Nikko (camping gear and accessories). Some Hong Kong companies serve as agents/distributors of foreign sportsgear/sportswear companies and being the sponsors for local sports team. In the first eight months of 2009, Hong Kong total exports of sporting goods fell by 19%. Exports to the EU dropped by 18%,

while exports to the US fell 29%. In terms of product categories, exports of sports equipment and accessories and sports apparel dropped by 23% and 12%, respectively, while exports of sports footwear fell by 4%. Many Hong Kong sporting goods are exported under licensing and contract manufacturing arrangements with overseas manufacturers and brand holders such as Nike, Puma, Umbra, Quiksilver and Wilson. Buyers usually provide production specifications and product designs. Yet, Hong Kong manufacturers are increasingly devoted to product design and development, engineering, modelling, tooling and quality control, so that they can generate higher value along the supply chain. Sales Channels As mentioned, a few large local manufacturers export products bearing their own brand names. For example, the “Nikko” knapsacks and “Neil Pryde” sails are well known in overseas markets. It is common practice for these manufacturers to appoint overseas distributors to 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 are advised to ensure that their potential partner is well established in the market, supported by warehousing and product handling facilities, and with good knowledge of the dynamics of the local market. On the Chinese mainland, sporting goods are channelled through shop-

“Though the EU and the US remain the biggest markets, sporting goods manufacturers are keen on the mainland’s market.”

ping centres in first-tier cities and specialised retail stores in second- and third-tier cities. Industry Trends Generic sporting goods tend not to be influenced by changes in favour of particular sports, though they are still highly affected by fads and fashions. A “life cycle hypothesis” is proposed to describe the boom and bust in the specialised sporting equipment market. As people grew older, they prefer fishing, golf and exercise equipment, as opposed to more strenuous football and tennis etc. Stiff competition has led to industry consolidation in the international arena. Converse was acquired by Nike earlier; the Hockey Company was acquired by Reebok in 2004, with the latter subsequently acquired by adidas in summer 2005. Luxury brands have entered into the sporting goods business by introducing sneakers and sporting accessories. As regards marketing, endorsement agreements with sports stars and sponsorship and licence agreements with sports events are important factors for the products/brands to be successful. Thus sports stars, teams and tournaments are often sponsored by sporting goods companies. Close connections with sports stars and coaches could provide a source of competitive advantage. Their feedback on products could help direct R&D activities. Though the EU and the US remain the biggest markets, sporting goods manufacturers are keen on the mainland’s market. According to Euro Asia Consulting, in 2008, the Chinese sporting goods market was worth around Rmb 54 billion. The success of 2008 Beijing Olympic Games had further driven up the demand for sporting goods in the mainland. The Li Ning Group, listed in Hong Kong since June 2004, is one of the most successful local sporting goods enterprises on the mainland, which operates over 2,000 sales outlets and offers over 1,000 varieties of products. While international brands such as Nike and adidas are projecting their brand names as upmarket brands on the mainland, Li Ning tries to appeal to the grass-root level, creating a casual and popular brand image. Other popular local China brands include Kangwei, Gweat, Anta and Double Star. Product Trends Modern technology is playing a role in the industry, with designers seeking new fabrics and applications, for example, sun-protect-

60 | HONG KONG BUSINESS ANNUAL 2011


sporting goods - company and industry Performance of Hong Kong’s Exports of Sporting Goods^ 2007

2009 Jan-Aug

2008

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.0.9

Growth %

726

-6

295

-31

155

-21

Re-exports

44,624

+5

45,892

+3

24,774

-19

of Chinese Mainland Origin

42,910

+4

43,928

+2

23,595

-20

Total Exports

45,050

+4

46,187

+3

24,929

-19

(HK$ billion) Domestic Exports

2007

2009 Jan-Aug

2008

Share%

Growth %

Share%

Growth %

Share%

Growth %

32.4

+5

54

+2

33.8

-18

United Kingdom

7.9

+8

10

-5

7.2

-21

Germany

6.9

+6

12

+7

7.9

-16

34.7

-1

3

-3

28.9

-29

Japan

9.8

+5

2

+2

10.4

-9

Chinese Mainland

6.3

+25

8

+28

8.8

-8

Canada

3.5

+3

3

-2

3.3

-17

ASEAN

2.3

+12

6

+13

2.8

-6

by Markets EU (27)

US

2007

2009 Jan-Aug

2008

Share%

Growth %

Share%

Growth %

Share%

Growth %

Accessories

69.9

+2

67.7

-1

64.9

-23

Sports Apparel

24.8

+9

26.1

+8

27.9

-12

5.3

+20

6.2

+20

7.2

-4

by Categories Sports Equipment and

Sports Footwear

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.

ing and reflective fibres with synthetics blended into wool and cotton. Manufacturers of sports balls and golf equipment have upgraded the materials used on basketballs, volleyballs and footballs from rubber and PVC to high-end PU. The use of nanotechnology in sports apparel is also expected to become more widespread, dry-fit and coolmax are becoming more popular in sportswear. Apart from new materials, products have been developed with hi-tech devices attached, such as MP3 sport shoes. Furthermore, new sportswears are increasingly designed with the help of the latest sports science, which enhances performance. Equipment for indoor “passive exer-

cise” has been invented such as the iGallop. Among different types of sporting activities, golf continues to be one of the high growth areas, although the rise in the number of players has been steady rather than dramatic in recent years. With golf averaging a 14% growth over the past few years, opportunities are becoming more promising for retail sales of golf equipment and specialist clothing. In Asia, the Chinese mainland is seeing the greatest growth potential. According to China Golf Association, the mainland will need to develop 2,000 courses in the next eight years to service current demand. Fitness activities have become

“The best selling sports outfits nowadays combine sports activities with leisurewear, as sports lovers want to look smart and fashionable while exercising.”

a worldwide trend, and yoga and Latin dance are gaining popularity especially among females. Sporting goods companies have introduced series of products (outfits and accessories) especially for yoga. Other new indoor sports equipment includes foam roller, balance disc, rubber bands/tube and fitball. As a result, women are an increasing prominent clientele of the industry, and companies have devoted more resources to introducing women sporting goods. In the US, outdoor pursuits like hiking have grown in popularity. Nordic fitness, which involves walking with the use of poles to optimise fitness, is expected to gain popularity. HONG KONG BUSINESS ANNUAL 2011 | 61


company and industry - packaging Materials

Packed with features The trend is towards packaging materials that have additional functionality and improved hygiene and safety elements

T

he trend is towards packaging materials that have additional functionality and improved hygiene and safety elements. The Chinese mainland is the largest export market of Hong Kong’s packaging materials industry, accounting for 55.7% of total exports in 2008. Demand for packaging materials on the mainland has been mainly driven by local production activities. Items under SITC 582, which include plastics plates, sheets, film, foil and strip, are the major packaging materials exports of Hong Kong. This category made up 43% of total exports in 2008. It is also the major category of packaging materials exported to the Chinese mainland, and it accounted for 67% of total exports to the mainland. On the other hand, plastic articles for the conveyance or packing of goods (SITC 89319) are the major products exported to other markets, including the US, the EU and Japan. The packaging materials industry can be divided into consumer packaging and industrial packaging. The former refers to the packaging of goods sold to consumers, primarily involving shopping bags, packaging bags, padded mailers, boxes and gift wraps, etc. Food and beverage packages, such as PET bottles, tetrapak laminated paper packages and flexible packaging, also fall within this category. Industrial packaging is mainly used for protection and transportation purposes. They include vacuum packs, heat seal, shrink packaging films, cartons, paperboard boxes,

62 | HONG KONG BUSINESS ANNUAL 2011

PS foam, air-bubble blister stuffing and foam sheets. Hong Kong companies are famous for quick response, flexibility in customising products for their customers and short delivery lead time. The local packaging materials industry is also supported by a strong printing industry. Some Hong Kong companies can offer more value-added services such as developing the packaging design along with the customer’s product development. For example, in toy industry, the packing can be integrated as part of the play set to reduce wastage in packaging materials. Hong Kong companies are also following closely with technology trends, for example, retort packaging for food, and more advanced hygienic standard required by customers. Industry Trends The Chinese mainland has been a major consumer goods production centre which generates mammoth demand for packaging materials. The growth in other businesses on the mainland has also boosted the demand for advertising, packaging and printing. In the meantime, more consumer goods manufacturers outsource their packaging production to specialized packagers. These developments have created business opportunities for packaging subcontractors. In this respect, Hong Kong packagers have competitive advantages over other foreign companies, considering their well-established and long-term relationship with the consumer goods manufacturers while many

“Some multinational packaging companies have started operation on the mainland in hope of tapping the domestic market.”

of them are in fact Hong Kong companies. Hong Kong companies also possess more advanced facilities and better management when compared with Chinese indigenous manufacturers. Some multinational packaging companies have started operation on the mainland in hope of tapping the domestic market. For example, Swiss SIG Group’s Combibloc, which is one of the largest aseptic paper packaging manufacturers worldwide, has set up its paper box packaging material manufacturing factory in Suzhou Industrial District. The majority of higher quality raw materials used for packaging in China is reliant on overseas supply. China’s dependence on overseas supply is mainly resulted from the less developed paper products and plastic raw materials manufacturing industry, particularly the higher-quality sector. Digital printing is already used in package label design and the production of commodity labels for branded liquor, food, beverage and other products. The technology enables direct plate-making via computer without using films in pre-pressing. In addition, digital printing also plays an important role in flexible packaging, which is gaining popularity in the industry. Product Trends Environmental-friendly packaging: The growing concern of environmental issues and the more stringent legislations on the use of packaging materials worldwide are influencing the choice of materials. Manufacturers use more recycled content in their production and make their products more readily recyclable. The use of biodegradable plastics will reduce the proportion on non-biodegradable and ozone depleting plastic bags. Biopolymers, which are generated from renewable natural sources, are also used. They are often biodegradable and not toxic to produce. Packaging also tends to be lighter in weight and made of less material in order to meet the increasing recycling or recovery targets which are measured by weight. Using refilling reusable containers can also reduce packaging waste. Longer shelf life: In the US, researchers have developed anti-microbial plastic films which inhibit bacterial growth. Food companies also make use of the new aseptic technology packaging systems to extend the shelf life of their products. Demand for flexible packaging is expected to continue to


packaging materials - company and industry Performance of Hong Kong’s Exports of Packaging Materials ^ 2007

January - April 2009

2008

HK$Mn.

Growth %

HK$Mn.

Growth %

HK$Mn.0.9

Growth %

1,248

- 16

971

- 22

235

- 23

Re-exports

24,029

+1

23,017

-4

5,371

- 24

of Chinese Mainland Origin

13,609

+3

13,199

-3

3,015

- 22

Total Exports

25,277

*

23,988

-5

5,606

- 24

(HK$ billion) Domestic Exports

2007

January - April 2009

2008

Share%

Growth %

Share%

Growth %

Share%

Growth %

Chinese Mainland

57.4

-1

55.7

-8

57.6

- 26

USA

11.5

-6

11.6

-4

9.9

- 27

EU (27)

11.4

+11

12.0

*

10.7

- 24

United Kingdom

2.9

+11

3.1

*

2.4

- 24

Germany

2.4

+16

2.3

-9

2.1

- 27

France

2.2

+19

2.4

+4

1.9

- 29

Japan

4.9

-3

5.1

-1

5.8

-9

ASEAN

5.2

+11

5.7

+4

5.7

- 22

Australia

1.4

-9

1.5

+5

1.4

- 20

by Markets

2007 by Categories

Share%

Growth %

Share%

41.1

+2

16.5

January - April 2009

2008 Growth %

Share%

Growth %

41.8

-4

43.1

- 26

+2

17.5

+1

17.9

- 18

8.1

-1

8.2

-4

8.3

- 22

7.5

+2

7.9

*

6.3

- 27

4.4

+5

3.8

- 18

3.4

- 26

3.3

3.1

- 12

3.1

- 23

Plates, Sheets, Film, Foil & Strip, of Plastics Plastic Articles for the Conveyance or Packaging of Goods Plastic Sacks & Bags Folding Cartons, Boxes etc, of Non-corrugated paper Other Paper or Paperboard Sacks & Bags Other articles of paper pulp, paper, paperboard

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessary reflect the export business managed by Hong Kong companies. * Insignificant ... over 1000% increase

rise since it offers longer shelf life for fresh foods, more consumer convenience, better economies for retailers and packaged goods manufacturers as well as reduction of packaging waste.

Convenient packaging: Apart from improved safety, additional functionality and added convenience would be the general trend in food and beverage packaging market. For example,

“Manufacturers now use more recycled content in their production and make their products more readily recyclable.”

there are pouches which feature handles and pouring spouts. These pouches can be heated in boiling water and stored under refrigeration and are especially ideal for soup packaging. HONG KONG BUSINESS ANNUAL 2011 | 63


numbers | indicators Average Monthly Salaries of Selected Occupations Supervison and Techincal Workers

HK$ Year

2009

2010

Month

D.p. Supervisor / Office / Administrasystem Analyst / tive Supervisor Prorammer

Accounting Supervisior

Production Supervisior

Shipping Supervisior

Estate officer/ Building services Officer

Jun

N.A

N.A

N.A

N.A

N.A

N.A

Sep

21,795

18,343

20,344

14,605

17,837

13,890

Dec

N.A

N.A

N.A

N.A

N.A

N.A

Mar

21,244

18,586

20,661

14,281

18,193

14,228

Jun

N.A

N.A

N.A

N.A

N.A

N..A

Clerical and Secretarial Workers

HK$ Year

2009

2010

HK$ Year

2009

2010

Book keeper/ Accounting Clerk

General Office Clerk

Receptionist/ Telephone Operator

Documentation / Shipping Clerk

Sales Clerk/ Shop assistant

Jun

N.A

N.A

N.A

N.A

N.A

Sep

12,333

10,244

10,171

12,358

9,910

Dec

N.A

N.A

N.A

N.A

N.A

Mar

12,374

10,482

10,93

12,403

10,001

Jun

N.A

N.A

N.A

N.A

N..A

Month

Service Workers

Month

Cook

Junior Cook

Waiter / Waitress

Guard (in security and Investigation)

Jun

N.A

N.A

8,140

7,255

Sep

11,883

5,993

8,190

7,338

Dec

N.A

N.A

8,267

7,381

Mar

11,940

6,436

8421

7,405

Jun

N.A

N.A

8,408

7,470

Miscellaneous Non-Production Workers

HK$ Year

2009

2010

General Worker

Message / Office Assistant

Driver

Delivery Man

Cleaner (Lavatory) (Pest Control)

Dishwasher

Jun

7,543

7,855

N.A

N.A

5,124

N.A

Sep

7,478

7,882

12,235

8,823

5,201

7,126

Dec

7,520

7,969

N.A

N.A

5,279

N.A

Mar

7,770

8,054

8,666

8,666

5,346

7,178

Jun

7,775

8,209

N.A

N.A

5,394

N.A

Month

64 | HONG KONG BUSINESS ANNUAL 2011


indicators | numbers Average Wage Rates for Employees up to Supervisory Level ( Excluding Managerial and Professional Employees) by Broad Occupational Group by selected Industry Section) Manufacturing

HK$ Year

2009

2010

Craftsmen and Operatives

Supervisory, Technical, Clerical and Non - Production workers

All Selected Occupations

Jun

N.A

N.A

9,664

Sep

315

11,825

9,373

Dec

N.A

N.A

8,900

Mar

298

11,771

9,329

Jun

N.A

N.A

9299

Month

Import /export, Wholesale and retail trades

HK$ Year

2009

2010

Craftsmen and Operatives

Supervisory, Technical, Clerical and Non - Production workers

All Selected Occupations

Jun

-

N.A

14,069

Sep

-

13,917

13,917

Dec

-

N.A

14,007

Mar

-

13,839

13,839

Jun

-

N.A

14,232

Craftsmen and Operatives

Supervisory, Technical, Clerical and Non - Production workers

All Selected Occupations

Jun

N.A

N.A

14,679

Sep

525

16,525

14,897

Dec

N.A

N.A

14,642

Mar

524

16,102

14,702

Jun

N.A

N.A

14,848

Month

Transportation

HK$ Year

2009

2010

Month

Accommodation and food services activities

HK$ Year

2009

2010

Craftsmen and Operatives

Supervisory, Technical, Clerical and Non - Production workers

All Selected Occupations

Jun

-

N.A

8,827

Sep

-

9,007

9,007

Dec

-

N.A

8,994

Mar

-

9,160

9,160

Jun

-

N.A

9,266

Month

HONG KONG BUSINESS ANNUAL 2011 | 65


numbers | indicators Financial and insurance acitivites

HK$ Year

2009

2010

Craftsmen and Operatives

Supervisory, Technical, Clerical and Non - Production workers

All Selected Occupations

Jun

-

N.A

17,022

Sep

-

16,936

16,936

Dec

-

N.A

17,305

Mar

-

17,672

17,672

Jun

-

N.A

17,519

Month

Real Estate Leasing and Maintenance Management

HK$ Year

2009

2010

Craftsmen and Operatives

Supervisory, Technical, Clerical and Non - Production workers

All Selected Occupations

Jun

N.A

N.A

8,845

Sep

479

8,654

8,868

Dec

N.A

N.A

8,907

Mar

478

8,758

8,950

Jun

N.A

N.A

9,074

Month

Professional and Business Services

HK$ Year

2009

2010

Craftsmen and Operatives

Supervisory, Technical, Clerical and Non - Production workers

All Selected Occupations

Jun

-

N.A

6,951

Sep

-

7,053

7,053

Dec

-

N.A

7,329

Mar

-

7,415

7,415

Jun

-

N.A

7,499

Craftsmen and Operatives

Supervisory, Technical, Clerical and Non - Production workers

All Selected Occupations

Jun

N.A

N.A

11,593

Sep

563

11,174

11,387

Dec

N.A

N.A

11,539

Mar

566

11,739

11,932

Jun

N.A

N.A

12,011

Month

Personal Services

HK$ Year

2009

2010

Month

All selected Industry Sections

HK$ Year

Craftsmen and Operatives

Supervisory, Technical, Clerical and Non - Production workers

All Selected Occupations

Month

2009

Dec-

458

11,321

11,342

2010

Mar

452

11,290

11,302

Jun

453

11,433

11,442

66 | HONG KONG BUSINESS ANNUAL 2011


indicators | numbers Statistics on Labour Force, Unemployment and Underemployment Labour Force No. Percentage Change Unemployed Unemployment Unemployment (‘000) over the same period (‘000) rate (seasonally rate (not seasonally in preceding year (%) adjusted) (%) adjusted) (%)

Period

Underemployed Underemployment (‘000) Rate(%)

2007

3629.6

1.6

145.7

N.A

4.0

79.2

2.2

2008

3648.9

0.5

130.1

N.A

3.6

69.0

1.9

2009

3676.6

0.8

196.7

N.A

5.4

86.4

2.3

7/09 -9/09

3696.2

1.0

209.2

5.4

5.7

89.3

2.4

8/09-10/09

3669.1

0.4

189.4

5.3

5.2

88.2

2.4

9/09-11/09

3668.5

0.6

180.6

5.2

4.9

89.5

2.4

10/09-12/09 3653.4

-0.2

172.6

5.1

4.7

83.8

2.3

11/09-1/10

3672.0

0.2

166.4

4.9

4.5

80.6

2.2

12/09-2/10

3672.7

-0.1

159.1

4.6

4.3

78.2

2.1

1/10-3/10

3657.3

-0.7

160.6

4.4

4.4

80.0

2.2

2/10-4/10

3655.2

-0.7

164.8

4.4

4.5

76.5

2.1

3/10-4/10

3655.7

-1.0

172.4

4.6

4.7

74.7

2.0

4/10-6/10

3644.0

-0.7

171.8

4.6

4.7

73.7

2.0

5/10-7/10

3667.6

-0.8

167.4

4.3

4.6

72.9

2.0

6/10-8/10

3680.1

-0.5

167.5

4.2

4.6

70.5

1.9

7/10-9/10

3682.5

-0.3

161.8

4.2

4.4

71.0

1.9

8/10-10/10

3684.6

0.4

153.2

4.2

4.2

70.7

1.9

9/10-11/10

3685.1

0.4

143.3

4.1

3.9

71.6

1.9

Vital Events Number of Marriages

Expection of life at birth (years)

Number of Deaths

(‘000)

Year-on-Year % change

Crude birth Rate

Total Fertility rate

(‘000)

Year-on-year% change

Crude death rate

Male

Female

2005

57.1

14.7

8.4

959

38.8

5.2

5.7

78.8

84.6

2006

65.6

14.9

9.6

984

37.5

-3.5

5.5

79.4

85.5

2007

70.9

8.0

10.2

1024

39.5

5.4

5.7

79.4

85.5

2008

78.8

11.2

11.3

1056

41.8

5.9

6.0

79.3

85.5

2009

82.1

4.2

11.7

1042

41.2

-1.5

5.9

79.7

85.9

Median age at first Marriage

Number of Marriages (‘000)

Year-on-Year % change

Crude Marriage Rate

Male

Female

Child Dependecy Ratio

Elderly Dependency Ratio

Overall Dependency Ratio

2006

65.6

17.0

7.3

31.2

28.2

185

168

354

2007

70.9

-5.7

6.8

31.2

28.3

179

170

349

2008

78.8

-0.3

6.8

31.1

28.4

174

169

343

2009

82.1

8.1

7.3

31.0

28.5

167

171

337

HONG KONG BUSINESS ANNUAL 2011 | 67


numbers | indicators Population by Type of Housing, 1996, 2001 and 2006 1996

Type of Housing

Public rental housing Housing Authority subsidized sale flats Housing Society subsidized sale flats Private permanent housing Temporary housing Non-domestic housing Total

2001

2006

Number

% of total

Number

% of total

Number

% of total

2391 857

38.5

2 135 624

31.9

2 129 252

31.0

691 895

11.1

1 080 377

16.1

1 173 115

17.1

17 117

0.3

51 315

0.8

48 106

0.7

2 912 626

46.9

2 284 001

49.0

3 383 890

49.3

124 617

2.0

72 035

1.1

45 504

0.7

69 254

1.1

79 142

1.2

81 413

1.2

6 207 366

100.0

6 702 494

100.0

6 861 280

100.0

Real Estate Project Statistics Professional and Business Services Year

Total Number of projects expenses

Payments to fittings supplied

Building materials & fittings supplied

Architectural design Interest Others Land area & technical Payments project of projects consultancy fees expenses (thousand sq.m)

Gross floor area of buildings when completed (thousand sq.m)

2009

182

31,510

31,510

31,510

1,689

2,378

4,442

4,442

9,502

2006

190

32,045

32,045

32,045

1,348

3,111

2,682

2,682

8 624

2007

204

32,541

32,541

32,541

1,105

4,219

2,254

2,254

8 529

2008

215

40,104

40,104

40,104

1,548

2,976

2,513

2,513

8 210

2009

192

32,435

32,435

32,435

1,418

1,403

2,194

2,194

6 030

No. of Establishments, Persons Engaged and Vacancies (Other than those in the Civil Service) Analysed Industry Establishments

Year

2009 2010

No.

Year-on-Year % Change

Sep

4

Dec

2009 2010

Vacancies

No.

Year-on-Year % Change

No.

-20.0

95

-3.1

0

-

3

-25.0

87

-11.2

0

-

Mar

3

-25.0

93

-4.1

0

-

Jun

3

-25.0

95

0.0

0

-

Sep

3

-25.0

87

-8.4

0

-

Month

Establishments

Year

Section B: Mining and Quarrying Persons Engaged

No.

Year-on-Year % Change

Sep

13 090

Dec

Section C: Manfacturing Persons Engaged

Vacancies

Year-on-Year % Change

No.

Year-on-Year % Change

No.

-0.4

124 689

-5.0

1 216

-19.2

12 924

-1.0

124 907

-4.4

1 161

10.6

Mar

12 726

-0.9

122 567

-2.5

1 546

133.9

Jun

12 506

-3.1

119 816

-3.9

1 445

120.6

Sep

12 357

-5.6

117 686

-5.6

1591

30.8

Month

68 | HONG KONG BUSINESS ANNUAL 2011

Year-on-Year % Change


indicators | numbers No. of Establishments, Persons Engaged and Vancancies (Other than those in the Civil Service) Analysed Establishments Year

2009 2010

No.

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

316

-3.7

10 409

-4.4

32

-57.3

Dec

312

6.5

10 870

2.0

31

-50.0

Mar

309

-2.8

10 687

1.3

52

30.0

Jun

327

2.2

10 752

2.2

71

51.1

Sep

327

3.5

11 194

7.5

72

125.0

Month

Establishments Year

2009 2010

Section D & E: Electricity, Gas and Waste Management Persons Engaged Vacancies

Section F: Construction sites (Manual Workers only) Persons Engaged

Vacancies

No.

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

987

-2.5

47 965

-0.4

18

-56.1

Dec

992

0.6

53 154

7.5

30

16.5

Mar

1 006

3.7

53 913

3.8

47

101.0

Jun

1 081

13.3

55 523

13.4

59

41.1

Sep

1 168

18.3

56 502

17.8

72

55.9

Month

Part of Section G: Import / Export Trade and Wholesale Establishments Persons Engaged Vacancies Year

2009 2010

No.

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

109 201

-1.7

558 276

-4.1

4 500

-37.6

Dec

111 939

2.2

562 551

-2.4

4 812

16.5

Mar

114 361

5.8

564 299

0.8

6 556

101.0

Jun

115 012

5.5

562 154

1.4

6 091

41.1

Sep

115 491

5.8

563 704

1.0

7 015

55.9

Month

Part of Section G: Retail Persons Engaged

Establishments Year

2009 2010

Vacancies

No.

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

58 022

3.0

236 827

-0.4

4 216

-22.8

Dec

59 385

6.1

239 782

1.2

4 575

29.7

Mar

60 079

5.8

240 598

3.7

4866

68.4

Jun

60 108

4.3

240 803

3.5

4396

20.1

Sep

60 397

4.1

242 652

2.5

5 564

32.0

Month

HONG KONG BUSINESS ANNUAL 2011 | 69


numbers | indicators Section H: Transportation, Stroage, Postal and Courier Services Establishments Persons Engaged Vacancies Year

2009 2010

No.

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

8 817

9.2

157 715

0.5

1 144

-28.7

Dec

8 805

14.8

159 297

2.2

1 457

65.4

Mar

9 072

7.3

159 435

0.9

1 663

70.7

Jun

9130

5.1

160 409

2.3

1 983

100.5

Sep

9 078

3.0

159 984

1.4

2 148

87.8

Month

Establishments Year

2009 2010

2009 2010

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

14 224

4.1

240 207

-2.0

7 704

31.0

Dec

14 679

8.7

247 045

2.6

4 725

-17.0

Mar

15 103

10.7

247 354

3.8

6 137

18.8

Jun

15 075

7.8

247 464

3.6

6 632

47.9

Sep

15 194

6.8

247 015

2.8

7 279

2.9

Month

Section J: Information and Communications Persons Engaged

2009 2010

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

8 717

0.1

87 910

-2.2

1 353

-37.1

Dec

9 026

6.5

87 847

0.1

1 427

70.9

Mar

0 206

9.1

87 430

1.5

2 245

155.1

Jun

9 430

8.8

88 385

1.7

2 302

51.9

Sep

9 788

12.3

88 443

0.6

2602

92.3

Section K: Financing and Insurance Persons Engaged

2009

Vacancies

No.

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

16 864

4.7

182 173

-2.3

3 818

-0.5

Dec

17 574

8.4

185 614

2.4

2 900

21.1

Mar

17 719

7.3

186 654

2.6

3 701

109.1

Jun

18 153

7.3

190 839

4.7

4 054

112.5

Sep

18 479

9.6

193 086

6.0

5 215

36.6

Month

Section Section K: Financing L: Retail and Estate insurance Persons Engaged

Establishments Year

Vacancies

No.

Month

Establishments Year

Vacancies

No.

Establishments Year

Section I: Accommodation and Food Services Persons Engaged

Vacancies

No.

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

11 487

3.7

107 123

0.6

2 312

-16.4

Dec

11 992

10.6

108 410

3.3

1 692

-14.5

Month

70 | HONG KONG BUSINESS ANNUAL 2011


indicators | numbers Section K: Retail Estate Persons Engaged

Establishments Year

2010

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Mar

12 016

10.1

109 676

5.1

2 455

61.8

Jun

12 163

8.8

110 068

4.7

2 334

18.4

Sep

12 367

7.7

110 241

2.9

2 973

28.6

Month

Establishments Year

2009 2010

2009 2010

2009 2010

Vacancies

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

33 790

5.0

294 391

1.9

4 990

-23.5

Dec

34 420

9.1

302 352

4.9

4 037

-4.8

Mar

34 937

7.8

299 930

4.7

5 639

61.2

Jun

35 613

7.5

303 729

4.7

5 787

63.6

Sep

36 038

6.7

308 923

4.9

4 733

-5.2

Section P - S: Social and Personal Services Persons Engaged

Vacancies

No.

Year-on-Year % Change

No.

Year-on-Year % Change

No.

Year-on-Year % Change

Sep

34 636

5.2

417 079

3.0

8 109

-27.5

Dec

35 953

8.2

422 734

4.1

7 710

5.0

Mar

36 437

7.9

427 684

5.1

11 053

55.2

Jun

37 544

9.9

426 936

3.7

10 070

19.3

Sep

37 762

9.0

429 163

2.9

11 824

45.8

Month

Establishments Year

Section M & N : Professional and Business Services Persons Engaged

No.

Month

Establishments Year

Vacancies

No.

All Industry Sections Covered in the Survey Persons Engaged

Vacancies

No.

Year-on-Year % Change

No.

Sep

310 155

1.8

2 464 859

3-1.0

38 782

-18.8

Dec

318 004

5.5

2 504 650

1.4

34 557

7.5

Mar

322 974

6.5

2 510 320

2.8

45 960

65.4

Jun

326 145

6.0

2 516 973

3.0

45 224

43.4

Sep

328 449

5.9

2 528 680

2.6

51 088

31.7

Month

Year-on-Year % Change

No.

Year-on-Year % Change

HONG KONG BUSINESS ANNUAL 2011 | 71


High-Flyers

2010

Profiles of Hong Kong’s outstanding enterprises and business leaders

AIA Pension & trustee Co. Ltd. 74 | ABN AMRO Private Banking 78 | AGEAS Insurance Company (Asia) Ltd 80 | Altruist Financial Group Ltd 82 | Atradius 84 |Canadian International School of Hong Kong 86 | Cathay Pacific Airways 88 | Chiram Strategic Group 90 | Crystallize.ME 92 | Decor House 94 | Dentro 96 | Fuji Xerox (Hong Kong) Ltd 98 | GODIVA Chocolatier 100 | Henderson Real Estate Agency Ltd 102 | Hong Kong Matchmakers 104 | HSBC Insurance 106 | JIA International Ltd 108 | Kadriden Interior Design/ Architecture 110 | Lan Kwai Fong Hotel @ Kau U Fong 112 | Luxury Living 114 | SA SA International Holdings Ltd 116 | Sound Concepts Ltd 118 | Starworld Hotel & Casino 120 | OneMBA, Global Executive MBA Program – The Chinese University of Hong Kong 122 | Thomas, Mayer & Associes 124 | Ultra Active Technology Ltd 126 | Zung Fu Company Ltd 128 Contrtibuting Writers: Bonnie E. Engel, Kapila Bandara HONG KONG BUSINESS ANNUAL 2011 | 73


ENTERPRISE AWARD

AIA PENSION AND TRUSTEE CO. LTD.

AIA-JF expand retirement choices with three new lifestyle funds Leading MPF service provider AIA-JF is continuing to broaden its portfolio of investment options as the MPF scheme marks a decade

A

pioneer in Mandatory Provident Fund products and one of the largest MPF service providers in Hong Kong, AIA-JF – a strategic alliance formed between American International Assurance Company, Limited and JF Asset Management Limited, has unveiled three new lifestyle funds with diversified portfolios offering varying allocations in equities, bonds and cash providing different risk and return levels as the MPF Scheme marks its 10th anniversary. The funds, catering to the varying degrees of risk appetite and the unique investment objectives of retirement fund members, are managed by FIL Investment Management (Hong Kong) Limited. Available from December 1, 2010, these new funds increase the total number of fund choices

to 21, further broadening the investment options available for MPF scheme members. The three new funds, namely Fidelity Growth Fund, Fidelity Stable Growth Fund and Fidelity Capital Stable Fund, range from aggressive high-risk to conservative low-risk. The Fidelity Growth Fund invests in global equity markets and has the flexibility to invest in global bonds. It has a bias towards Hong Kong but maintains broad geographic diversification. The Fidelity Stable Growth Fund invests in equities and bonds with a broad geographic diversification. This fund also maintains a bias towards Hong Kong. The Fidelity Capital Stable Fund invests in bonds and cash, while also retaining some exposure to equities. Like the other two funds,


Bonnie Tse, Senior Vice President and Managing Director of AIA Pension and Trustee Co. Ltd., Chief Exceutive Officer of American International Assurance Company (Trustee) Limited HONG KONG BUSINESS ANNUAL 2011 | 75


AIA PENSION AND TRUSTEE CO. LTD. PHILOSOPHY

As a responsible market leader, AIA Pension and Trustee Co. Ltd. (“AIAPT”) strives to respond to needs and concerns of customers through quality services and effective communication.

it has a bias towards Hong Kong and maintains broad geographic diversification. Bonnie Tse, Senior Vice President and Managing Director of AIA Pension and Trustee Co. Ltd. - the Administrator of AIA-JF’s MPF schemes, says these new funds demonstrate the continuing commitment to introduce the best of the breed MPF products for the varying investment needs of members. Ms Tse is also the Chief Exceutive Officer of American International Assurance Company (Trustee) Limited. AIAPT is a member of the AIA Group. AIA Group Limited is the largest, independent listed pan-Asian life insurance group in the world, with an unparalleled footprint spanning 15 markets in Asia Pacific. Ms Tse points out that FIL’s three lifestyle funds, “aim to further enrich the fund choices of our well-established multi-manager platform’’. “As the MPF system has been in operation for ten years, scheme members have gained considerable knowledge and become more investment-savvy when managing their MPF investments. They are looking for more quality fund options and that is why we introduced FIL to our platform,’’ Ms Tse adds. AIA-JF is one of the leading providers of MPF services with about 700,000 members and 35,000 corporate customers. Innovative fund choices and services for MPF members have been a characteristic of AIA-JF over the past 10 years. When the MPF was first launched a decade ago, AIA-JF offered five core portfolios with simple and easy-to-understand structures. And in 2002, as the market matured, four regional / single-country equity funds, namely North American Equity Fund, Japan Equity Fund, European Equity Fund and Hong Kong Equity Fund, were introduced. These funds widened the investment options offering access to developed economies. In 2004, two more equity funds, namely Greater China Equity Fund and Asian Equity Fund were added to the range. AIA-JF was the first to introduce Greater China Equity Fund in the Hong Kong MPF market. Later, AIA-JF opened its manager platform to

third party manager by adding three RCM funds in 2005 and Green Fund in 2006. To meet members’ demand for funds with lower management fees, AIA-JF introduced Global Bond Fund and World Equity Fund in 2007. In 2008, AIA-JF introduced the Manager’s Choice Fund with a dynamic asset allocation strategy for members who wish to have a mixed assets portfolio but have limited knowledge and time for fund switching by themselves. Fund products continue to improved, while service levels are upgraded for member convenience. Seminars have been organised and an “MPF Academy’’ set up to train intermediaries, among other initiatives. Members can understand more about products


MOST OUTSTANDING ENTERPRISE This page clock-wise: AIA-JF – a pioneer in MPF product offerings; The management team has worked with AIAPT for at least 10 years, on average; Bonnie Tse, Senior Vice President and Managing Director of AIAPT; AIA-JF volunteer team walked in action to support Yan Oi Tong Elderly Care Fund

FAST FACTS

and services by accessing AIA-JF’s website. Members can also check on the performance details of various funds through the website. Some services on offer also go beyond the regulatory requirements, Ms Tse says. While regulations require only one annual statement to MPF members, for example, the firm provides quarterly statements. Statements are also provided electronically, when members request the service. One of the innovative services offered to members is LifeEasy, which enables rebalancing of assets in constituent funds (World Equity Fund, Global Bond Fund and Guaranteed Portfolio) according to a pre-determined mix. It is based on a member’s birthday and assets

are allocated according to the number of years to retirement. For example, for an MPF scheme member below the age of 50, the entire allocation will be in the World Equity Fund, while for anyone between 62 and 63 the predefined mix would be 30 per cent in the World Equity Fund, 40 per cent in the Global Bond Fund and 30 per cent in the Guaranteed Portfolio. The rebalancing is done when a member signs up and it is optional. Among the constituent fund choices, one of the more innovative offerings – useful for those members who do not have an adequate understanding of asset allocation – is the Manager’s Choice Fund. “The manager has the flexibility to switch between equities or bonds … up to 90 per cent equities, or up to 90 per cent bonds. This depends on the market situation. It is a forwardlooking strategy fund and the risk rating is the same as the Growth Portfolio,’’ says Ms Tse. AIA-JF has been first to market with a several innovative ideas for members of MPF schemes. In 2004, it was the first to launch the Greater China Equity Fund investing in Hong Kong, China and Taiwan, and also launched a Green Fund in 2006, investing in companies rated according to their environmental credentials. - Kapila Bandara

• AIA Pension and Trustee Co. Ltd. is a member of the AIA Group • AIA Group Limited is the largest, independent listed pan-Asian life insurance group in the world • The AIA Group has total assets of about US$90 billion • The AIA Group is listed on the Main Board of The Stock Exchange of Hong Kong Limited under the stock code ‘1299’

.

HONG KONG BUSINESS ANNUAL 2011 | 77


ABN AMRO PRIVATE BANKING

PHILOSOPHY

ABN AMRO is a bank with an enduring culture, always putting clients’ interests at heart. With 290 years of experience in global banking, more than 180 years in Asia and over 100 years in Hong Kong, the bank has built on a strong heritage of being close to its clients, understanding their priorities and circumstances, and offering the best possible solutions to support its clients to fulfill their financial needs and ambitions, be it personal or business matters. The bank is committed to continue this long-standing legacy to establish itself as a professional, trusted partner to its clients, and help them move forward, to achieve more in their lives.

Trust and Long-term relationships make the difference

T

he Dutch institution, ABN AMRO, is one of the oldest foreign banks in Asia, starting with its Asia establishment in Jakarta or as it was then known, Batavia, dating back to 1826. In Hong Kong, its roots trace back to 1906 when it began as a deposit-taking branch of the Netherlands Trading Society. According to Executive Director Arjan de Boer, Head of ABN AMRO Private Banking for North Asia, this deep local heritage allows the bank to understand the needs of Asian clients very well. Having a discreet, disciplined Dutch/European banking style has also allowed the bank to weather the recent economic turmoil unruffled. Focusing on High Net Worth Individuals and their families with assets available for investment exceeding USD1 million, ABN AMRO Private Banking has many investment opportunities to offer them, including a global footprint spanning 13 markets and over 4,400 professionals who have expertise in a wide range of specialist areas such as wealth structuring and making investment recommendations. Its global network of experienced professionals includes research analysts, economists, portfolio managers, estate planning experts and product specialists. Each client has a dedicated client service team comprising of a private banker, an assistant private banker and /or an investment advisor. The dedicated teams work with the bank’s open architecture product platform that provides clients with access to the best possible products and services regardless of location or provider. They source and offer the most suitable investment opportunities that suit clients’ financial objectives and risk profiles. To help clients make sound investment decisions, ABN AMRO Private Banking’s dedicated teams offer clients pre-filtered information and discerning market

analysis drawn from specialist expertise in every financial discipline and local market knowledge across every major financial centre of the world. It operates in a world-class platform that competes comfortably with the top private banks globally by offering clients a more personal, hands-on approach to individualised investment portfolio construction and wealth structuring. If a client’s circumstances change, the bank is there to provide the client with active guidance on adjusting the investment plan in line with the new financial priorities and recommend the proper portfolio mix and asset allocation to achieve the desired ends. The dedicated teams at ABN AMRO Private Banking guide each client through four clear steps to establish the optimal investment solution. First the team establishes a client’s investment profile based on the client’s needs and objectives, established by thorough, mutual discussions and analysis of various investment options. Then, the lead private banker of the team develops a proposal based on the client’s profile and gathers recommendations from the bank’s research and advisory teams. Third, the client examines the recommendations and gives approval of the detailed investment plan, which is then ready for execution. Finally, once implemented, the portfolio is regularly reviewed with the client by the private banker so as to help the client quickly respond to any changes in the world economic scene or changes in the client’s individual needs or ambitions. These four steps also allow the team and the client to establish a close relationship based on factual information and trust. “Relationships drive our business. That’s why we always strive to have long-term relationships with clients by putting their interests first. We do not just focus on offering the highest yields to our clients. Instead, we focus on providing tailor-made wealth structuring


PRIVATE BANKING This page clock-wise: ABN AMRO’s headquarters at Gustav Mahlerlaan in the Netherlands; Cheung Kong Center, ABN AMRO Private Banking’s office in Central, Hong Kong Opposite Page: Arjan de Boer, Executive Director, Head of ABN AMRO Private Banking for North Asia

FAST FACTS • An international wealth management division of ABN AMRO Bank N.V.,

and wealth management solutions to address each individual client’s needs because we recognise each client is unique and different. We believe personalised investment plans yield long-term benefits for our clients. Although there was a dip in the world’s economic picture in the last couple of years, most of our clients chose to stay with us because of this long-term relationship that has built trust between us”, de Boer said. “Hong Kong came through the economic turmoil very well. We see some of our clients decide to move more into property or areas they know best, which leads to a growth in home buying meaning they put the money in the local market or close to home. We always encourage our clients not to be distracted by short-term fluctuations, instead looking at the ‘big picture’ to exploit sound investment opportunities for long-term value cultivation”. De Boer said, “Hong Kong’s high net worth investors are very savvy and are now more inclined to take advice only from a trusted partner who is sufficiently well-versed with product knowledge and the necessary skills to manage their portfolios. One of our key focuses is to ensure our staff be well trained on product and technical knowledge as well as necessary behavioral skills to deliver independent and tailor-made solutions to clients.” “This is why we are committed to continuing our investment in people learning and development with a new initiative in partnership with the leading international business school INSEAD on a customised certification programme for ABN AMRO private bankers all over the world, including those in Hong Kong. The aim of this programme is to establish the highest standards of knowledge, skills and behaviour among our private bankers worldwide so that each of them can deliver the same high level of services in all markets where we operate. This represents a significant outlay of resources. ABN AMRO is the only private bank with this partnership with INSEAD and is another important incentive for our staff for their long-term career develop-

ment”, de Boer explained. “Because our staff is well equipped and trained, we get most of our new business through referrals from existing clients on the basis of their experience of good results and personal treatment. That in itself is a testament to our way of doing business and the returns we can offer our clients”. ABN AMRO Private Banking offers a variety of ways for its clients to manage their portfolios as well. Discretionary Portfolio Management (DPM) is an attractive solution for clients who wish to make their capital work for them but do not have the time to analyse the everchanging investment landscape. They can trust their ABN AMRO DPM team to review and actively manage their assets on their behalf for a peace of mind. ABN AMRO Private Banking has one of the top fund managers, Francois Moute, who has consistently delivered returns for clients in DPM solutions. Another unique service at ABN AMRO Private Banking, international estate planning, offers personalised service to clients to make the right plan to convey clients’ inheritance to the loved ones, the future generations or a particular philanthropic cause. “Succession planning is a strategic combination of wealth preservation and effective wealth transfer”, de Boer said. “We expect Asian business families to increasingly engage for professional advices in the succession planning process. Our strong global networks and local experts enable us to ensure clients’ legacy is preserved and transferred optimally.” Due to the breadth of the services ABN AMRO Private Banking offers, clients can turn to the private bank for almost all their investment and wealth management needs. It is always important to have a welldiversified and well-balanced portfolio. “Ultimately”, de Boer said, “we are here to assist our clients in making well informed decisions when it comes to their portfolio to fulfill their individual needs, be it wealth creation, preservation or transfer.” - Bonnie E. Engel

.

an independent bank under the supervision of the Dutch Central Bank • The No. 1 Private Bank in the Netherlands and No. 11 in Europe* • Global footprint spanning 13 markets worldwide with over 4,400 professionals employed • Sizeable establishment encompassing over 120,000 high net worth clients with more than USD200 billion of assets under management** • Long-standing presence in Asia with a legacy dating back to 1826 • International network of experienced professionals including research analysts, economists, portfolio managers, estate planning experts and product specialists • Website: www.abnamroprivatebanking.com * Source = Euromoney, Private Banking Survey 2010 ** As of 30 September 2010

AAPB_fullcolourU.eps ABN AMRO Private Banking, full-colour for uncoated paper Width shield: 20 mm Overlap: 0,05 mm

HONG KONG BUSINESS ANNUAL 2011 | 79


AGEAS INSURANCE COMPANY (ASIA) LIMITED

PHILOSOPHY

Driven by an ambition to achieve and excel by nurturing lasting relationships, Ageas is committed to becoming a leading financial services provider in Hong Kong.

Rebranding gives fresh impetus to leading insurer

The brand is combining the adoption of a new logo and name with service quality enhancements to reinforce its status as an industry leader

S

ince adopting its new brand name last August, Ageas Insurance Company (Asia) Limited has maintained its momentum as one of Hong Kong’s largest insurance companies with an award-winning marketing communications programme to promote awareness of its forward-looking fresh identity. The campaign kicked off with the lighting up of a giant illuminated harbour-front billboard displaying the new name and the colourful logo that symbolises Ageas’s clear vision and strategic direction for the future. Posters and billboards appeared in MTR stations, on the streets, and on the sides of buses and trams, and an advertising blitz began in the print media. Then, the company’s long-time spokesperson – popular stand-up comedian Dayo Wong – took to the airwaves with a new series of 20-second “Smart Financial Tips” infotainment slots on major local TV channels. This served to emphasise to clients old and new that they would continue to enjoy the same high standards of products and services to meet all their insurance and financial planning needs. As its CEO, Stuart Fraser, explains, the first two letters of Ageas hearken back to the company’s historical origins as AG Leven, which was founded in 1824. “EA” reflect its two key markets, Europe and Asia. Finally, “AS” represent assurance, the company’s single-minded focus on its core insurance business. “But obviously the success of our rebranding depends on more than simply adopting a new name and logo. We have also been putting enormous effort

into raising the quality of our services and products even further,” he points out. Some examples have been the recent introduction of innovative iPhone and iPad-based calculators and Model Portfolio Illustrations. These enable Ageas agents to give their clients an instant and accurate picture of how the company’s insurance plans will benefit them. Then there has been the launch of B.O.S.S. – the online Business Oriented Support System – which allows clients to check policy details and perform housekeeping tasks, such as switching funds, whenever they wish and wherever they happen to be. The Ageas product range has also taken on a new look with the development of new ways to satisfy the changing needs and aspirations of its clients, and their search for comprehensive and competitively priced solutions that will give them and their families complete peace of mind and financial security in every situation and at every stage in their lives. For instance, the “MediZure” Hospitalization Rider provides various levels of hospitalization benefits to ease financial burden to clients in face of large medical expenses due to illness or accident. The “Compass” Target Saving Plan offers guaranteed cash endowment every three years starting from the sixth policy anniversary to provide clients a secured financial support at different stages of life while premiums are paid for only a fixed period. “Extra” Income Plan offers stable monthly income during the income period which can help with retirement planning. “Super Kid” Children’s Educational Fund caters to the need of funding for tertiary educa-


FINANCIAL PLANNING This page clock-wise: Ageas’s giant neon sign in Sheung Wan, Ageas sponsorship puts HKPGA Championship back on course, The brand new Ageas is revealed at the offfical launch party on 28 August 2010 Opposite Page: Mr Stuart Fraser, CEO of Ageas Insurance Company (Asia) Limited

FAST FACTS • Ageas Insurance Company (Asia) Limited is one of Hong Kong’s largest life insurers. It is a wholly-owned subsidiary of Ageas Group. • Ageas’s financial status is confirmed by the high ratings from a number of global rating agencies, namely: A.M. Best A- (Excellent); Fitch Ratings Aand Moody’s Baa1 • Ageas attaches great importance to developing the professionalism of its consultants. Six per cent of them have become members of the Million Dollar Round Table, the premier international association for financial professionals.

tional expenses by offering guaranteed educational fund from the age of 18 to 21. “The ‘personal touch’ is extremely important too,” notes Mr Fraser. “Our clients have always known they will receive knowledgeable and highly personalised advice from our well-trained people. With the new name, we have also adopted a new motto: ‘We love the future’. This emphasises how we aim to build close and enduring partnerships with our clients, and achieve a happy and successful future together.” The company’s long-term commitment to good corporate citizenship is another reflection of the Ageas mindset. For years, it has enthusiastically supported wellknown charitable events like the Matilda Sedan Chair

Race and the Oxfam Trailwalker. It also sponsors initiatives to enhance the lives of people of all ages, such as the FCBEscola Hong Kong, which teaches football skills and social values to local children free of charge. In recognition of these contributions, the Hong Kong Council of Social Service has awarded it the title of “Caring Company” for the past seven consecutive years. “Our new brand has been welcomed by our clients, agents and staff. We firmly believe it will provide us with opportunities to build on our well-established reputation and success, and enable us to achieve an even better future in the Hong Kong insurance market,” says Mr Fraser. - Kapila Bandara

.

HONG KONG BUSINESS ANNUAL 2011 | 81


ALTRUIST FINANCIAL GROUP

PHILOSOPHY

Altruism for 10 years. Listen to the voice of customers; serve customers with integrity and professionalism; aim to provide a fruitful life to customers; concern for not only the wealth of customers, but also their health and wisdom, and undertake regular voluntary work for society.

A decade of dedication to financial solutions that care

F

or almost a decade, Altruist Financial Group Limited (Altruist) has served the financial planning needs of 50,000-plus individuals and families charting their path to a happy retirement, supporting the education of children, and building up savings for medical expenses in the event of an accident or sudden, unexpected illness. In the spirit of altruism, the company has provided a variety of services for the welfare and happiness of customers in the 10 years since its inception in 2001. The decade of providing excellent financial planning services has earned public recognition. Altruist has been the only one in the financial planning sector that has won the Hong Kong Business High Flyers Award since 2005. A multitude of factors has contributed to such recognition. For one, the company, founded by President Mr. Albert Lam, is a pioneer. Mr. Lam led the evolution of the insurance industry by detaching the agency force from a life insurance company and establishing it as an independent financial consultancy. “This transformation has enabled us to provide more independent and impartial advice to our clients. On behalf of our clients’ interest, we now have more choices of financial solutions [from over 40 renowned product providers] to meet their changing needs,” says Mr. Lam. He emphasises that the root of financial planning is insurance. Over the past decade, Hongkongers have experienced the volatility of financial markets – more so following the financial tsunami that engulfed the world in late 2008, and whose unsettling effects are still being felt. The devastation that epidemics such as the SARS virus would cause in Hong Kong, also became a

reminder of the value of financial security. Altruist has sailed through these storms because it firmly believes that insurance is the root of financial planning. “Men need life insurance because they die too soon, or live too long for any other types of investment to do the job that they want done. Most other industry practitioners focus on short-term, speculative investment and overlook the importance of life insurance,” explains Mr. Lam. To provide all-round insurance coverage, Altruist has aligned with more than 20 insurance partners. This allows the company to provide a full range of life and general insurance products. Altruist has also been granted the exclusive rights by CIGNA and Standard Life to distribute one of their variable life products. This exclusive right does not only represent the trust Altruist has gained from its partners, but also recognises the high quality of its business practices. The company’s success can also be attributed to continuous innovation and commitment to serve clients better. In addition to being a financial expert, Altruist also extends its care to the health of its clients through dental care services, health check programmes and even health products. Wealth, health and wisdom, are three very important elements to every single individual. Altruist is the only consultancy in Hong Kong, which delivers a total well-being solution to make clients’ lives happier. This commitment to altruism provides the company a very unique edge in the market. A caring approach has helped Altruist to foster a faithful customer base, which is served by a cadre of loyal financial consultants.


MULTI CHANNELS FINANCIAL CONSULTANCY This page counterclockwise: Altruist: A group of people working for other people’s welfare and happiness Presentation of Altruist Scholarship to Hong Kong Polytechnic University Students (Two ladies in the middle) Sponsorship of OTIC Charity Concert Opposite Page: Albert Lam, President

FAST FACTS • Members of professional affiliations: CIB, IFPHK, IFAA, LIMRA, LUA, GAMA, MPFA, SFC • Exclusive distribution right from CIGNA & Standard Life on its variable life product • Caring Company Logo (2003-2010) • Hong Kong’s Most Valuable Company (2005-2011) • Hong Kong Business High Flyers (20052009, 2011) • First joint venture insurance agency license in Shenzhen & Ningbo • Wealth Health Wisdom

People are important assets at Altruist and the company cares for them just the same way it cares for its clients. More than 50 per cent of staff and consultants have worked in Altruist since its establishment. This dedicated group of staff has proven their quality by obtaining different professional designations, and local or international awards. More importantly, the quality of their business conduct is reflected in the leading high persistency of more than 90 per cent, measured over 24 months. This high degree of professionalism and integrity in financial planning has translated into goodwill from customers. Clients continue to refer new customers. In some cases, Altruist has even served three generations of the same family. As the company grew, Altruist has spread its foot-

print beyond Hong Kong’s geographical borders. Altruist has been granted the first joint-venture insurance agency license in Shenzhen and Ningbo respectively. This has enabled the company to provide a wide range of financial planning services to mainlanders, the large majority of whom do not have the correct concept of financial planning. Clients are not the company’s only concern. Altruist is also engaged in the local community at different levels. By organising a charity photo-shooting contest, joining the Community Chest Walk for Millions, or offering scholarships to students of Hong Kong Polytechnic University, it has demonstrated the steadfast belief of Altruism — the core value at Altruist which makes it different.

.

- Kapila Bandara

HONG KONG BUSINESS ANNUAL 2011 | 83


ATRADIUS

PHILOSOPHY

Excellent products can attract excellent customers, but excellent people enable us to keep them. This is one of the key principles within our Customer Service Charter, which formalizes our commitment to customers in every aspect of our business from product innovation to service, support and delivery. Our unique approach in the credit insurance sector not only gives us a range of specific benefits and points of difference, but also allows us greater control and flexibility to adapt to the changing needs of our customers. Every facet of our business points toward our customers, which enables us to create, implement and manage seamless and integrated tailor made credit insurance solutions.

Atradius supports businesses with credit insurance cover

International businesses turn to Atradius for assistance with credit insurance decisions all over the world

T

oday, the Atradius name is recognised globally as one of the world’s leading credit insurance and collections businesses with 168 offices in 42 countries and a team of 3,400 highly skilled people. We not only provide customers with up to date information on 52 million businesses, but also make more than 22,000 credit decisions every day to ensure that international trade is supported by high quality credit insurance cover. With a history spanning almost 90 years, this status wasn’t achieved overnight and the company has undergone a number of key changes along the way to ensure it is always aligned with the needs of international business. So, where did it all begin? The Atradius timeline started in 1925, with the formation of Nederlandsche Credietverzekering Maatschappij (NCM) in the Netherlands, whose primary goal was to support and improve trade for Dutch businesses and partner with the Dutch government to provide export credit services. The next key phase of the company’s evolution occurred in 1954 when German insurance company, the Gerling Group, established its specialised credit insurance arm, Gerling Credit, which was the first private company to offer export credit protection. Following the merger of NCM and Gerling in 2001, the company became a global leader in credit insurance and credit management. To better represent the business and provide a unified brand in the market, the new name of Atradius was adopted in 2004. This coincided with a change in shareholder structure

where the Gerling Group was replaced by a group of leading international financial institutions that included two leading Spanish companies, Seguros Catalana Occidente, and, the fourth largest global credit insurer Crédito y Caución. Founded in 1929, Crédito y Caución became part of the group in 2008. Atradius in Hong Kong and Asia Atradius’ commitment to Hong Kong spans more than a decade and reinforced by selecting Hong Kong as the location of Atradius’ regional headquarters for Asia in 2007. Atradius business in China, Singapore, Japan and India is also managed through a global network of offices and partners. Atradius has more than 50 years experience of providing credit insurance expertise and support to businesses throughout Asia, helping to give them the confidence to seize opportunities knowing that the risk of financial loss due to non-payment is covered. Eric Jan den Boogert, New Business Regional Director with Atradius, explained: “Hong Kong is a perfect vantage point for Atradius to not only observe, but also to deliver credit insurance solutions into, the dynamic Asian market and business environment.” He added: “The spread of business types, coupled with the diversity of trading requirements, has enabled us to develop outstanding solutions for companies doing businesses within Asia and has given the Atradius team an unrivalled level of knowledge, expertise and experience not only of the markets, but also the business culture and the specific demands of trading in


CREDIT INSURANCE This page clock-wise: Atradius’ trade credit insurance protects businesses from trading risks; Atradius, Regional Director, Eric Jan den Boogert; Atradius lets people do business freely without barriers; Atradius headquarters, office in Amsterdam.

FAST FACTS • Atradius provides trade credit insurance, surety and collections services worldwide • We operate through 168 offices in 42 countries worldwide. • Atradius provides its customers with access to information on 52 million companies and we make more than 22,000 credit decisions daily. • Atradius is rated as ‘A-‘ by S&P • We have a 31 percent global market share and annual revenues of more than 1.7 billion

this part of the World.” Atradius credit insurance We’ve compiled a brief overview to answer a few common questions. This overview is just a general guide. What is trade credit insurance? Credit insurance is a tool to protect your business against the risk of not getting paid when trading on credit payment terms. Once the goods have been dispatched and your customers have accepted delivery, they are obliged to pay you by the due date. However, if you don’t get paid, then the credit insurance policy covers you against potential financial loss. How does it work? Once the due date has passed and additional pursuit of payment has been ineffective then, at the appropriate time, you can make a claim against your policy. Where the reason for default is the customer’s insolvency, a claim may be made immediately. What are the benefits? It minimises a company’s exposure to the risk of financial losses in the event of non-payment, giving businesses the freedom to pursue sales opportunities knowing they are protected. If banks know your trade finance is protected, it can ease access to loans and other forms of finance as well influencing interest rate negotiation.

We provide valuable insight into the financial viability of up to 52 million buyers. The truly global solution To do business freely and confidently in a world that increasingly trades without barriers, the protection of seamless global cover is vital. Atradius’ single ‘Global Policy’ is true to its name; a unique solution created in partnership with its account team to meet the specific strategies, objectives and structure of each individual customer business, while protecting exposure to risk. One flexible, tailored policy from one global credit partner means substantial savings in complexity and cost. Conflicts and overlaps are written out; bespoke cover and control are written in. Companies can, for example, select umbrella cover with common terms for the group and add individual policies for each country that reflect local terms and situations. The Global Policy is central to Atradius’ ability to protect its customers’ bottom line and improve cash flow, enabling them to trade with confidence anywhere in the world. This includes access to Atradius Collections, a global network of collection specialists, lawyers and insolvency practitioners covering 220 countries, to help ensure customers’ invoices get paid on time. - Bonnie E. Engel

.

HONG KONG BUSINESS ANNUAL 2011 | 85


CANADIAN INTERNATIONAL SCHOOL

PHILOSOPHY

Canadian International School of Hong Kong strives to develop responsible global citizens and leaders through academic excellence. It accomplishes this goal by involving teachers, students, parents, alumni and administrative staff in all the school’s initiatives to improve the quality and monitoring of education. In addition to innovative use of state-ofthe-art information technology, the school includes fostering environmental education and action among its responsibilities for preparing future leaders. This philosophy extends to supporting the surrounding community as well. The school emphasises service to the community as well as academic excellence.

Green torch-bearers foster consciousness and responsibility

A

clever student launches such an effective and efficient initiative to focus on food waste that her encouragement helps to cut the daily 50 kilogram load disposed at the lunch break to less than half and wins her an 18-day adventure to Antarctica. Two other students gather corks and throwaway tetra-packs to transform trash into vibrant wearables. And in another initiative that takes aim at saving nearly HK$1 million in annual photocopying costs, teachers and students are joining forces to halve the use of colour copying and to cut black and white photocopying by a quarter. Efforts to save paper have even extended to other activities such as the Parents’ Association family fun fair, where tickets and volunteer forms were put online, saving 5,200 sheets of paper. These are just a few of the environmental initiatives at the Canadian International School of Hong Kong (CDNIS), where young minds are being nurtured into becoming global citizens, as well as knowledgeable and respectful leaders who will endeavour to fulfil their potential and make a difference. “Our children will be living and dealing with conditions we as parents can only surmise, whether they be difficult or joyous. Thus, we need future leaders whose first nature is making decisions based on environmental concerns and a new view of quality of life. This is part of our mission to develop responsible global citizens and leaders,” says Dave McMaster, the Head of School. Teachers and students are rising to environmental challenges and are inspiring each other as they strive to do their part in the school’s EcoSmart environmental programme. This permanent initiative, which exhorts

participants to Join The Team, Play it Green! aims to raise awareness of green issues and galvanises students into action. In the long-term, it will help change their behaviours, traditions, systems, lifestyles, while also solidifying the future leaders’ connection with the world they will become custodians of. EcoSmart is rooted in the aptly-named SEED (School Environmental Education Development) Committee formed in May 2010, involving students, teachers, administrators and parents. Their mandate is to plant the seeds of environmental responsibility and work to make CDNIS a greener school. Underlining the school’s commitment to this undertaking, a new permanent staff position, Sustainable Development Co-ordinator, was created. EcoSmart will tackle use and reduction of energy, water, paper and plastic. SEED will also address recycling, campus greening, traffic policies and cafeteria operations, including healthier products that reduce waste in vending machines. Sustainable Development Co-ordinator, Nasci Lobo, says: “Whether it’s an individual or an organisation, being environmental is a long term and continuous process. Habits and systems need to be formed first, which means changing behaviour first. They then need to be monitored for further improvement as new information becomes available. We know our school can’t ‘go green’ in just a few weeks.” Efforts to change habits are reflected in meaningful incentives such a HK$1 discount on hot drinks at the school’s Maple Café for anyone who brings his or her own cup. Some activities support external organisations. A total of HK$25,000 raised at a Dress Down Day in September was donated to Clean Air Network, an NGO that highlights dangers to health from air


LEADING INTERNATIONAL SCHOOL This page clock-wise: Upper School gardening club, Raising conservation awareness, Re-potting plants for decorating school, concept drawing for educational green roof turning, coffee filters into fashion. Opposite Page: juice tetra-paks turned fashion

FAST FACTS

pollution in Hong Kong. Proceeds from such activities Award from Hong Kong Business magazine 4 times. in March and April are to be donated to groups working An International Baccalaureate (IB) World School, on local and global issues. and comprised of a Lower and Upper School, it is reLast year, the school donated funds to the Friends garded as one of the top international schools in Asia of the Earth Dongjiang River Reforestation Project. As offering the Primary Years Programme (PYP), Middle a result, 76 trees were planted in the school’s name at Years Programme (MYP) and Diploma Programme the source of Hong Kong’s drinking water. Also, the (DP). In June 2010, 100 per cent of the school’s first school Environmental Club collected HK$11,000 for cohort of IB students received their IB Diplomas. The Project Kaisei through a student charity concert. Upper School is also authorised to grant credits for Other activities aim to inspire students. In early the Ontario Secondary School Diploma (OSSD). All 2010, Sophie Tang, a member of Robert Swan’s teachers and students from Grade 5 to 12 have an Antarctic expedition, shared her thoughts with students Apple MacBook, while students in Grades 2 through as the first speaker in the Ecomart Speaker Series. 4 share dedicated mobile MacBooks at a ratio of 4:1. Environmentalists, scientists, researchers, and explorBelow Grade 2, students have access to state-of-theers are being invited for talks. Eager young minds also art computer labs. witnessed the oceans in peril through the awardwinning movie Sharkwater by Rob Stewart screened at SEPARATE HIGHLIGHT the 604-seat Leo Lee Arts Centre on World Ocean Day With each passing day, support has been increasing on June 8, 2010. for one of the biggest environmental undertakings Educational activities also provide a channel for by the Canadian International School of Hong Kong students to get engaged. These include the Gardening (CDNIS) – a green roof atop the library, overlooking Club, Environmental Club, and EcoECA (Extra-curricu- Aberdeen Harbour. lar activity). Simple efforts range from cutouts of paper The school’s proposal is vying for a HK$300,000 light bulbs to stick beside light switches, and displaying grant from the Li Ka-Shing Foundation’s LoveIdeas a junk mail tree in the school foyer, to eco-fashions civic improvement competition. The green roof is 3.pdfto 27/7/2010 11:16:03 created by IB Diploma Arts students, using waste/recy- ad meant be aesthetically significant and purposeclable materials/theme-related pieces. ful, providing habitats for flora and fauna, acting as In addition, an Environmental Science course was a green lung, reducing water run-off and flooding, introduced. Through the programme, students had the reducing energy costs and the heat island effect in chance to speak with the head of NASA’s Goddard Hong Kong. Students, teachers and parents will be Institute for Space Studies at a university conference. able to use the green roof and it will become a natural All environmental programs and strategies are classroom, particularly for science, art and geography, designed to take the school well into the future as it or for social gatherings to simply enjoy nature with a makes plans to celebrate its 20th anniversary next stunning view. year. The school has grown from 80 students to the Details and concepts are being planned, but ideas 1,817 it now fosters on a hillside campus with a 25-me- so far, include flowing/recycled water, wood motifs, a tre swimming pool and a 604-seat theatre. The growth butterfly and vegetable garden, sitting areas, a lawn, has been rapid and fruitful, bringing recognition and solar panels and a small urban wind turbine. success. CDNIS has been awarded the High Flyers - Kapila Bandara

• CDNIS was established in 1991, and has evolved from a small campus of 81 students to a school with over 1,800 students representing over 40 different nationalities today • Students from Pre Reception to Grade 12 are supported by over 200 highly qualified educators and support staff within a state-of-theart and environmentally friendly campus overlooking the Hong Kong hills and scenic Aberdeen waterfront • As a non-profit organisation, all the school’s funds are reinvested to continually upgrade and improve our facilities and learning resources.

.

HONG KONG BUSINESS ANNUAL 2011 | 87


CATHAY PACIFIC AIRWAYS

PHILOSOPHY

Our vision is to be the world’s best airline. Being the best means that we always strive to excel in everything we do. Our dynamic team provides the highest quality service so that our customers are happy they chose Cathay Pacific. We put safety first We grow a winning team We provide outstanding products and services We consistently deliver Service Straight From The Heart We produce superior financial returns We support Hong Kong We are a socially and environmentally responsible company

Serving Hong Kong for six decades

C

athay Pacific Airways has been proud to call Hong Kong its home for the past 64 years, and the airline works hard to promote the city and build its reputation as one of the world’s most important international aviation hubs. The airline has seen rapid growth in recent years, spurred by its huge investments in new aircraft and infrastructure at Hong Kong International Airport. Like its home city, the airline has big ambitions and its vision is both bold and simple: to be the best airline in the world. But it will never be an easy ride. The airline industry is noted for its volatility, and over the past decade Cathay Pacific has had to deal with the impact of a range of crises including bird flu, 9/11, SARS, soaring fuel prices and the hugely damaging effects of the global financial crisis of 2008-2009. The downturn hit Cathay Pacific’s passenger traffic and freight business hard, but the airline did not panic, keeping its international network intact and its team in place. It pared back on capital expenditure but at the same ensured there was no impact on customer-facing services. In a huge show of solidarity, the vast majority of Cathay Pacific staff signed up for unpaid leave. The airline’s strategy during the downturn paid dividends when the business turnaround began in the last quarter of 2009. Cathay Pacific found itself in a good position to quickly restore services, announce new destinations, aircraft orders and product enhancements. The business rebound was stronger than anyone anticipated and in mid-November 2010, Cathay Pacific announced it expected to make a record profit of at least HK$12.5 billion for the year. As a mark of its general confidence, and ongoing commitment to Hong Kong, the company is now going ahead with the purchase of new aircraft valued at more than HK$115

billion and is investing HK$5.5 billion in a state-of-the cargo terminal at Hong Kong International Airport. Everything the airline has achieved has been done under its own steam; Cathay Pacific receives no form of government support. Investing for the future The Cathay Pacific Group – which includes sister airline Dragonair and all-cargo carrier Air Hong Kong – operates to more than 140 destinations around the world, employing a fleet of some 160 aircraft. Cathay Pacific itself now operates a fleet of 121 wide-body aircraft for both passenger and cargo services. The fleet is still young, with an average of less than 11 years, but the airline is keen to invest for the future to ensure it continues to operate the most modern and fuel-efficient fleet possible. An order for 36 aircraft announced in August 2010 was Cathay Pacific’s biggest single purchase to date. The airline now has a total of 65 aircraft on firm order, including 18 Boeing 777-300ERs, 7 Airbus A330-300s, 30 Airbus A350 XWBs (Extra Wide Body) and 10 Boeing 747-8 Freighters. A total of 15 aircraft will be delivered in 2011 alone. Other significant investments include the building of a new HK$5.5 billion cargo terminal at Hong Kong International Airport, and enhanced products in the cabin and on the ground. The cargo terminal will begin operating in early 2013 and will boost the efficiency and competitiveness of the Hong Kong air cargo hub. The terminal is being designed to handle an annual air cargo throughput of 2.6 million tonnes and its heart will be a HK$1.4 billion mechanical handling system - the most advanced in the world to date.


AIRLINES This page clock-wise: Cathay Pacific aircraft B777-300ER in the air, Cathay Pacific cabin crew serving passenger inflight, The People of Cathay Pacific Opposite Page: Mr. Tony Tyler, CEO, Cathay Pacific

FAST FACTS

Gateway to the Mainland A key focus for the airline is to enhance Hong Kong’s position as a leading international aviation and gateway to the Chinese Mainland. An important development took place in September 2006 when Cathay Pacific entered into a strategic relationship with Air China. Air China now holds a 29.99% stake in Cathay Pacific while Cathay Pacific holds 19.27% of the shares of Air China. The two airlines are cooperating on a number of fronts, including the establishment of a cargo joint venture to capture airfreight opportunities of the Yangtze River Delta region. The joint venture is expected to begin operations in early 2011 using an existing carrier, Air China Cargo, as the platform. At the same time as the relationship with Air China was established, Dragonair became a wholly owned subsidiary of Cathay Pacific. Dragonair is an awardwinning regional carrier that operates a fleet of 32 aircraft to 33 destinations, including 17 in Mainland China. Service and product excellence The Cathay Pacific service philosophy, “Service Straight From the Heart”, is summed up in a service style that is always efficient and professional, but also friendly and caring. Through its recent strategy review, the airline has put in place a number of initiatives that are already helping to boost the level of service provided by its staff. Foremost among these was the unveiling of its new Business Class product that will help to redefine the travel experience for premium passengers and put Cathay Pacific ahead of the game in the ultra-compet-

itive market for international premium travel. The cabin – which will offer one of the longest and widest seats in the sky– will be introduced on the A330 and Boeing 777-300ER fleets starting from March 2011. On the ground, Cathay Pacific opened The Cabin, its latest passenger lounge at Hong Kong International Airport - a 1,339-square-metre space located by Gate 23 on the airport’s central concourse. The collection of Cathay Pacific Group lounges at Hong Kong International Airport includes three other departure lounges –- The Wing, The Pier and G16 – and The Arrival for passengers flying into Hong Kong. Social responsibility Cathay Pacific is fully aware of its responsibility to the community it serves. The airline has a number of well-established community initiatives in place that have a particular focus on helping young people. The airline has also developed a detailed strategy for running a sustainable business, and its 2009 Sustainable Development Report earned an A+ rating under the influential Global Reporting Initiative guidelines, recognising both the in-depth nature and transparency of the reporting. In 2010, Cathay Pacific was honoured to receive the Total Caring Award - the top award under the Caring Company Scheme organised by the Hong Kong Council of Social Service since 2003. The award recognises local companies that demonstrate a “continual and sustainable total commitment in caring for the well-being of the community, the employees and the environment”. The airline has been awarded the Caring Company Logo every year since the Caring Company Scheme was launched.

.

• Cathay Pacific Airways operates a fleet of 121 wide-body aircraft • Average age of passenger aircraft in service: 10.8 years • Firm orders: 65 (7 Airbus A330-300; 30 Airbus A350-900; 18 Boeing 777-300ER; 10 Boeing 747-8F) • Flies to 141 destinations in 38 countries and territories • World’s 3rd most profitable airline (net profit) and the 4th largest airline in the world by operating profit. • Ranked 12th-largest in the world in terms of revenue passenger kilometres and 5thlargest in freight tonne kilometres. • Turnover in 2009: HK$66,978 million • Attributable profit in 2009: HK$4,694 million • Over 19,000 Cathay Pacific Airways staff worldwide • Cathay Pacific is a founder member of the oneworld alliance which has 12 member airlines and a combined network of 750 destinations worldwide. • Cathay Pacific is a partner of Asia Miles, Asia’s leading travel reward programme.

HONG KONG BUSINESS ANNUAL 2011 | 89


CHIRAM STRATEGIC GROUP

PHILOSOPHY

Chiram Strategic Group stands for quality and leadership in its hospitality and trading organisations. Its five speciality restaurants are renown for imaginative, innovative food and beverages, and its quick service Shakey’s pizza outlets are favourites in Asia. Chiram’s goal to deliver the best restaurants to Hong Kong people is accomplished through its groundbreaking Dial-A-Dinner service that delivers top-notch food from 150 restaurants. The Group’s trading companies provide high-quality equipment and furnishings to starred hotels and spas, concentrating on the best brands, on-time delivery, staff training and outstanding service. Expecting continuous expansion by catching Asian market trends, the Chiram Strategic Group is poised to grow, adding restaurants, representative offices and staff.

Imaginative food, beverages and hotel equipment from Chiram

Chiram Strategic Group, led by energetic Moss Bakar, is one of Asia’s leading hospitality and trading organizations in Hong Kong, Macau and China

C

hiram Strategic Group is the epitome of the saying “to leave no stone unturned” in every aspect of its business. Not only does it feed both Hong Kong citizens and tourists alike from its specialty restaurants and quick service restaurants, it also provides a food logistics service for the majority of Hong Kong restaurants and it is also a leading provider of equipment to star-rated hotels and restaurant groups. At the helm of the business is Moss Bakar, managing director of the operations of all the groups. Bakar, a genial young fellow, seems perfectly suited to the hospitality business. Graduating from Harrow School in London, receiving his undergraduate degree in business management from Boston University and further studying at Shanghai Jiao Tong University left him multi-lingual and multi-faceted. A work history in investment banking and experience at the highly rated Laris Restaurant at Three on the Bund in Shanghai left him perfectly capable of handling a large logistic and supply operation as well as outstanding restaurants. “We are bullish on the future, having weathered the economic downturn without much fuss”, he said. “I travel constantly to major cities and hotel fairs to keep on top of the game. Brands come and go but we are always looking for the next trend”. Bakar and a group of investors took over a 20-year old restaurant and hotel supply company five years ago, and the expansion has not stopped since then. His five specialty restaurants reveal his uncanny knack of finding a gap in the market and filling it.

In the restaurant arena, Duetto in the Sun Hung Kai Centre stands out for its unique combination of Indian and Italian food, with two kitchens to conjure up authentic dishes of each cuisine, along with spectacular views of the Hong Kong skyline and Victoria Harbour. This smart casual destination makes entertaining a mixed-nationality crowd of people easy as it covers almost all tastes. Black Stump, with its authentic and original Australian cuisine, is located along the bustling Knutsford Terrace in Tsim Sha Tsui. It serves premium steaks and seafood, and of course, grilled kangaroo and Wagyu beef. Outdoor seating and a large, open kitchen, attracts locals and tourists alike. Also in Tsim Sha Tsui is the famous Gaylord Indian restaurant, which opened in 1972, serving authentic Indian cuisine in a relaxed and comfortable setting. The restaurant offers live Indian music to add charm to the dining experience. Chiram Strategic Group also has two popular dining options at another tourist hotspot, Stanley. Located near the famous Stanley market, Rocksalt gives diners excellent food, top-notch service and competitive prices with stunning views of the bay. Saigon at Stanley, located in the rebuilt Murray building, gives diners the best of Vietnamese cuisine with a choice of indoor or verandah seating. Furnished with an old, colonial atmosphere, the rattan fans and large French doors, the interior is a cool celadon green, providing shade and respite from the hot Hong Kong days of summer. The elegant, delicate Vietnamese dishes and the


LEADING HOSPITALITY AND TRADING COMPANY This page clock-wise: Rocksalt, the newest restaurant in the CSG repertoire; Vietnamese cuisine in an elegant setting at Saigon At Stanley; Bakar takes the 20 year old Equip Asia brand into the next decade with a new logo; Two timeless cuisines in a stunning dining space at Duetto. Opposite Page: Mr. Moss Bakar, Managing Director, Chiram Strategic Group.

FAST FACTS

fine service lure people away from the bustle of the Stanley Market for a relaxing meal. Chiram Strategic Group hasn’t stopped there in the restaurant business but has acquired the world rights to one of the first quick-service pizza restaurant chains, (excluding the US, Japan and the Philippines). Established in the US in 1954 by Sherwood “Shakey” Johnson and Ed Plummer, Shakey’s Pizza has become a global phenomenon with 250 worldwide outlets, six of which are in Hong Kong and are operated by the Chiram Strategic Group. Bakar is planning a new, high-end restaurant in the coming years in Hong Kong. “We are developing a fine dining concept”, he said. “We want to create a destination restaurant for that special occasion, one for anniversaries and birthdays, engagements and marriages”, said Bakar. “Hong Kong is a very good market because it is all about eating out, and we are looking to provide the restaurant solution no matter what the occasion”. Hong Kongers enjoy convenience of dining at home and Chiram Strategic Group’s food logistic arm, which includes Dial-A-Diner, the market leader with 150 restaurants participation has the motto: “We deliver Hong Kong’s Best Restaurants”. Within the dynamic group is the trading arm, Equip Asia Limited, which is the leading provider in Asia for five-star hotel equipment and has four divisions. Chinaware, flatware, glassware and other tabletop items are supplied through Equip Asia; table and bedroom linen & guestroom amenities are traded through Pacific Rim Trading Ltd, information technology hardware and software are provided via Hostech Ltd, and high-end spa equipment is supplied through Pure Spa Asia Ltd. Naturally Macau offers Equip Asia Ltd. hotel supply

group ample opportunity to provide high-end goods to the raft of new six, five and four-star hotels and casinos opening there. Counting the Wynn Hotels, the Venetian, and the City of Dreams among its current clientele, the group is bidding to serve more. With an office in Macau, the company aims to be total solution provider for procurement management from the beginning to completion as well as offering maintenance services through its four subsidiaries. Shanghai, where the group just opened an office, is the home of the newly refurbished Peace Hotel, where Equip Asia assisted the renovation, and the group also supplied the Peninsula Hotel, along with new tourist hotels in Hangzhou and Suzhou. Bakar said, “We are looking to open an office in Sanya, Hainan as it is targeted that 40 five-star resorts will open within the next two years. With the majority of the brands represented by Equip Asia Limited being the top-tier brands from US and Europe, Bakar believes they will be in high demand in China as hotels are seeking only the best and most well-recognized brands to be in their portfolio to satisfy their clientele. In addition, the EAOutlet is Equip Asia’s retail store containing hundreds of homeware essentials and designer home accessories, specialty kitchen products, handmade crystal glassware, modern chinaware and more, at unbelievable prices. “Chiram Strategic Group will be growing and expanding aggressively in the next few years to continue our edge as being the leading trading and hospitality group”, said Bakar. “And we won’t stop there! We plan to expand our reach in the Asia Pacific region”. - Bonnie E. Engel

.

• Established in 1990, Chiram Strategic Group is one of Asia Pacific’s leading hospitality and trading organisations with restaurants and offices in Hong Kong, Macau and China. • Chiram Strategic Group’s diversity includes operating specialty restaurants – Saigon, Rocksalt, Gaylord, Black Stump and Duetto - under a variety of dining concepts; as well as six quick service restaurants under the name of Shakey’s Pizza. • The Chiram Strategic Group includes Equip Asia which is a leading provider in Asia for hotel & restaurant equipment (4 divisions handling everything from table top to room service equipment) and also 3 delivery logistics companies, including the market leader, Dial-A-Dinner, which delivers meals to homes and offices from over 150 restaurants.

HONG KONG BUSINESS ANNUAL 2011 | 91


CRYSTALLIZE.ME

PHILOSOPHY

“Crystal, representing a unique magic of luxury and style, is a definite symbol of identity in the Western societies. While in China, people have always lived by a philosophy based on the ancient traditional culture – “clothing, food, home, travel”. Crystallize•me has redefined these four traditional aspects into “Fashion, Cruise, Deco and Discovery”. The “crystal life” philosophy of Crystallize•me is not an indulgence in self-admiration rather it is to service the tasteful crowd. With the wondercrystal-ful pieces of Crystallize•me, the refined and the discerning you will discover what the Dolce Vita offers.”

Crystal glamour concept to include art

While the original Blue Heaven lights Hong Kong, the new Bao Gallery is putting more sparkle into China with a new www.crystallize.me line up

M

anaging Director Raymond Chui is celebrating the 10th anniversary of the original Blue Heaven Crystal Lighting Ltd.’s entrée into the Mainland China market with crystal chandeliers and fine crystal products. After a company restructuring last year, the original Blue Heaven name is now a product brand in China to signify the 100 percent European and custom made crystal chandeliers presented within the new outlet, Bao Gallery. Upon entering China in 2000, he found that the original Chinese name of Blue Heaven was already registered, so he decided to name the company Bao Xi Lai (which implies ‘Imperial Luxury’). In a market that is filled with copycats, Bao Xi Lai’s early aim was to pioneer its original concept of luxury decorative lighting. The concept has now grown to include creative crystal products made from the finest crystals available, branded under the name Jing Ke, which implies “Crystal Glamour”. “Blue Heaven Crystal Lighting, the 40-year old lighting company in Hong Kong, gave birth to Bao Xi Lai, a concept for China. Bao Xi Lai is using ‘Crystallize•Me’ as its English name and Web site www.crystallize.me. All Crystallize •Me showrooms will be branded as ‘Bao Gallery’”, Chui explained. Bao Gallery is primarily a crystal lighting showroom which also features other crystal products, such as crystal ornaments, glassware and gifts. Chui has opened shops in Beijing, Shanghai, Hong Kong and Chengdu. “After 10 years of growth, we have become much

more diversified, offering much more than just crystal chandeliers. Bao Xi Lai showcases the lighting products, while crystal glasses, jewellery, home accessories and gifts are marketed under the Jing Ke brand in China”, Chui said. His creative juices flowing, he began to separate and rebrand the products and experiment with new directions. Jing Ke (Crystal Glamour) is now split into two brands: jk-Blue (no Chinese name) for the jewellery lines and jk-Royal (Chinese name Jing Ke) to include crystal ornaments and gifts. The jk-Blue brand jewellery has two shops, one in Shanghai, and one in Beijing, with others planned. Jk-Blue’s official e-commerce website: www.jk-blue.cn and jk-Blue’s second website: http://jkblue.taobao.com offers lower line products. Part of the 10-year anniversary celebration was the grand opening in early December of the second Bao Gallery showroom located on King’s Road, Hong Kong, which is following the idea for a Frenchdesigned modern showroom for crystal lighting, fibre optic lighting, furniture and art that started in Shanghai. Before a customer enters the Bao Gallery, he notices the crystal-shaped faceted patterns on the exterior walls and windows of the shop, while the door, also faceted triangles, projects gleaming, coloured crystal handles. Ultramodern and sharp-edged cement walls and floors in the showroom highlight the beautiful chandeliers and the gallery hosts a beautiful white Rolls Royce that Chui wants to cover with crystals eventually. Everything, from the desks and computers


CRYSTAL LIGHTING clock-wise from top left: New modern design of Bao Galleries, “Blue Heaven” Series European design chandelier exclusive to Bap Gallery, Frontage of the first Bao Gallery on Shanghai’s famous Huai Hai Road Opposite Page: Mr. Raymond Chui Managing Director of Crystallize•Me

FAST FACTS

stands to the ceilings, is part of the overall, new gallery design. “Each showroom will have a wall of blue lights too, so that you know when you walk in whose shop it is”, Chui explained. “This concept is a first for China. Bao Gallery is also presenting lighting range and household glassware from the new Ray Living brand. The ‘Ray Living’ brand is born out of concept of ‘Living with Crystal’, which features core products, such as lighting and household glassware, but it will also include furniture and other crystal household accessories. ‘Ray Living’ is NOT named after me”, Chui laughed, “but the name works in both English and Chinese because of the way the sun’s rays hit and highlight the facets of crystal. Ray Living will also offer lighting products design in China”. These new ideas did not come from the ether. The economic slowdown, although it hardly affected Hong Kong’s and China’s growth, did provide time for Chui to re-evaluate the entire business direction. He hired a consultant to examine the Blue Heaven Crystal Lighting and Bao Xi Lai operations in early 2009, creating a new road map for the company for the next 10 years. The new business plan was completed in September 2009 and Chui opened a representative office in Chengdu at the end of 2009, part of the company’s long-planned entrée into south-west China cities. Right after Chinese New Year in 2010, Chui opened two new headquarters, one in Hong Kong and the other on Nanjing Road in Shanghai to create and promote the new concept of Bao Gallery. Then the company opened new logistic centres in both cities, providing more efficient and professional after-sales service and facilitating international purchasing. The first Bao Gallery opened in Shanghai in June of 2010 on Huahuai Road in Shanghai presenting a new, modern face for

the fine, old historical tradition of crystal lighting and crystal products. “Building these modern galleries, rather than ordinary shops, sets a new direction for the retail business and the customer shopping experience in China. It differentiates us from our competitors”, Chui said. “We will open different shops for the jk-Blue line in Beijing and Shanghai too. Our jk-Blue shops will appeal to a different customer base than Bao Gallery. Jk-Royal is the brand for all the ornaments and gifts, glasses and art pieces. We are the first to promote European glass arts in China”. Bao Galleries and JK-Blue shops have a rosy future, Chui feels. “In 2011, we will be continuing with our effort to promote crystal and glass art, another first for China. We will sell to individual collectors but we are also moving into commercial property developments and working with interior designers to bring the sparkle of crystal ornaments and art into homes, clubs and restaurants. ‘Living with Crystal’ is one concept to do that”, Chui said. “That’s why we are introducing lower-prices crystal products, so more people can enjoy it”. Chui is also very proud of his staff. The employees of Blue Heaven are still working there after more than 40 years, and all the staff members he hired in China over the past 10 years are still with him. He spends quite a bit on staff training so that they are not only familiar with all the products and the sources of the crystals, but also that they understand the steps for proper installation and use. “Throughout the expansion plan, we had to ensure that the foremost principle of the original Blue Heaven, i.e. to provide only the highest quality products and services is upheld. After all, this is what makes the brand so trustworthy”, Chui said. - Bonnie E. Engel

• 1969 - Established in Hong Kong • 2000 - Starts expansion in Mainland China, Shanghai • 2001 - Chosen to be the supplier for the VIP Hall for the APEC venue, Shanghai • 2006 - Opens first showroom in Beijing • 2007 - Opens six shops in China • 2009 - Company restructuring • 2009 - Representative office opens in Chengdu • 2010 - New head offices open in Hong Kong and Shanghai • 2010 - New logistic centres open in Hong Kong and Shanghai • 2010 – New Bao Galleries open in Shanghai and Hong Kong

.

HONG KONG BUSINESS ANNUAL 2011 | 93


DECOR HOUSE

PHILOSOPHY

At Décor House, we try our best to achieve the best service. To all of our employees, Décor stands for D=Detailed; E=Excellent; C=Customer-oriented; O=Organized, and R=Reliable. Décor House prides itself on unique, creative design solutions for all sizes of residential property, space-saving furniture and equipment, solid construction and consideration of each client’s needs. Décor House provides comprehensive interior design space planning solutions, transforms concept ideas into reality to make the impossible to be possible. In line with our aim of producing top-quality furniture, our products come with complete after-sales service. This include three-year furniture structural warranty and on-site checking by technicians during the first, ninth and eighteenth month after the purchase to ensure our furniture’s superior quality.

Décor House is outstanding in innovative interior designs

Décor House’s business revolves around the design-and-build service for high-end residential properties, plus innovative custom-made furniture, working with different major property developers for show flats and design reference, plus exporting furniture to the overseas market

D

écor House, with two large showrooms in Wan Chai and North Point, is very like a funhouse where nothing is what it seems to be at first. It is a place where creative people show you how to double the usable space in your home. Décor provides comprehensive interior design space planning solutions, and transforms concepts into reality to make the impossible to be possible. Flexible swiveling arms for televisions or home entertainment centres let the TV face in several directions, coffee tables rise and unfold to become desks or dining tables, and beds slide under false floors or into walls, freeing up valuable living areas. A sofa turns into a twolevel bunk bed with only a slight tug on a strap. The eager chief interior designers, Philip Yeung and Simon Wong, gleefully wave their arms over a seemingly solid pieces of wood, which suddenly slide up or down, or move right or left to expose recessed storage space, shelving, dresser drawers, DVD stands, bookcases, or whatever the family needs in that room. Many of the cabinets seem flush with the walls, but moving aside the textured feature door or wall in front exposes more space inside. Décor House designers are very creative and go much further than just designing furniture. They are also space planning magicians who help homeowners to gain space visually and functionally. They can’t help but grin when sliding a twin bed out from under a step-up floor holding a student’s desk, or pushing one top bunk bed over a desk to reveal more drawers that double as steps up to the bed. Residences

are the main focus of the company, which provides both customers and property developers with ideas for most rooms, home offices, kitchens, bathrooms and bedrooms. “The company employs over 23 designers to accommodate the needs of multi-generational families in all sizes of flats. The designers are divided into categories, modernism, simplism, naturalism, cyberism, traditional Chinese and European traditional, plus a mix and match style that utilises the best of each”, said Marketing Manager Eric Law. “Every designer is a graduate of the Hong Kong Interior Design School, and they all study environments, interior design and furniture Design. Some of them are architects as well”. There are few criteria’s that lead to the excellent quality, innovative, custom-made furniture. First of all is the designer’s innovative idea. Second is the excellent imported German raw material, and lastly is the exclusive foreign manufacturing machinery. “Although all the furniture and pieces are assembled in China, under our supervision, in order to be completive in price”, Law said, “we use only imported materials, such as E-1 Standard Solid MDF Wood from Germany, and accessories from Italy and Germany. We know not only are they safe and environmentally friendly, they are also sturdy and durable. All of our imported E-1 wood has passed the Formaldehyde Emission EN717-1:2004 standard. “We work with the different, name-brand furniture companies found at the Milan furniture Exhibition every


INNOVATIVE FURNITURE & CUSTOM MADE FURNITURE clock-wise from top left: In mid-2007, we acquired patents and won numerous awards for the Automatic Panel TV wardrobe, 6-second transformation of a coffee table to a dining table, Two-storey showroom with an area of over 6000 sq ft in Wan Chai set in 2007 Opposite Page: In 2000, we have set a 3000-sq ft showroom in North Point, 3-second transformation of a coffee table to a desk

FAST FACTS

year. Our designers import the most updated, trendy and functional furniture and introduce it into the Hong Kong market. “We also will work with other material suppliers’ goods so that we can provide a complete service for our clients. For example, our clients may buy mattresses, wallpaper, wall paint and fabrics, and kitchen appliances as well as hardware, toilet fixtures, and flooring materials from others. Our client may simply place an order with Décor House for a two- or three-bedroom furniture package from us and he or she is able to take advantage of our one-stop design service”, Law added. “In Décor House, about 40 percents of our business is from our existing customers who come again when they move to another house or from customers satisfied with our interior design service will refer us to their friends and associates”, Law said. The care taken with the home designs have paid off with two patented furniture systems. One is an Automatic Panel TV Wardrobe that can go in a living room or bedroom, with an automatic electronic sliding panel behind the TV, opening onto a wardrobe, shelves and drawers for clothes and accessories, or in the living room, a bookcase and other shelves for storage. There is also space for the DVD player and other equipment that is already wired into the unit. One drawer has a top that lifts up to reveal a mirror, acting as a vanity foldable dressing table for makeup and fixing one’s hair. The designers love motion sensors for the sliding doors and moveable mirrors so people don’t have to tug or pull them and are very clever in the use of hydraulic systems in all their designs. Ever practical, the designers take into account the

heat generated by wiring and electronics by building in cooling systems to wick away the heat and keep the units from melting down or overheat itself. They are also keenly aware of the importance of lighting, as they have a lighting designer who focuses on lighting for studying, lighting for a home theater, lighting for family gatherings and install false windows backed with soft lights to brighten up a small room without taking up any space. The visitor to Décor’s showrooms requires quite a bit of time to grasp the full extent of the sheer ingenuity of Décor House designs. Each client is unique to the staff, and they take the time they need to make each home or flat as efficient and easy to use as possible by creating one-of-a-kind furniture systems that are flexible, durable, functional and lovely. “As our company understands that sometimes our customers have a tight timeframe for remodeling or interior decoration, it is also a very important factor for us. Décor House is the first interior design and custommade furniture company which has a $1000 per night penalty guarantee for our all of customer. This philosophy extends to their own offices, where the management invests a lot of time and money making a comfortable, modern, efficient, friendly workspace for employees. The company also pays for annual trips for teambuilding learning experience and having fun (countries like Dubai, Shanghai, Switzerland, France and Germany). The company also provides a name brand car for experience coworkers, a clothing and haircut allowance and the company offers emergency funding for staff, so employee retention is extremely high. - Bonnie E. Engel

• Décor Suite Interiors Ltd was set up in 1984 (formerly called Elegance Engineering Ltd) with businesses divided into three main areas: Apartments, shops and offices. • Set up the first 2000 square foot showroom in 1996 at Kowloon and later relocated showroom to the Hong Kong Side. • Set up the 3000 square foot showroom ‘Décor House’ in North Point in 2000 • The company has grown fast so it set up an office on the 27th to 29th Floor of North Point Asia-Pac Centre at 2002 • In 2003, Décor House implemented and obtained certification for ISO9001:2000 Quality Management System and SGS – ISO9001:2000 • In 2007 opened a 6000 square foot showroom in Wan Chai.

.

HONG KONG BUSINESS ANNUAL 2011 | 95


Dentro

PHILOSOPHY

“Dentro” in Italian means inside in English. This represents how our company works magic on an inside space. Interior space can be transformed by using modern objects and furniture to make one unique.

Modern Life Ltd. carries furniture brands of extreme prestige High-fashion European designer furniture and lighting make any home picture perfect yet comfortable

M

odern Life Managing Directors Winnie Ma and her husband Philip run three branches of modern furniture and lighting stores in Central that feature only the creations of inspired designers and brands acclaimed worldwide. On Ice House Street is Déntro, the first store, a shop of mixed brands such as Seven, Arflex, Ingo Maurer and Emeco, offering the sleekest and most up-to-date living room and dining suites along with great ideas for bedrooms. The company also carries brands such as Fiam, Linteloo, and Droog from the Netherlands. Déntro means “the inside philosophy”, perfect for a home furnishing store. Nearby on Wyndham Street, they have a monobrand store, Maxalto from Italy that is renowned for precious materials, passion for detail and sophisticated selection of textiles, and a lighting store, Flos, that features modern fixtures and designer lighting. “Modern Life” seems the perfect name for a company that combines good taste with contemporary sensibilities that suit the Hong Kong lifestyle. Mrs. Ma was in the fashion business before moving into home décor, and it shows in her exquisite choices of furniture, fabrics and accessories. The showrooms fairly bristle with modern art and sculpture that accompany the sofas, beds and tables and the lighting that creates the ambiance and atmosphere. When she married 15 years ago and was looking for furniture for her new home, she noticed a lack of world renowned brands in the city, so she decided to open her own shop. As a pioneer, she brought in European, primarily

Italian, brands and she had the first showroom in Wan Chai that caught the imagination of Hong Kong’s rich and famous. That 10,000 sq. ft. showroom started the industry buzz about the company and soon she began attracted not only clients but interior designers who look to her for inspiration. The media soon caught up with her and she was featured in several magazines. “Many interior designers would come in and comment that the showroom was more like a gallery, so even architects and developers of luxury flats, clubhouses, dining facilities and amenities started to drop by, looking for tasteful yet exclusive furnishings and design ideas. I like contemporary art so I scour the galleries for pieces and ideas, both in Hong Kong and China, that compliment the furnishings. “Now”, she says, “there is much more competition out there and some of the brands and furniture designers have moved on. But I keep sourcing new brands at the trade fairs, especially in Milan, and I like to showcase younger designers to keep up with the trends overseas. We enjoy working with good partners and now many are good friends as well. We can promise them a good volume of sales”. Modern Life mostly deals with European companies that manufacture in their own countries. “Many modern furniture stores in Hong Kong feature items that are made in China”, she said, “but I prefer the higher, hand-made quality from Europe. When people buy from us, some items, such as an expensive sofa, can be sold after 10 or 15 years nearly for the purchase price. I have had customers for whom I helped design


LUXURY FURNITURE This page clock-wise: Alamo Bed: designed by Citterio in 2007, Emeco 111 Navy chair with CocaCola: Made from recycled plastic bottles, Naviglio by Seven Salotti, designed by Umberto Asnago, Table Lamps by Ingo Maurer Opposite Page: Winnie Ma & Philip Ma, Managing Directors

FAST FACTS

homes and they tell me that when they sold their flat, the buyer wanted to buy the furnishings too. That is very flattering”. Each piece featured on the Déntro Web site gives the name of the designer, especially the Arflex chairs and sofas. There are 20 pages of well-designed, colourful pieces to choose from. Although mostly Italian or Northern European, the buyer will find American and Japanese designers’ works too. World-famous Philippe Starck and Antonio Citterio design lighting fixtures for Flos, among others. “My brands are aggressive”, Ma said, “so we cooperate together well. Since we have our own home designers in house, we can help our clients, whether commercial or residential, get the best use of space with the right furniture and lighting to give each of the rooms a sophisticated, modern look. We also spend a lot of time training staff to share our passion with them. With the luxury flat developments, we work with the architects and property developers to help with their branding consistency and to create a theme throughout the establishment. We also help design show flats for developers to show clients what can be made of each space”. Ma sees a trend now of mixing antiques, especially Chinese, with modern furniture. “For example, you may see the famous Ming Dynasty wooden horseshoe chairs that are very ergonomic in design mix well with new pieces. The old Chinese ceramic stools are now being copied in wood, showing the cross-cultural influences in the industry. Hong Kong is an international city so both styles mix and match naturally. It’s

a metropolitan style you can find in New York, London or Paris. “Hong Kong people’s lives are changing and they work hard to attain a higher standard of living. There is a higher level of education and income so that creates more demand for sophisticated furnishings. Because Hong Kong is also a trading and financial hub, we get many different nationalities coming in so these influence each other. About 35 percent of our business is from individual families whom we help when they remodel their flats or when they buy a new home”, she said. Mr and Mrs. Ma also pay close attention to how people’s way of life is changing because of the creation of new technologies, such as a compact home entertainment system or an intelligent home security networking system. The challenge is to hide all the equipment yet make it very functional. Philip Ma said, “Home design makes a lot of difference to people but evolves over time. You can tell era by era the time of each new innovation or technological advance. We keep up with these trends, helping people integrate the new technology into their home design. It’s all about space utilization”. Mr. Ma continued, “We provide a total solution, including technology and lighting. We have good connections with our suppliers and we cooperate with international designers while looking for upcoming designers in Asia for the future. We wish to improve the lifestyle, let people appreciate their home environments through good design”. - Bonnie E. Engel

• Modern Life Ltd. was started in 1995 • Déntro started 1995 as a European designer furniture and lighting retail and wholesale business. • Flos is a mono brand store started 2003 to provide lighting solutions for home and commercial clients • Maxalto is a mono brand store started 2009 that features of one of the collections of the luxury furniture umbrella of B&B Italia, under the coordination of Antonio Citterio • Other brands include Seven, Arflex, Ingo Maurer and Emeco as well as Fiam, Linteloo, and Droog from the Netherlands.

.

HONG KONG BUSINESS ANNUAL 2011 | 97


FUJI XEROX (HONG KONG) LTD

PHILOSOPHY

The “Good Company Concept” was launched 1992, promotes three attributes aimed at keeping and balancing the company for being “Strong”, “Kind”, and “Interesting”.

Convergence of green performance and business sustainability

T

echnology and business trends today Enterprises continue to strive hard to create a greener working environment through energysaving IT solutions that have eco-friendly designs and functionality. While document management helps save paper use, it continues to be a principal focus for enterprises looking for smarter and more intelligent uses of new techniques, which allow them to store, manage, protect and share digital documents in a safer, more efficient and reliable way. Fuji Xerox has been making concerted efforts over the past few years to demonstrate that environmental and business goals don’t have to be competing objectives, but can be integrated into one business model. Fuji Xerox Hong Kong has undertaken a wide range of green initiatives starting around year 2000, including energy-consumption reduction in operations, evaluations of suppliers’ ‘green’ credentials, and adopting a ‘zero-landfill’ recycling policy for used products by establishing its own recycling centre in Tsuen Wan. It also recorded a total yearly 7% reduction of CO2 emissions during the fiscal 2009 compared to 2008, despite of increased business, demonstrating what is possible for companies upon integrating environmental impact reduction targets into mainstream management. Doing more with less, achieving better returns on investment and lowering total cost of ownership have all been key focus areas for our customers. Setting Role Model For The Industry The company aims to set an example for others. It has

devised a system for evaluating the environmental performance of its contractors and suppliers, which helps guide its procurement decisions, encouraging partners to ‘go green’. It also conducts a survey among channel partners to find out how ‘green’ they are and identify any room for improvement. The company has also developed the Ecological Workplace online tool, to help choose and run energyefficient document management solutions, helping end-users reduce energy consumption and operating costs. Over recent years, the company has won a host of other government and industry awards, starting with the internationally-recognised ISO 14001 Environmental Management System certification in 2003 for its work in integrating environmental considerations into long-term business objectives. In 2008, Fuji Xerox Hong Kong was the first company in the document management and printing solution industry to win the coveted, governmentsupported Environmental Performance Award at the Hong Kong Awards for Industries. This recognises Fuji Xerox Hong Kong’s longstanding commitment to implementing effective green strategies, which is reflected across the company’s operations and in its customer offerings. Technology And The Environment Fuji Xerox has seen greater investment in document management solutions from customers. With these market realities in mind, a new strategy was announced in 2010 encouraging customers to “buy


ENVIRONMENTAL PERFORMANCE This page Counterclockwise: Eco Copy wizard helps save paper by notifying users of the number of saved paper, First sustainability report published in November 2010,Fuji Xerox Eco-Manufacturing Co, Ltd. in Thailand Opposite Page: Henry Kwok, General Manager of Marketing at Fuji Xerox (Hong Kong) Limited FAST FACTS

fewer machines’’ and instead, make better use of intelligent software solution such as ApeosWare Management Suite. This has redefined the rules of the industry, moving from a boxed mentality to a solution perspective, raising the bar for excellence and effectiveness in multifunction device management. This not only marked a new era for the industry, but also set out a new business direction for the company, fulfilling its green objectives and demonstrating the commitment to environmental protection. Green & Healthy Office In line with Fuji Xerox’s green approach, the new solution features an Eco Copy (see graphic) function on a simple, user-friendly interface, which provides features such as duplex and multi-up copying in few simple steps to reduce paper consumption. The interface display encourages the use of duplex and multi-up printing by telling the user how many sheets of paper have been saved. A basic advantage of the new solution is that all features require only a single server, which means a reduction in power use and CO2 footprint. With Fuji Xerox new solutions, organisations can set rules that minimise print use by exploiting multi-up and doublesided copying as well as controlling the volume of colour printing. “Going Green is not as hard as corporations might think,” says Henry Kwok, General Manager of Marketing at Fuji Xerox (Hong Kong) Limited. “Our new simple Green Solution evokes user consciousness about the environment and effectively reduces paper wastage.’’ This green focus and all the key features form a holistic strategy to effectively manage documents in the more demanding

environment of the future office. Fuji Xerox through its latest solution is now able to address each of the key user trends that are emerging in the changing workplace and aim to deliver improved company workflows and more effective business operations. Extra data security protection by Fuji Xerox Customers are concerned about data security in the multifunction document management solutions. Fuji Xerox, a trusted partner to customers, has stringent disposal and recycling processes of MFD hard disk in place to ensure the greatest possible protection of customer data, which includes: 1) Upon reaching its end-of-lifetime, the MFD will be shipped to the Fuji Xerox Eco-Manufacturing Co, Ltd. in Thailand where it is taken to pieces and recycled. 2) Dismantling the hard disk from the MFD and returning it to the customer for self-handling 3) Implementing international standard “3D Procedures” – ‘Degauss’, ‘Destroy’ and ‘Disposal’ of the hard disk in front of the customer. Fuji Xerox Eco-Manufacturing Co, Ltd. achieved its zero-landfill goal by placing an even greater focus on recycling. Its facility in Thailand, which is at the heart of the company’s International Resource Recycling System, has reached recycling rates of 99.8 per cent, generating 21,200 tons of re-usable resources from used products and consumables processed in FY2009. With climate change looming as a top-of-mind concern for most people, Fuji Xerox’s new direction will further help to meet its target of CO2 emission reductions of 30 per cent by 2020. - Kapila Bandara

• 2010 Fuji Xerox Hong Kong published the industry’s1st Sustainability Report • 2009 Ecological Workplace online was established • 2004 Tsuen Wan Recycling Centre started operation in Hong Kong • 2003 Acquired ISO 14001 Certification for environmental management standards • 2000 Fuji Xerox Hong Kong became part of Fuji Xerox Company Limited • 1997 Fuji Xerox ranked No.1 in the Hong Kong color copier/laser multifunction product market for 13 consecutive years (1997- 2009) (unit shipments)* • 1964 Rank Xerox (Hong Kong) Limited established *Source: IDC Asia/Pacific Semiannual Copier Tracker, 1997-2002; IDC Asia/Pacific Quarterly MFP Tracker, 20032009

.

HONG KONG BUSINESS ANNUAL 2011 | 99


GODIVA CHOCOLATIER

PHILOSOPHY

For nearly 85 years, GODIVA has created the world’s most elegant and hand-crafted chocolates to delight customers, from royalty to workers, adults and children. Only the finest quality Belgian chocolate is used, along with highquality ingredients for fillings and decorations. GODIVA operates its own shops to preserve its tradition of providing the finest chocolates in varieties appropriate to global countries and cultures. The company strives to be a business with customer satisfaction and delight as its ultimate goal.

For the sweetest of gifts, think GODIVA chocolates

Every occasion is suitable for giving a special box of the finest chocolates: anniversaries, birthdays, housewarmings and holidays, or just a dinner with friends.

G

ODIVA‘s history began more than 80 years ago in Belgium with its name given in honor of Lady GODIVA. The name dates back to the 11th century, at Coventry. The people of Coventry were suffering from heavy taxes. Lady GODIVA was determined to convince their lord to reduce the taxes. Therefore, the following morning she made her famous ride in the city in the hope of helping the citizens. To spare Lady GODIVA from any feelings of shame, they all graciously stayed indoors to prevent her from getting embarrassed. Moved by the fearless sacrifice by Lady GODIVA, Leofric decided to reduce the grateful people’s taxes. Today, in Europe, Lady GODIVA is celebrated in countless works of art, including tapestries, paintings, sculptures and literature. People can’t help but think of sweet thoughts about this fine lady. The remarkable Lady GODIVA is also appreciated as well by Joseph Draps so that he named his confectionary company as GODIVA Chocolatier. GODIVA is a memorable name for the best Belgian chocolate confections, offering comprehensive products worthy of its distinguished name. The GODIVA story begins with Father Draps, who is already a renowned “Maître Chocolatier”. In keeping with this tradition, Joseph Draps introduced GODIVA chocolate to Belgium in 1926. Draps opened his shop on a cobblestone street on Grande Place, selling his unique formula of rich chocolate with unparalleled smoothness. With a remarkable eye for details, he set forth the standard at GODIVA for innovative selection of elegant, European shell-molded designs and beautiful packaging.

Through the years, these standards have been maintained as assiduously as Draps’ recipes have been guarded. As a result of this adherence to Draps’ heritage, GODIVA chocolates evoke the greatest in confectionery excellence. The same careful attention to quality is apparent in the exquisite European-style gold ballotins and handcrafted seasonal packaging that have earned GODIVA a reputation for design excellence. Among some of Pierre’s famous creations are that he added nuts to the chocolate, and produced chocolate “Fabiola” for the King of Belgium Baudewijn and his bride Fabiola, which earned the company the right to serve the Belgian royalty. Another of his inventions, “Autant”, was inspired by the feather in the hat of heroine Scarlett O’Hara to celebrate the premier of the movie “Gone with the Wind” in 1947. The inventions and new tastes have not stopped since. The company has two major productions centres, one in Brussels for the Europe, the Middle East and Asia market, and one in the US in Pennsylvania for the North American market. Each market is tested by focus groups and new chocolates are brought to the markets only if they have the right taste, balance and intensity that say ‘GODIVA’. John Holmberg, Managing Director for the Pac Rim said, “We operate our own stores to make sure we can offer GODIVA as it should be offered to our customers. It’s important to have the quality control and to assist consumers to feel the luxurious GODIVA experience. Staff training is particularly intensive.” Since its introduction to the America in 1966, GODIVA Chocolatier continues to be the leader in the premium


PREMIUM CHOCOLATIER clock-wise from top left: Mr. John Holmberg - Managing Director, GODIVA Pac Rim, GODIVA 2011 Limited edition Chinese New Year Collection Gift Box, GODIVA Chinese New Year Ultimate Hamper Opposite Page: GODIVA Flagship store located at ifc mall, Hong Kong

FAST FACTS •

chocolate category. Its first GODIVA boutique in the US was in New York on 5th Avenue. Japan first tasted GODIVA chocolates in 1972, when the company opened a counter in the Mitsukoshi department store and the company is still a leader there in the following 40 years. GODIVA now owns and operates more than 450 boutiques and shops worldwide, with its products available as well at finer department and specialty stores. The company has come to the Asia market by setting up its first location in Hong Kong in 1998, followed by Singapore, Taiwan, Macau and Malaysia. It gained a foothold in China through the trendy city of Shanghai by establishing its premier outlet in Grand Gateway Mall in 2009, followed by the opening of its first flagship Café at Xintiandi in 2010, bringing an unparalleled experience of premium Belgian chocolate to such a notable market in the Orient. There, customers not only enjoy the GODIVA exquisite chocolate pastries and cakes specifically created by the GODIVA Chef Chocolatier, but also a range of mouth-watering chocolate martinis and other irresistible chocolate cocktails and other confections. GODIVA has now also expanded its territory to Beijing, Shenzhen and Guangzhou. Holmberg is really pleased with his assignment in Asia covering six countries with boutique shops in good locations in all the major cities. “The China consumer reaction has been encouraging. China has a strong, gift-giving culture and we are tapping into that huge market with special Chinese New Year offerings, such as our legendary gold ballotins or gold boxes that are very distinctive. We already have the ‘Year of the Rabbit’ boxes produced with special

flavours to appeal to the Asian palate. “We have a rabbit-shape chocolate filled with a delicate mousse of black tea and ginger to celebrate the New Year”, said Holmberg. “We pay attention to every little detail in every single market”, continued Holmberg. “GODIVA changes with the seasons and the holidays. The Mid-Autumn Festival is a great opportunity for us to make chocolate moon cakes in hazelnut praline with roasted caramelized soy piece filling. “We are promoting our red and green Christmas line now in Hong Kong, China, Singapore and Taiwan, and will be filling our shops with the red and gold Chinese New Year boxes very soon. We create special limited edition gift boxes and luxurious package design for the Chinese market, all decorated with Asian motifs and themes.” GODIVA is branching out from the ‘gift’ culture of chocolates to self-gifting by tempting people to treat themselves. Each shop offers individual pieces of many different chocolate flavours and fillings for that on-the-go concept. The company has also provided lines of chocolate drinks – Chocolixir, and has an ice cream collection during summertime. Of course there are all shades of chocolate from dark to milk and white, some with fruits and nuts, while some tiny as chocolate pearls in small tins. Other delicacies also include beautiful biscuits, chocolate spreads and cocoas. “Pac Rim is a huge potential market for GODIVA. Our brand is doing very well. People love our products, love our brand and we are going to continue to innovate across the brand to find new ways of delighting consumers”, concluded Holmberg. - Bonnie E. Engel

With exquisite taste, premium quality, seasonal packaging, exclusive boutiques and innovative products, GODIVA Chocolatier is dedicated to over 80 years of excellence and innovation in the Belgian tradition. Recognized around the world as the leader in premium chocolates, GODIVA brings the most ultimate chocolate experience and emotional appeal of gifting to chocolate lovers worldwide. GODIVA now owns and operates more than 450 boutiques and specialty stores in more than 50 countries, offering chocolate lovers from all over the world a unique and comprehensive selection of GODIVA delicacies.

.

Approved Icon Logo+more hair covered for large scale usage® (May. 12/2005)

HONG KONG BUSINESS ANNUAL 2011 | 101


HENDERSON REAL ESTATE AGENCY LTD

PHILOSOPHY

Address of choice in Sha Tin Mid-Levels commanding spectacular views of lush, green hills and landscape, with homes offering world-class ambience.

A benchmark for luxury living set amid a green landscape

S

urrounded by verdant green hillsides of Sha Tin Mid-Levels, the deluxe property development Hill Paramount caters to the elite who aspire to live lives of privilege and exclusivity in a tranquil environment. Developed by Henderson Land Development Limited, Hill Paramount is set in a convenient location with easy access to Kowloon Tong, Mongkok and the rest of Hong Kong via the nearby Lion Rock Tunnel. A drive to Cheung Sha Wan and West Kowloon via Route 8’s Shatin Heights and Eagle’s Nest tunnels will take about 10 minutes. And nearby Tai Wai MTR station provides access to all other urban and non urban locations. I For families, schools, ranging from primary and secondary schools to tertiary institutes are within easy reach. Apart from the Chinese University of Hong Kong, high-calibre primary and secondary schools abound. These include Sha Tin Government Secondary School, Sha Tin Methodist College, Sha Tin Pui Ying College, Kiangsu-Chekiang College (Sha Tin) and Jockey Club Ti-I College. Primary School Net No.88 in Tai Wai boasts an equally impressive array of respected choices. They include Carmel Alison Lam Primary School, Immaculate Heart of Mary Primary School, PLK Dr. Jimmy Wong Chi-ho (Tin Sum Valley) Primary School and Shatin Government Primary School. Hill Paramount consists of two 31-storey towers. The 153 deluxe homes on offer include a choice of typical, split-type and duplex units with floor areas ranging from 1,456 to 5,252 square feet. The selection of variable layouts includes three-bedroom units, plus four-bedroom units with two en-suites and duplex five en-suite units.

Hill Paramount also offers four exclusive mega homes appropriately named “Chairman House” with stunning indoor and outdoor living spaces totalling between 7,300 and 10,000 square feet. With imposing ceiling heights of 13 feet soaring to a full 26 feet in the living rooms, each three-storey “Chairman House” provides incomparable space. There are private lifts, lawn for a relaxing stroll, and separate pool for a leisurely dip in the morning or evening. The green views at Hill Paramount are exceptional, stretching from Lion Rock to Beacon Hill, Eagle’s Nest, Needle Hill and Golden Hill and to the Sha Tin cityscape. Hill Paramount’s exclusive, elegantly-designed Club Master boasts of a private theatre with a 120-inch perforated screen, THX certified full HD projector and Bluray player, and comfy sofa seats, karaoke machines, a 39-meter wide pool shaped like a lagoon and a spa with two massage rooms equipped with steam bath. The design, inspired by lakes, streams and the ocean, subtly echoes the traditional belief that the wise love to be near water. Its predominantly black, white, grey, silver and leather interior is further enhanced by dimpling wall patterns and lighting effects that exude modern elegance. Taking pride of place in the imposing five-meter high reception lobby is the property’s magnificent 4.5-metre diameter crystal water drop chandelier. For a little excitement, there is the Skiing Practice Area, where one can sharpen up for the slopes on that next skiing holiday by training on a state-of-the-art skiing practice machine. Those eager to test their skills of precision and patience will not notice the time pass by in the Master Billiard Room.


PROPERTY DEVELOPER This page clock-wise: Stunning indoor and outdoor living spaces; A breathing room for relaxation and comfort; Embrace relief of the calm waters; Echoes of nature entrenched in minimalist design Opposite Page: Elegance in 153 deluxe homes of variable layouts

FAST FACTS

And while the adults are at play, the children can entertain themselves, in the Kids’ Wonderland, where little ones can meet and play with the giant mushrooms, fancy bug and unique, anthropomorphic playing cards troop. This enchanting vista even extends to an outdoor dreamland where a huge clock and upside-down teapot are sure to widen kids’ eyes and smiles. A magical distorted mirror house that will make tiny visitors look taller or smaller plus a challenging maze game will keep youngsters happy hour after hour. There is also separate pool for them. Meanwhile, the adults can sit back and watch the world go by at the Hill Paramount’s soothing Lush Aqua World, where residents discover delightful resortstyle water attractions surrounded by lush greenery. Step in to another world at Hill Paramount’s landscape garden, which echoes the minimalist design concept of leading boutique hotels, combining modern elegance with gorgeous flowers and plants. The immense window wall at the Shuttle Lift Lobby is sure to usher in a first-sight love affair with the soothing green expanse outside. The artistic sculptures and water features here further enhance the area’s tranquil, unhurried ambience. Step outside and find inspiration by simply strolling under the trees, enjoying a cup of tea in the tea garden or unwinding near the cascade lounge. A day at home with family and friends can also turn out to be pleasurable experience for the man and wife who enjoy trying their hand at a new recipe. Italian

kitchen cabinets from Varenna and Follina Cucine, as well as hobs, barbecue grill, steamer, over, fridge, coffee maker, wine cellar, all from Meile, make cooking, or baking a simple joy. Bathroom are no less enjoyable, designed with fixtures and fittings from Kohler, Roca, Duravit, Gessi, as well as an Advanced Samsung-Uasis Bathroom TV, meant to turn a private space into refreshing, relaxing haven. To ensure peace of mind, the homes are secured with a sophisticated user-friendly Home-Master Automation System, while an Interactive Household Appliance Remote Control System provides convenience. Simply log-in to the system via your internet connection to activate/deactivate lights and pre-set air conditioners in your living/dining and bedrooms. An ABB Triton Intelligent Light Switch that enables easy adjustment of lighting and scenario setting is fitted in the living/dining and bedrooms in all Executive Units. A remote control unit activating/deactivating airconditioners will further add to these units’ residents’ and their loved ones’ convenience. Also pre-installed in each unit is a Samsung touch-screen video doorphone that will enable residents to activate/deactivate lights and air-conditioners more conveniently. Executive Units also feature an additional Samsung doorphone in their master bedroom and kitchen. All this sophistication is to ensure that the resident truly feels at home.

- Kapila Bandara

• Hill Paramount, 18 Hin Tai Street Sha Tin • Two 31-storey towers • 153 deluxe homes including a choice of typical, split-type and duplex units • Floor areas from 1,456 to 5,252 square feet • Layouts include threebedroom units, plus four-bedroom units with two en-suites and duplex five en-suite units. • “Chairman House”, three-storey mega homes between 7,300 and 10,000 square feet.

.

HONG KONG BUSINESS ANNUAL 2011 | 103


HONG KONG MATCHMAKERS

PHILOSOPHY

• It is possible to be happy alone as long as you are not in denial. • If you are not happy alone, do something about it fast. • Age matters. The older, the more difficult . Start early, start soon, start now. • Seek help, be it from a matchmaker, a relative or a friend. It would be unwise not to. • Scrap that long list of demands. Remember, you are not perfect either. • “Matching” is not about whom you want, but whom you want who also wants you. • A “spouse” is not a gap-filler. If you insist on being unyielding, get a dog instead.

Brought together and made for each other

Hong Kong Matchmakers is helping hearts heal and make happily ever after possible

16 years and 2 children later, my ex left me for a Shanghai beauty. I was devastated. Hong Kong Matchmakers helped me heal, not just by making introductions, but the image consulting, makeovers, date coaching….. Little by little, my self confidence returned, I began to feel and look better… then they brought Larry to my life. I am very grateful.” Marcia Graham, a Human Resource Manager and Larry Goodwin, Regional Director Asia Pacific of a chemical company were married in August. “I have had over ten years of Lan Kwai Fong and Soho and that was quite enough.” said Tong Li, a Senior Civil Engineer . “ I wanted to settle down, have a family, and I decided to seek professional help because it was unlikely that the lady I was looking for would hang out where I usually hang out. It was the best decision I’ve ever made. ” Tong and Yin have been happily married for over two years now, and they are blessed with a beautiful baby boy Kuku. John Simpson, Managing Director of a Chinese American joint venture manufacturing optical fibres, has been dating since he joined Hong Kong Matchmakers. The expatriate is now seeing one lady with whom he plans to take their relationship to the next level. Anthony Gibbs, a solicitor, has been introduced to some women whom he describes as “elegant, well-groomed ’’ and most of all, are capable of continuing an intelligent

conversation. Lisa Kong, a regional marketing manager of a leading 5-star hotel chain has found her man and is preparing to take the wedding vows in February. Her grandparents, she points out, had been brought together by matchmakers, and she thinks the idea of well thought out, formal introductions, is efficient and makes sense. These successful, educated 40-somethings have gone on record about the experience opened up for them by Mei Ling Ng, who founded the high-end matchmaking service. Hong Kong Matchmakers is an elite service which has been certified by the Matchmaking Institute of New York. Mei Ling Ng, the Managing Director, is an experienced marketing professional with stints as Marketing Manager of Levi Strauss in the United States, the General Manager of May Department Stores (LA) in Bangkok, Trade Adviser of Hong Kong Trade Development Council in Frankfurt, and International Marketing Director of Dunlop/ Slazenger/ Puma in London. In Hong Kong, she was vice president of Bank of China and then struck out on her own. She sold two successful companies she founded and went into semi-retirement. These days, while being involved with Hong Kong Matchmakers, she is also engaged in community activities. Ms Ng, the author of How to Find a Husband,


MATCHMAKING SERVICES This page clock-wise: How To Find A Husband, the runaway best seller, Marcia Graham & Larry Goodwin, Anthony Gibbs, John Simpson, Tong, Yin & Kuku Li Opposite Page: The Managing Director of HK Matchmakers Mrs. Mei Ling Ng Liu and her husband Conway Liu

FAST FACTS

has even piqued the interest of a French TV channel, Paris Premiere, which zoomed in on her story in September 2010, just days after the book was published. The book is a light-hearted guide, presently available in all the Bookazine stores, Dymocks, Beachside, Metro Books as well as online: www.hkmatchmakers.com. The interest in finding partners through matchmakers is not unusual. In New York alone, the demand for high-end matchmaking services has soared 380 per cent, according to Ms Ng. “When you are young there are many options: the Internet, speed-dating, singles events, mixers … but as a person matures, discretion becomes the better part of valour. The higher in the world you reach, the more privacy you would require. Sooner, or later, matchmakers become the only option. For many senior executives who do not want to risk running into clients, colleagues, subordinates, gossipy neighbours or foes, it is no longer a question of going to the matchmaker or

not, it is where to go to find a good one,’’ Ms Ng explains. Those seeking compatible partners through her service are degree holders who are also high income earners. Among them are professionals, entrepreneurs and senior executives of both sexes based in Hong Kong and overseas. The women on Ms Ng’s books are financially independent, smart and successful people. They are in the 30-55 year age group. Many are home owners and Hong Kong Matchmakers, has verified their background.Well-educated men in the top income brackets who have registered with Ms Ng’s service are legally single, divorced or widowed heterosexual men, in the 35-60 age group. They too have been screened, she says. All that any man or woman seeking an introduction has to do is to register online at www. hkmatchmakers.com . A consultant will get in touch shortly to set up a meeting. - Kapila Bandara

• Winner of 2010 High Flyer Award • Hong Kong Matchmakers is certified by the Matchmaking Institute of New York • A member of European Matchmakers Alliance • A member of Professional Matchmakers Association • A member of Hong Kong General Chamber of Commerce • Winner of the European Union Marketing Award • M.L.Ng is also the Managing Director of Monsoon Hong Kong Ltd. • Board Member of American Women’s Association • Chairperson of AWA’s Education & Scholarship • Author of How To Find A Husband

.

HONG KONG BUSINESS ANNUAL 2011 | 105


HSBC INSURANCE

PHILOSOPHY

Open to different ideas and cultures; Connected with our customers, community and each other; Dependable and doing the right thing .

Leading bancassurer explores Asia’s untapped potential

Planting top bankassurer and insurance provider branches all over Asia HSBC Insurance provides opportunities to firms in Asia and mainland China, answering customers’ needs at a branch near their firm.

I

n the past few years, Hong Kong’s leading bancassurer and insurance provider, HSBC Insurance (Asia Pacific) Holdings Limited, has been spreading its footprint in Asia and mainland China. “In Asia, we have the manufacturing capability in nine markets. Hong Kong, Singapore and Macau are our most established entities, but in the last four years, starting in 2006, we moved in to Malaysia, in 2007 Vietnam and Taiwan, and in 2008, in to India and South Korea, and in September 2009, established in mainland China,’’ says Paul Menzies, Deputy Regional Head of Insurance at HSBC Insurance (Asia Pacific) Holdings Limited. In India, HSBC Insurance (Asia Pacific) Holdings Limited is the fastest-growing life insurer through a joint venture with Canara Bank and Oriental Bank of Commerce, which allows access to close to 5,000 branches across India and access to over 40 million customers, he says. “In South Korea, our partnership with Hana Bank gives us the ability to distribute in over 1,000 branches. In Vietnam, we have an 18 per cent stake in Bao Viet Holdings, the largest financial conglomerate in Vietnam.’’ “With our business model, we are the market leader in Asia, with our dynamic propositions. In Hong Kong, we are the No 1 bancassurer and insurance provider with market share of 26.7 per cent in new annualised life premiums.’’ Considering the population, Hong Kong is a

relatively small market for the firm, but opportunities abound, he notes. “We have a very successful, integrated bancassurance model, which means we have the manufacturing and distribution functions all within the same Group. We can manufacture products to suit the bank’s customer needs. We have insurance specialists who ensure that insurance is easy to sell and bancassurance is still very much on the rise in Hong Kong,’’ Mr Menzies says. In the fist half of 2010, he points out, four out of top five sellers of insurance were bancassurers, including HSBC Insurance (Asia Pacific) Holdings Limited. Having a strong brand is a part of this success. “Another factor in our success is that insurance is very much an integral part of the bank’s wealth management proposition. So with our brand and our expertise both in insurance and financial planning, we can cater for our customers’ insurance and financial needs all under the same roof. We can provide the same service quality,’’ Mr Menzies says. “We are a very customer-focused organisation. We sell products on a needs-basis, rather than pushing products. Our products are simple and easy to understand and we have a number of facets that support this. We have a 30-day service pledge to customers, a 48-hour jet claim service pledge, and travel insurance in Hong Kong. I believe we are the only company that provides travel insurance through our extensive ATM network, and we are the first company to provide travel


LIFE INSURANCE This page: HSBC Insurance offers a comprehensive range of insurance products to meet different customer needs.

blissful

Opposite Page: Paul Menzies, Deputy Regional Head of Insurance, HSBC Insurance (Asia Pacific) Holdings Limited.

FAST FACTS

satisfied

Lifestyle Wealth Protection Plus

1

insurance for the people disrupted by the volcanic ash Holdings Limited is looking beyond Shanghai. “We cloud in Europe in April.’’ have an application to open in Beijing.’’ In China, HSBC Insurance (Asia Pacific) Holdings HSBC Insurance (Asia Pacific) Holdings Limited Limited set up a 50:50 joint venture with The National had a strong start to 2010, he explains. “In the first half Trust in Shanghai with registered capital of 500 million of 2010, our profit before tax was US$1.6 billion, up reminbi, Mr Menzies says. “After one year, we rank NoWholeLife 36 per Protection cent year-on-year, representing 17 per cent of Plan 3 among foreign joint ventures. We launched 23 prodGroup profit before tax. This is a significant contribuucts in the last 14-15 months and we have multiple tion,’’ he says. distribution channels and that includes 30 bancassur“Net earned premiums was very strong and stood ance outlets via partner banks. We also have a direct at US$5.7 billion, up 11 per cent year-on-year. Net sales force of just under 300.’’ operating income was US$2.2 billion, up 13 per cent Already it has grown to be the market leader in year-on-year. The first half profit from our associates bancassurance in Shanghai and has found its niche. and joint ventures was up 63 per cent to US$300 “Our niche is the high net worth space. China is the million. home to the world’s fastest growing high net worth “Asia is clearly driving a significant proportion of population. McKinsey estimates that there will be that. All of the regional geographies are profitable. Asia 4 million affluent mainlanders by 2015. And by that accounted for 52 per cent of the global profit before year, China will rank fourth globally in terms of affluent tax, which is up from about 35 per cent in the similar families,’’ Mr Menzies says. period in the prior year. Europe contributed 16 per “China is also one of the world’s fastest-growing cent, Latin America 13 per cent, and North America 19 insurance markets. It’s the second largest in Asia after per cent. Japan and has the potential to be the world’s largest “Given our emerging markets strategy both at Group insurance market. By 2030, there will be more mainlevel and insurance level, emerging markets accountland Chinese over the age of 65 than there are under ed for about 65 per cent of profit. So we are clearly the age of 14. Population, sustained GDP growth over tapping into the huge potential of the underinsured.’’ the last two decades and very low level of life insurance penetration – in 2009, the level of penetration Life, pensions and investments are the core strategy was only 2.4 per cent of GDP.’’ of HSBC Insurance (Asia Pacific) Holdings Limited. HSBC Insurance (Asia Pacific) Holdings Limited will “Profit before tax associated with this product set was continue to develop its bancassurance network and up 33 per cent in the first half of 2010. LPI products will continue to focus on long-term financial planning generated nearly 40 per cent of the total Group insurand wealth management products. ance profit before tax,’’ Mr Menzies says. - Kapila Bandara In the new year, HSBC Insurance (Asia Pacific)

• In Hong Kong and Macau, HSBC Life (International) Limited offers life insurance and retirement schemes, and HSBC Insurance (Asia) Limited provides general insurance business including property and casualty insurance, and medical insurance protection. • HSBC Insurance (Asia Pacific) Holdings Limited is a wholly owned subsidiary of The Hongkong and Shanghai Banking Corporation Limited, which is owned by HSBC Holdings plc, the London-based holding company of the HSBC Group. It is the holding company for HSBC insurance manufacturing operations in Asia Pacific.

.

HONG KONG BUSINESS ANNUAL 2011 | 107


JIA INTERNATIONAL LTD

PHILOSOPHY

Jia’s company philosophy is to make the kitchen the heart of the home. Its importance cannot be underestimated as the centre of family activities, and it has both practical and aesthetic functions. A well-designed kitchen can improve quality time by being efficient and easy to clean. Jia is branching out to bedroom, office and bathroom cabinetry as well, offering custommade wardrobes and cabinets to fit every size room. Jia’s future strategy is to continue to develop the brand, provide more innovative designs and source new materials that are environmentally friendly. Quality workmanship, unique designs and after-sales customer service make Jia stand out in the market.

Jia International Ltd designs stylish, sustainable kitchens

More goes into planning a kitchen than figuring out where to put the stove and the sink

T

aking the company into new territory, Managing Director and Project Director Almon Au Yeung and her able assistant, Project Manager Dora Chow, are continuing the development of their in-house brand called “WOW” which has had a simple mission for their clients since 1999: “A dream kitchen with heart”. Both Almon & Dora feel that the kitchen is the heart of every home, and even the company name “Jia” means “family” in Chinese. The WOW factor is enfolded in every custom design. W for “wish”, O for “original” and W for “wonder” encapsulate the feelings they wish their clients to have as they appreciate their new kitchens. Not only do Jia kitchens fit into each unique kitchen space, using the best materials, trendsetting designs, latest technology and innovations, they are also built to reflect each customer’s character and style of cooking, either Western or Chinese or a combination of the two cultures. Every little detail counts. Dora said, “We ask our customers about their cooking habits, if they work with a wok or oven more, are they electrical or gas oriented. We recommend a stove hood from Unico, a professional Chinese kitchen supplier, who offers modern water system ventilation, so that water condenses, the grease or oil drops down behind and doesn’t build up. It provides a safer, cleaner environment for Chinese-oriented cooking”. Jia’s WOW brand has been in development over 11 years and has always focused on choosing different eco-friendly products and materials. The environment of the kitchen affects the entire home so Jia’s experts recommend that the cabinetry and furniture is of the E1

standard from the European standard, which originated from Brussels, the highest and most stringent rating possible. It rates furniture according to the amount of chemicals used in the manufacturing process and the degree to which it releases dangerous fumes, such as formaldehyde and other toxic particles. Paint, too, can contain harmful ingredients so Jia only uses sustainable, water soluable paints and coatings. The company is also aware of electrical efficiency and uses LED lighting and other energy-saving devices to create kitchens friendly to the living environment as well as having a stunning design and functionality. Almon said, “We are also concentrating on better lighting, a new type of LED kit for shelves and under cabinets, to create thematic moods inside a kitchen. “Being green is part of our DNA as kitchen designers. We take great care in choosing eco-friendly products and materials for designing WOW kitchen systems”, says Almon. “Although using sustainable products may add to the cost of some products, we endeavour to strike a balance by offering well-designed, functional and stylish furniture that has a minimum negative impact on the environment. “We have been able to concentrate more on growth and product evaluations lately,” she added. “We have doubled the size of our showroom, we are adding staff, and we have been working out ways to improve our designs, installations and service plus sourcing new accessories. We always feature the top range of products available”. Now Jia is doing research and due diligence on “smart” kitchens with more computer control over menu


KITCHEN DESIGNER This page clock-wise: Showroom Snapshot, Drawer Accessories BOB Bathroom System, Drawer Accessories, Kitchen & Shelving System Opposite Page: Almon Au Yeung, Managing Director of Jia International Ltd

FAST FACTS

planning and ingredient shopping. More microchips mean greater savings on electricity, water and gas usage in the future. Jia International has a great reputation for home kitchen design and is gaining momentum with interior designers, architects and property developers to assist with the plan for show flats and large residential developments. By bringing in works from a German brand, Alno, the second largest furniture manufacturer in the world, Jia is winning the approval of end users and developers in Hong Kong, China and Macau because of the range of products it represents. It has recently been supplying the design and products for large blocks of flats. Jia is a niche company, fitting in between the most expensive, all-European sourced kitchen appliances and furniture, and the all-Chinese made goods. It works almost exclusively by referrals, so the Jia brand name awareness is growing every year. “Whether an individual or a property developer, we want to give them the best of both worlds, the highest quality yet price conscious designs”, Dora said. Bedroom, Office, Bathroom (BOB) Moving out of the kitchen, Jia International is also beginning to design bedrooms, offices and bathroom systems, some on commercial properties as well as in residences. BOB systems, designed by Jia’s talented artists, offer composite wardrobe systems, bathroom cabinets and office cabinets that can be free-standing or built in. The office modules can be fit in like building blocks

and re-arranged according to the varying needs of any business. The BOB system allows all the cabinetry and door panels to match and can be tailor-made for each customer according to plan, fitting in with different modules in unique finishes and colours to suit the client’s taste. Jia works with Chinese factories for the custom-made pieces to ensure quick delivery. Because quite a bit of manufacturing of the bigger brands is done in China, Almon can use OEM products, which are excellent value and better quality for her customers. Sourcing in China reduces the lead time and helps with customer’s budgets, but she also insists on using German, Austrian or Italian parts and accessories for the main structures. “We can source cabinet doors, handles, special panels, and other items from China, but they must be of the same high quality as products from Europe,” she explained. Dora added, “Each customer works with our design consultant so he/she understands the storage requirements for his/her individual needs. Whatever the customer’s usual pattern is and how he or she would like to store things is at the heart of a well-designed bedroom, bathroom, or office. Our technical officer then draws up a layout plan before the actual designing begins. We care for details, such as handle-less or recessed drawers, which can be automatic or semiautomatic, opening at the lightest touch”. New product updates: The BOB systems will be on display in the Hysan Avenue showroom in Causeway Bay after Chinese New Year 2011. - Bonnie E. Engel

• Jia International was established in 1999 by Almon Au Yeung and her husband • Staff consists of 10, soon to grow to 14, full and part-time consultants and designers • The company has clients in Hong Kong, Macau and an increasing number in China, Japan and the US • Installation is done by highly trained craftsmen • Major products are sourced from Germany, Austria and Italy • Since 2003, some conceptual accessories have been designed and sourced in China • In-house designers keep abreast of the international markets and trends and seek ways to utilise space for maximum efficiency and sustainability • Jia has received a number of awards for its craftsmanship, service and entrepreneurial flair.

.

HONG KONG BUSINESS ANNUAL 2011 | 109


KADRIDEN INTERIOR DESiGN/ARCHITECTURE

PHILOSOPHY

Our ‘design and build’ concept aims to provide one-stop shopping for interior building work, from the design brief to completion and handover for a set price, delivered at a set time, based on professional standards. We cater to the residential, retail and corporate markets. By being designer, project manager and main contractor, we are able to manage each project effectively and efficiently by coordinating with all the suppliers and subcontractors.

Satisfied customers are architect Krishom Architecture’s goal

Krishom Holding, the prestigious commercial interior design architect, and its subsidiary Kadriden Architecture, a luxury residential interior design specialist, both offer one-stop quality interior design and build services for well-known clients

K

rishom’s commercial portfolio reads like a ‘Who’s Who’ of businesses and developers of Hong Kong. Even sections of the Hong Kong government are listed as clients of this architecture and interior design company started in 1994 by Nison Chan, chairman of the group and chief designer. Currently located in Happy Valley on Hong Kong Island, the group plans to expand to Kowloon and the New Territories soon, as businesses and people move closer to China and take advantage of the greater available space. Chan said he has developed an innovative project management system to make sure all the company’s projects are delivered on time and on budget. “We treat our customers’ money as if it were our own, and we treat our customers as our friends whom we don’t want to let down. We take care of everything, from brainstorming to planning to designing and building each project. We also manage the subcontractors, who have to go through the same process as our own designers and workers. “The construction process guide allows us to monitor every project down to the last detail on a daily basis. Our process book explains how to do everything, from large residential flat and home flooring and bathrooms to large-scale commercial and office designing or remodeling, and how to order and use the correct materials. Our customers trust us to make the designs harmonious and functional, whether residential or commer-

cial. “We have learned from our mistakes and realize that discipline is very important for every project. We take photographs of our progress and send one every week to our customers so they can see our progress. We must finish on time because we know the inconvenience that is caused by delays and overruns”, he said. He proudly displayed the thank-you and referral letters that the company has accrued over the years. “All our business now comes from referrals, from show flats to private homes, from commercial businesses to large property developments. We often get repeat business from people who move to a bigger flat or a commercial client that opens more shops or offices. More than half our clients are from the Mainland now, and business is booming”, Chan said. One of the jobs of which he is particularly proud is the Consulate General of Kuwait’s residence in Hong Kong, which was put to world-wide tender. Kadriden won the bid against all the other designers from the USA, Japan and Europe. One client’s house in Clearwater Bay, measuring over 20,000 square feet, was a challenge that the company eagerly took on. Kadriden specialises in large luxury properties, starting around 3,000 sq. ft. “The bigger, the better”, according to Chan. In the beginning, Krishom’s clients were mostly from the commercial and retail market sectors. Chief Designer Chan said, “Since we first started Krishom Architecture, we have been providing comprehensive


INTERIOR DESIGNER This page clock-wise: Concept Design Opposite Page: Nison Chan, Chief Designer, Kadriden Architecture

FAST FACTS

interior design space solutions and project management services for many reputable and listed companies in Hong Kong, most of whom, over the years, have become repeat customers”. Its impressive portfolio of commercial clients reads like the listings on the Hong Kong Stock Exchange, ranging from supermarkets chains to fashion to beauty outlets as well as banks and department stores, and show flats for developers to demonstrate clever use of space along with good design. Repeat customers for show flats include Cheung Kong (Holdings) Ltd., Henderson Land Development Company Ltd., Hysan and K.Wah International Holdings Ltd. Retail and office clients include, but are not limited to, Hang Seng Bank, The Hong Kong Jockey Club, JCDecaux, Escada, Polo Ralph Lauren Sourcing Pte Ltd., Max Mara, Emporio Armani, SaSa, Toys’R’Us, The Body Shop, Starbucks, Fortress, 3M, adidas, AIG, DKNY, Carlsberg, Wellcome and ParknShop. This list shows the range and scope of the projects that Krishom undertakes and completes satisfactorily. By 2006, Chan decided to expand the company by adding another subsidiary, Kadriden Architecture, which is dedicated to the luxury residential arena. The residential projects range from luxury developments such as High Cliff, May Road, Manhattan Hill, Villa Bel Air on the Peak to Regalia Bay, among others. Chan said, “Quality in every field and aspect of the whole process, from implementation to completion, is the key to our success. Our clients feel that with our

high integrity and years of professionalism, they can depend on us, even when it comes to choosing the style, colour and texture in materials that will perfectly match the design, from bed sheets to wallpaper. “Since we have a factory in China, we have also been asked to make the furniture and fixtures as well as bathroom and kitchen fittings”, he added. “We pay the same amount of attention to the factory production in China as we do to our Hong Kong clients’ jobs”. Chan feels comfortable about the future. As people wish to move up in their societies, they want a more gracious lifestyle and are willing to hire firms with good reputations. He sees more luxury residential properties coming on line, and more prestigious commercial clients wishing to upgrade industrial or business properties. In conclusion, he adds, “In order to maintain our current position in both the commercial and residential fields in the interior design industry, we need to continue performing to the highest level of quality in design and building. This is the secret of our success. Our ‘design and build’ concept has proven highly successful so far”. By being innovative and not restricting itself to design only, Kadridin’s concept of ‘design and build’ has transformed perception into reality. Its emphasis on a whole range of capabilities and a reliable system that demands attention to detail, dedication and careful project control has placed Krishm and Kadriden in an enviable position in a very competitive field. - Bonnie E. Engel

• 1994 - Nison Chan starts Krishom Holding to cater to clients in both the commercial and residential markets, providing design and project management to completion. • 1994-2006 Conceived and improved the ‘design and build’ concept for commercial clients, such as Hang Seng Bank, Sincere Deparment Store, Wellcome Supermarket and SaSa Cosmetics Company. • 2006 - Started Kadriden Architects to cater strictly to the residential market, concentrating on luxury residences throughout Hong Kong, Kowloon and the New Territories, such as High Cliff, May Road, Manhattan Hill and Regalia Bay.

.

HONG KONG BUSINESS ANNUAL 2011 | 111


LAN KWAI FONG HOTEL @ KAU U FONG

PHILOSOPHY

Hotel business is all about passion and enthusiasm, always thinking ahead and anticipating guests’ needs. Lan Kwai Fong Hotel @ Kau U Fong is filled with art and creative designs to differentiate it from others in this busy market. The hotel infuses style and design into each guest experience and ensures that the hotel’s visual message is full of character. “Don’t believe what you see. When you believe it, you’ll see it: This has always been my philosophy”, General Manager Rebecca Kwan said.

Unique boutique hotel in the heart of Hong Kong

Tucked away in the middle of Central, the Lan Kwai Fong Hotel offers guests much more than hospitality; it gives them an adventure

I

n the old days, people sought standardization, because standardization brought assured quality, standards, products and comfort by being in the comfort zone. Nowadays, people cherish design, personality, individualism and uniqueness. This is the reason that boutique hotels are flourishing all over the world, because they offer their guests the luxury of an alternative. The development of boutique hotels in Hong Kong started about five years ago. One of the first would be Lan Kwai Fong Hotel @ Kau U Fong, a boutique gem that is located in a fascinating part of old Hong Kong. It is only five minutes walking from Central, the financial, business and shopping district of the city, but the hotel is surrounded by a totally different atmosphere. “The hotel has grown together with the area”, according to Rebecca Kwan, general manager of Lan Kwai Fong Hotel @ Kau U Fong. “There were local printing shops, butchers and carpenters around this neighbourhood before but now it has become a fascinating area with art galleries, antique shops, designer boutiques and stylish restaurants, which has created a unique artistic and cultural atmosphere. It’s always like going on a treasure hunt in this area, a combination of old and new. You’ll never know what is there around the corner of the street”. The hotel’s location is extraordinarily attractive. It is situated in the centre of the trendy dining, nightlife and entertainment of Soho and Lan Kwai Fong. Central,

with its buzzing business district and various boutiques and shops, is within walking distance. Hotel guests benefit from an excellent transportation network; the Macau Ferry Terminal and Airport Express Hong Kong Station, Star Ferry, and the MTR station are just minutes away. The hotel itself is very charming. The contemporary design of Lan Kwai Fong Hotel @ Kau U Fong blends with oriental touches and incorporates unique design elements like jade turtles for the internet cable holders and Chinese Emperor’s costumes for photo frames. It infuses style and design into guest experiences. Its Harbour View Suites have private balcony which overlook the city and Victoria Harbour’s well-illuminated night view. Kwan added “There is a story behind every thought. For instance, the jade stone can calm people’s minds and let them have a good sleep so we hang it next to the bed. Turtles symbolize good health and longevity so there are two ponds of turtles in front of hotel entrance and also a stone one inside the room”. Kwan added, “All these elements are completed with passion and enthusiasm from our staff members.” Kwan believes what really differentiates a brand are the quality of its people and the service they provide. Anyone can build a luxury hotel but it is the consistent, warm, engaging and personalized service that makes guests feel unique and valued. Therefore the hotel has added a personal touch on welcome cards, a


BOUTIQUE HOTEL This page clock-wise: Deluxe Harbour View Room, “The Mercer” opening in Yr. 2011, Chinese mugs in guest rooms, Oriental décor in Breeze Lounge Opposite Page: Rebecca Kwan, General Manager of Lan Kwai Fong Hotel @ Kau U Fong

FAST FACTS

key card collection, and even the festive decorations and hampers. Kwan has a broad smile and a twinkle in her eye saying she was busy making up bespoke Christmas hampers right now as she found items in most of the commercial hampers are not attractive so she decided to make her own for the hotel. Kwan is a strong believer in hands-on management. She always inspires her staff and the hotel with her energy and thousands of ideas. She involves herself in all aspects of operations, from designing the hotel’s business card to developing business strategies. “It’s all about passion and enthusiasm in the service industry.” Kwan has actively participated in all different events. “Everything I saw, I experienced, I will try to link with hotel guests and see if the technology, design or idea can be applied to the hotel and benefit our guests”. The hotel is in a very competitive industry, a 24-hour, 365-day-a-year business. In order to stay ahead of the market, Kwan continuously tries to excel herself, be proactive and develop foresight. “As we are not an international chain hotel, there are no limitations, or pre-set standards. Therefore we can break through the tradition and do it in a better and different way. For example, we will tailor-make the welcome card for long staying guests, with the pictures of front line staff, including room attendant who cleans his room, the concierge, the restaurant manager and so on. Introducing our staff adds a personal touch and makes guests more familiar with the place and people, feeling more comfortable

and able to relax”. With the competitive advantage of convenient location, interesting surroundings, unique design and personalized service, no wonder the Lan Kwai Fong Hotel @ Kau U Fong achieves 30 percent repeat business. “One of the guests told us he knew about our hotel by another guest’s recommendation given to him by a hotel pool in Bali”, Kwan said. Passion is essential in service industry. Kwan appreciates her staff and encourages them to contribute ideas, welcoming their initiatives. “We want to maximize their talents and play to the strengths of each staff member”, she said. The hotel provides opportunities for staff to experience departments in which they are truly interested. Also, Kwan encourages staff to join more activities together to achieve better teamwork. There are bowling activities, departmental performance during the annual staff party, and they have actively participated in the activities organized by Hong Kong Hotel Associations e.g. the Waiters’ Race, a soccer tournament and the like. “Often interns and trainees come back for full-time jobs after experiencing the atmosphere we create in the hotel. Our parent company has a lot of new hotel projects coming up, such as, ‘The Mercer’ in Sheung Wan, which is opening in first quarter of 2011. Our existing staff is given the first priority for job development”, Kwan said. She is busy with the pre-opening and hoping to achieve another successful boutique hotel story in Hong Kong. - Bonnie E. Engel

• Kosmopolito Hotels International Limited (KHI), parent company of Lan Kwai Fong Hotel @ Kau U Fong, has more hotel projects coming up in Yr. 2011. 55-room contemporary design boutique hotel “The Mercer” is scheduled to open in 1st quarter of Yr. 2011. It is 2 minutes away from Sheung Wan MTR Station. Awards • 2010 stylish hotels selection – Vogue China • “Asia’s Leading Boutique Hotel” by World Travel Awards 2009 • Hong Kong Business High Flyers Awards 2008 “Outstanding Enterprises – Boutique Hotel” • “Best Boutique Hotel of China” by China Hotel Starlight Awards 2008 • “The Best Boutique Hotel in Asia” by Travel Weekly 2007.

.

HONG KONG BUSINESS ANNUAL 2011 | 113


LUXURY LIVING

PHILOSOPHY

Luxury Living is all about serving the best to our customers. We bring the latest European home furnishings to Hong Kong and China and help our customers design and install each piece. Luxury Living lives up to its name by promoting our motto: “Enjoy your Life”. We offer extended warranties on top of the manufacturers’ warranties and strive to provide the best products at the best price that best match our clients’ lifestyles. Brand-name, hand-crafted, highquality goods ensure customer satisfaction.

The good life starts with a comfortable, stylish home

By offering the top-of-the-line quality furniture and beds, Luxury Living has improved the lives of Hong Kong and China’s people

M

anaging Director Alex Tang’s many years spent in The Netherlands is immediately apparent in his debonair, casual manner and multi-lingual sophistication. Having spent over 30 years living and studying in Europe, he learned first-hand about gracious living and the accoutrements that go with it. After working for the most expensive bedding and mattress company in the world, Hästens from Sweden, Dr. Tang was asked to open a shop in Hong Kong. The first Hästens outlet was a small shop in Happy Valley that was the first in Asia was an immediate hit. Tang received the “Rookie of the Year” award from the company in 2007, his first year of business. His fellow dealers could not believe that he could sell so many expensive beds so fast, and sell them out of such a tiny space. He won “Dealer of the World” four years running. His success has continued mainly by word of mouth and referrals. He now is expansing into other types of luxury home furnishings. His new showroom at Ap Lei Chau features many fully made-up beds for customers to try. Many Hong Kong and mainlanders have already found his new outlet to come and examine the beds and furniture. He is also planning to open another small shop in Central in the Ruttonjee Centre on Duddell Street, where he plans to hold monthly social gatherings. Hästens has a world-wide reputation for hand-crafted beds. Tang said, “It is craftsmanship and attention to detail which makes the difference. Since the mid

19th century, Hästens has carefully maintained its tradition of master craftsmanship and a feel for nature’s finest materials, qualities that only the most skilful bed builder can bring”. The beds use genuine horsehair plus natural cotton and wool as part of the mattress construction and a luxury top mattress for the ultimate comfort. The multilayering provides support and the reversible spring mattress is designed to last for a lifetime. The springs are individually sprung and firmer springs are placed around the edges to prevent sagging. The superb craftsmanship and painstaking attention to every detail is evident wherever one looks on a Hästens bed: the well constructed bed frame, the sturdy, precise stitching of the fabric, the flexible stretch fabric on the top with the Hästens running horse emblem woven in, the famous blue-and white checkerboard toppers, all these details work together to create a bed for life. Whether the standard fixed bed or the adjustable models with remote controls, the Hästens experience is like none other. Luxury Living also offers beds from Kuperus mattresses offer similar luxurious nights, which serves by appointment to the court of the Netherlands. Kuperus’s Scandinavian Sleep system differs from all other sleep systems, not only visually, but, above all, because of its high comfort level and outstanding ergonomic qualities. Tang said, “Thanks to the best natural materials and over 100 years of Kuperus craftsmanship, every customer is guaranteed a good night’s rest for years to come.


LUXURY LIVING This page clock-wise: Crystal Edition- Hand made furniture with Swarovski crystal from Germany, Hasten Bed Vividus Continental Bed from Sweden, Leolux -Hand made furniture from theNetherlands, Keyton massage chair from spain, Opposite Page: Dr. Alex Tang, Managing Director, Luxury Living

FAST FACTS

“Luxury Living is also selling Auping Box Springs that are famous for their good ventilation and a built-in mesh base. We are proud to be able to offer these three highquality sleep systems to our discerning clients. One client from China bought three beds on his last visit and is back again today looking for more”. Branching out into luxury furnishing, Tang chose Leolux, a 75-year old company from the Netherlands that offers hundreds of styles and models of living room and dining room furniture. In the 1990s, the company moved into electrified, adjustable chairs and sofa. Tang explained, “Leolux offers a great variety of items for every taste and interior design. The company’s core values of ‘authenticity, tradition and innovation’ and dedication to real leather coverings make the furniture appealing to everyone. Only true design and craftsmanship can create authenticity. “Leolux does extensive testing on new products with their customers before releasing an item on the market. The customer, as well as the in-house and freelance designers, help design the final products. The company introduces 10-15 new items every year, producing furniture that is modern and furturist but also very comfortable”. Tang’s Luxury Living showroom in Ap Lei Chau is

only a few months old, but already it shows the extent of Tang’s good taste and sensibilities. He imports the newest models and latest trends from Leolux and arranges the furniture and smart accessories to show the possibilities for interior decoration. By adding crystal wine glasses and wine decanters to dining tables, using artistic vases and bowls on coffee table and shelves, and offering the finest linens and bedding, Tang helps his customers envision a better way of life. He plans to import more Dutch brands because of their high quality and commitment to European-style craftsmanship. The showroom sparkles with the addition of hand-made furniture from a German manufacturer who incorporate Swarovski crystals into the design and coverings of piece, such as sofa arms chairs and headboards for beds. Tang said this line was also doing very well in Hong Kong and China. Large, diamond-like crystals are embedded into the design as part of the stitching. Not stopping to rest on his laurels in Hong Kong, Tang also has shops in Beijing and Shanghai that showcase many European brand names. He sees continuing growth both in China and Hong Kong because more spacious flats are coming on the market and more people wish to enjoy the luxury lifestyle. - Bonnie E. Engel

• 2007-opened the Wong Nei Chung Road Hästens shop and won “Rookie of the Year” Award from the company and won the world-wide awards every year thereafter • 2010-opened the Ap Lei Chau showroom and began to import Kuperus, Auping sleep systems • 2010-began important Leolux and other luxury brands to Hong Kong to provide stylish, modern and luxurious home furnishings • 2011-create a presence in Central with a new showroom for new European brands

.

HONG KONG BUSINESS ANNUAL 2011 | 115


SA SA INTERNATIONAL HOLDINGS LTD

PHILOSOPHY

Sa Sa is driven by service excellence according to the three “S” system: Standards, System, and Supervision. Sa Sa achieves consistency and excellence in service through clear and stringent customer service standards, a wellestablished training system and supervisory mechanism. Over 1,400 well-trained beauty consultants are employed to provide professional services to its customers. The company always considers the good of the communities in which the company works.

One-stop beauty stores serve the Asia market

Women want to be beautiful and love to shop for cosmetics. SA SA offers them many choices of brands and tips from trained specialists

W

hen Dr.Simon Kwok and his wife Dr.Eleanor Kwok bought a tiny counter at the underground level of a mall in Causeway Bay in 1978, they did not begin to envision the enormous growth that Sa Sa has enjoyed over the years. Their innate entrepreneurial spirit attracted customers from the start and they soon bought out all the other little cosmetics counters around them. An enormous rent rise forced them out in 1989 so, with some trepidation, they moved to street level, opening their first stand-alone shop. From a 40-square foot counter in Hong Kong, the company today has grown to over 190 stores in Hong Kong and Macau, Mainland China, Singapore, Malaysia and Taiwan. Sa Sa entered the Taiwan, Singapore and Macau markets in 1997 as they went public, listing on the Hong Kong Stock Exchange, and set up its first store in China in 2005. However, they had already tapped into the huge potential of the Internet, starting their website for retail sales in 2000, serving beautiful women in 80 countries. Sa Sa is today’s most well-known regional “beauty” enterprise and is now the largest cosmetics specialty store chain in Asia. According to the “Retail AsiaPacific Top 500” rankings of Retail Asia magazine, KPMG and Euromonitor in 2010, Sa Sa is one of the top 10 retail groups in Hong Kong. The company’s future looks rosy-cheeked. Dr.Simon Kwok said, “The buoyant Asian economic environment, the increase in travel and tourism, and the upsurge

in consumer confidence, all give us reason to believe that the upcoming period will be favourable for the continuing growth of our business. The soundness of our financial platform, the flexibility and forward vision of our management, and the consistency and resilience of our performance, have enabled us to continue broadening our customer base while developing the potential both of our core Hong Kong and Macau markets, and of our mainland China and other markets. We are confident that Sa Sa will continue to deliver sustained growth for the rest of the fiscal year and beyond”. People from Mainland China still flock to Hong Kong to stock up on facial cream, lipsticks, powders and blush, and specialized shampoo even though the company has opened shops in Mainland China, because the Hong Kong stores offer more choice and the latest in beauty products. And China’s women are beginning to spend money on cosmetics and other hair and body-care products as incomes rise. The company’s offerings cover a wide range of quality professional brands at varying prices in order to cater to a diversified customer base. Sa Sa sells over 400 brands, with around 100 exclusive to Sa Sa. The company has 15,000 products including skincare, fragrance, make-up, hair and body care and accessories, including own-brands and exclusive international brands. As one of the largest sole agents in Hong Kong, Sa Sa represents over 100 international beauty brands in Asia to name a few, such as: • Elizabeth Arden, a leading global prestige brand (of


RETAIL CHAIN clock-wise from top left: Sa Sa sells over 400 brands, covering 15,000 skin, hair and body care products and health and beauty supplements, Méthode Swiss Brand Ambassador – KateTsui, Champion of Miss HK Pageant 2004, Largest “Sasa” store in Asia located at Albion Plaza, Suisse Programme Brand Ambassador – Barbie Hsu, actress and author of beauty books Opposite Page: Dr.Simon Kwok, JP, Chairman and CEO and Dr.Eleanor Kwok, BBS, Vice-Chairman

FAST FACTS

the top 10 beauty brands in US) • Nuxe and Caudalíe, among the top three brands in perfumeries in France • Collistar, the number one brand in perfumeries in Italy • Suisse Programme, one of the three Swiss skin care brands named as Luxury Superbrands, with Barbie Hsu (“Big S”), a famous actress in Asia and author of beauty books, as its brand ambassador • Ferre, Blumarine, Iceberg, Byblos, Pal Zileri, Paris Hilton, all leading fragrances Sa Sa constantly has new product launches on behalf of the principle brands to introduce the newest and latest fashion accessories and beauty products to its avid fans. Knowing that the make-up alone is not enough, Sa Sa offers many value-added services, such as complimentary skin analyses and make-up demonstration services to its customers by highly trained professional salespeople. Personalised customer service is a hallmark of Sa Sa. The company’s professionally-trained beauty consultants offer recommendations across beauty brands. Sa Sa’s staff go through more than 200 hours of training before they become qualified beauty consultants. Continuous training is also provided to existing beauty consultants to update their skills and knowledge. As of 30 September 2010, the group had a

total of 3,172 employees. Sa Sa is a consistent winner of service contests in the retail trade. As one of Asia’s leading companies with a well-recognised brand name and profile, Sa Sa is committed to the sustainable development of the communities in which it operates and to the integration of environmental, ethical and social principles into all its business decisions. Sa Sa believes that a reputation for integrity and social awareness is one of the most important assets a company can possess. To this end, the company has undertaken many social and environmental initiatives over the 32 years of its history, enhancing the well-being and sustainable development both of the company and of the broader community in which its customers live and work. Sa Sa also participates in and sponsors community activities. For example, Sa Sa now undertakes large scale sponsorships such as the 2009 East Asian Games. Sa Sa was the Diamond Partner of the Hong Kong 2009 East Asian Games, in support of the weighty international sports event held in Hong Kong. Sa Sa was the silver Sponsor of HKSAR’s participation in Expo 2010 Shanghai China in order to contribute to the promotion of Hong Kong’s International profile. The company also was the title sponsor of the 2010 Hong Kong International Dragon Boat Races.

.

• The company was founded in 1978 with a 40 square-foot counter. • In 1997, the company listed on the Hong Kong Stock Exchange followed by opening shops in Taiwan, Singapore and Macau • In 2000, Sa Sa established an e-commerce website • In 2005, the first store in China was opened • Its over 190 stores and counters in Asia sell more than 400 international brands • Sa Sa is the largest cosmetics specialty store chain in Asia, according to the “Retail Asia-Pacific Top 500”rankings of Retail Asia magazine, KPMG and Euromonitor in 2010. • In terms of market share, for every two bottles of fragrance sold in Hong Kong, more than one bottle was sold by Sa Sa.

- Bonnie E. Engel

HONG KONG BUSINESS ANNUAL 2011 | 117


SOUND CONCEPTS LTD

PHILOSOPHY

Our two main goals are to keep up with all the technical changes in the world of highquality audio systems and to provide our customers with the best system designs for home and commercial property entertainment systems. We believe in our products, which are the finest loudspeakers, amplifiers, home theatre systems, cables and tuning devices, IP-based network system, smart control and automation systems, CD, Blu Ray players and D/A converters available on the market today. We work very hard to solve the challenges of each, unique installation and guarantee our systems for one year after completion.

Changes in the AV industry but value is constant

Keeping the spirit of the company intact, HK Sound Concepts tracks technology for good value

The iPhone and iPad are game changers that can integrate music products, along with new server systems that can sync multimedia with new technologies”, said Managing Director Sherry Chung of HK Sound Concepts Ltd. “We can upgrade the MP3 to the WAVE format so the sound is much better. The audiophile can always discern the difference, if you compare two systems side by side, which one is compressed, as the sound has less body”. The company has been providing customers with the very highest quality sound and video equipment since 1990, when Chung founded the company. Her business has grown from 10 to 14 employees to provide custom home entertainment systems and solutions for private dwellings, hotel suites, recording studios and commercial properties. Her customers demand the best and are willing to pay for it, such as the luxury Mark Levinson amplifier that can cost onehalf million HKD. A luxury home theatre can cost up to $3 million. The JBL synthesis system, also top end, is used at the film award ceremonies at Cannes, France. A high-end ATC flagship speaker system can set the customer back more than a half a million dollars, or a THX certified home theatre system from Atlantic Technology can do the job for a bit less. One of Chung’s “secret weapons” is Sunny Lee who is on the road handling high-tech products and their integration into a home or commercial system. Sunny has been trained by all the high-end manufacturers to install the latest equipment not just for one room but for an entire household. “I love music so I am pleased to show others how to

fully enjoy it”, Sunny said. When we install integrated systems, we can put speakers everywhere with the NetStreams DigiLinX IP audio, Video and Control to create a seamless web where audio, video, gaming, HVAC, security and lighting all reside on one system, making for a truly interactive experience. We can play the music everywhere in the home and we can add intercom and security functions. We can also control the lighting in the home, using the Rako dimmer controls, which allow parents to monitor their kids to see if their lights are out at night”. In the living room or home theatre room, the universal remote control (URC) handles everything. Even a 7-year old child can turn the system on to play games, sing along to Karaoke or play musical instruments without waiting for Mom or Dad to come home. In multi-room installations, each room can have its own music and video combination simultaneously serving the different tastes of Mom, Dad, and all the children. Although playing more than one channel on the broadband television requires more than one broadband TV decoder. For commercial properties, such as spas in hotels or clubhouses in luxury property developments, each room can play the music the customer prefers by offering a large menu of choice to each client. These systems can also function as intercoms for hotel staff or family members, and a camera can be added to the network for baby or elder monitoring as well as for security. They work especially well in large, multi-level buildings. “One large house that was built on three levels needed audio on demand in 14 rooms and video on demand in 9 rooms with a surround-


PROFESSIONAL AV CONSULTANT This page clock-wise: Mark Levinson No.502 Media Console, Sunny Lee, Mark Levinson Flapship Model No.53 Amplifier, JBL-Synthesis Home Theatre System, ATC Flapship Model EL150 Speaker Opposite Page: Sherry Chung with her secret weapons - Jacky Woo on her left and Sunny Lee on her right

FAST FACTS

sound system in the home theatre room and the living room,” Chung said. This system cost almost $2 million. “One of our greatest challenges recently was a 4000 sq. ft. apartment that covered an entire floor of a large building. We integrated the security controls with the games and surprises in the guest bathroom through the AV and automation system” Chung’s other competitive advantage is Jacky Woo, her showroom manager, who is an audio expert for serious audiophiles. “When you buy an expensive sound system, you must consider the room acoustics. I can tune the speakers to balance the sound in the room to an optimum level. Even if the customer does not buy all the equipment from Sound Concepts, I can still optimize the system. In essence, I am the sound doctor”, Jacky said. Chung added that Jacky’s skills and service provided pay off over the long run for HK Sound Concepts because the customer will return to us when they upgrade or move and change their system”. Chung works with interior designers when a home is being built or renovated so that the entire system can be concealed, and soundproofed to not disturb neighbours. “Some customers have told us, on completion of the installation, that the sound experience is better than sitting in a movie theatre, because it has a better balance being in a smaller room that is designed and configured to the specific requirements of the room” Chung explained. “Many of my customers are the newly minted billionaires of China, who are rapidly becoming audiophiles, and we are also receiving referrals from, and being recommended by, the Hong Kong Indian community due to our high standards of service”. Sound Concepts also distributes the UK-based ATC loudspeakers, which are famous around the world in the professional market for their ability to accurately

reproduce sound. Through ATC’s commitment to multi-channel mastering and its direct involvement with leading players in the professional audio industry, ATC’s products are installed at some of the world’s most prestigious multi-channel studios and auditoria. Wherever the best is required you will find ATC. Chung prefers to use Netstreams for the whole house solution as the network system. She said Netstreams is the fastest growing company in the industry, with its advanced technology for IP-based designs and the distribution of uncompressed audio and video throughout a house or business premises. Sound Concepts, as the name implies, is the sound specialist, so the company works with various suppliers for the video components and screens. Chung does not sell TV screens but recommends plasma or LED over LCD formats and is monitoring product launches in the new 3D format. Chung believes in the best training for her staff, sending them overseas to be taught by the experts in the manufacturers’ factories. “It’s money well spent,” she said, “because I still employ the same people I hired when I started. As the equipment develops, so do my staff’s skills. I am a big believer in good aftersales- service. I know that many customers are too busy to learn how to operate the systems, so I have trained technicians standing by 24 hours a day to help them. Many sporting events are broadcast late in the evening or early in the morning in Hong Kong, so it’s important for clients to have access to a technician to fix technical problems, or just show them how to turn the system on,” she said smiling broadly. Most of the products have guarantees or warranties between three and six years, and Chung also offers a one-year onsite warranty for any equipment her company installs.

• Sound Concepts Limited was established in January 1990 in Hong Kong, by Ms Sherry Chung, who has been working in the audio industry since 1978. • Our goal is to import into Hong Kong and China premium quality audio and home theatre products with first class high-end performance but reasonable prices, and to provide an excellent after-salesservice to all our valued customers. • The company will continue searching for high quality audio, multi-room, home theatre and smart control products with outstanding performance to add to our distribution list. • Our team of experienced salesmen and technicians is looking forward to the opportunity to be of service to you at all times.

.

- Bonnie E. Engel

HONG KONG BUSINESS ANNUAL 2011 | 119


STARWORLD HOTEL & CASINO

PHILOSOPHY

With its customer-oriented focus and Asian heritage, StarWorld Hotel and Casino is dedicated to providing world-class integrated leisure, entertainment and gaming facilities with an Asian Heart. Since its launch in October 2006, StarWorld Hotel and Casino has provided unsurpassed guest experiences. The staffs act with deep personal respect for every individual that connects with StarWorld. The properties ongoing success is due to a strong management team and highly trained staff. Corporate citizenship is a priority and StarWorld prides itself on contributing to Macau’s allaround development through employment opportunities, social events and community service. As Macau becomes the entertainment capital of the world, StarWorld will have a starring role in its sustainable development.

“Star Rated” Experiences from Exceptional StarWorld Hotel & Casino

Step into StarWorld and shine like a star

S

trategically located on the bustling Avenida da Amizade in the heart of Macau’s dynamic gaming and entertainment hub, the award winning StarWorld Hotel is well recognized in the gaming-resort industry. Its renowned “Star Rated” hospitality and entertainment, together with renowned restaurants, elegant guestrooms, offer its valued guests the prestige of “When I step into StarWorld, I shine like a star”. The first 5-star hotel and casino in the Galaxy Entertainment Group, its world-class facilities embody distinct Asian characteristics of elegance, experience and innovation. An Asian flair is incorporated into its “Star Rated” amenities and ultra-high levels of personal service that appeal to both leisure and business travellers. Striking architecture and luxurious guest-room decor exemplify the outstanding quality of the StarWorld Hotel and Casino. The 39-storey StarWorld was designed by renowned Hong Kong architect, Mr. Rocco Yim. With a total floor area of 1.29 million square feet (120,000 square meters), StarWorld is illuminated by a double-layered glass curtain wall which adorned with engraved wave patterns. LED lights on the exterior display sparkling stars, turning StarWorld into a dazzling icon on the Macau Peninsula. “Star Rated” service has earned the hotel and casino several industry awards, including the prestigious 5-Star Diamond award from the American Academy of Hospitality Sciences and Top 100 Hotels

of China by the China Hotel Industry Summit. With award-winning services and accommodation, StarWorld Hotel and Casino provides everything a guest could desire of an entertainment and leisure destination. The 507 luxurious guestrooms and suites are designed for guests who expect discreet luxury and modern convenience. All rooms and suites at StarWorld offer stunning views of the sea, Nam Wan Lake or downtown Macau. Together with other wellequipped hotel facilities, the comprehensive meeting and banqueting facilities are a must see for any MICE travelers. A privileged “Star Rated” experience definitely includes dining at the one-Michelin star Jade Garden inside StarWorld. In 2010, Jade Garden was awarded one-Michelin star for the second consecutive year, and is the only Shanghainese restaurant in Macau to have received this honour. Elaborately decorated with bright lighting and vivid colours to reflect the restaurant’s modern cuisine, the dining room offers a relaxed atmosphere for guests to savour signature dishes including Jardin de Jade Tea Smoked Duck and Steamed Reeves Shad. A meal at Jade Garden is certain to be memorable and rewarding. The hotel’s Inagiku and Laurel restaurants have also been commended by the Michelin Guide to Hong Kong and Macau 2011. Guest can also enjoy “Star


LEADING HOTEL & CASINO This page clock-wise: StarWorld Hotel & Casino; Enter into the world of spectacular and experience the “Star Rated” service; Savour tempting international gourmet feasts by StarWorld; Become a member of Galaxy Privilege Club and enjoy great benefits; Over 500 guest rooms and suites command stunning panoramic views Opposite Page: “StarWorld, My Shining Star”

FAST FACTS

Rated” authentic regional Chinese specialties and international cuisines at other top-tier restaurants, including Sensations and Temptations. StarWorld’s extraordinary loyalty club, the Galaxy Privilege Club, gives members exclusive privileges and allows them do earn complimentary services throughout StarWorld and Galaxy MacauTM (set to open soon). As the latest initiative by StarWorld, the threetiered Galaxy Privilege Club is free to join, and is the only loyalty club in Macau that allows members to earn bonus points on every single dollar spent; whether on an exciting turn at the casino tables, fine dining or a stay in one of the guest rooms and suites. Bonus points can be redeemed at StarWorld and the luxurious resort Galaxy MacauTM, as well as facilities of partner establishments worldwide. One of the leading gaming properties in Macau, StarWorld is undoubtedly a favourite destination of VIP gamers. With its “Star Rated” entertainment,

StarWorld has enjoyed eight consecutive quarters of EBITDA growth and is a popular hotel with occupancy rates higher than 98 percent. The casino occupies an area of 140,000 square feet, with 233 gaming tables, more than 200 slot machines and games including Baccarat, Caribbean Poker, Blackjack, Sicbo and Roulette. Exclusive services and privileges are not limited to StarWorld. The Galaxy MacauTM, set to open in the first quarter by the Galaxy Entertainment Group, will be Macau’s first Asian-centric destination resort, offering Asian themed entertainment, Asian accommodation and Asian food. The resort promises to deliver “World Class, Asian Heart’’ service. Loyal patrons of these luxury properties stand to benefit from the best both have to offer. When guests visit StarWorld Hotel & Casino and The Galaxy MacauTM, they have every reason to feel privileged.

- Kapila Bandara

• Awarded Five-Star Diamond Award since 2007 by The American Academy of Hospitality Sciences • Named One Star Restaurant in Michelin Guide Hong Kong and Macau in 2010 and 2011 – Jade Garden • Awarded Top Ten Charming Hotels in China by Continental Diamond Awards of World Hotel Association (China) • Awarded Best Business Hotel in Macao at The 7th Golden Pillow Award of China Hotels • Awarded Top Ten Glamorous Hotels of China at China Hotel Starlight Awards • Awarded Best Gaming Hotel China at Golden Horse Award of China Hotel • Listed in Michelin Guide Hong Kong and Macau in 2011 and named Bib Gourmand Restaurant in 2010 – Laurel • Listed in Michelin Guide Hong Kong and Macau in 2009, 2010, 2011 – Inagiku

.

HONG KONG BUSINESS ANNUAL 2011 | 121


OneMBA, GLOBAL EXECUTIVE MBA PROGRAM – THE CHINESE UNIVERSITY OF HONG KONG

PHILOSOPHY

The Future is here ... your personal learning adventures from three of the four BRIC Countries. CUHK was the first university to establish a full-time MBA degree program in Hong Kong. Our OneMBA program, which we run in an alliance with four other well recognized and highly ranked business schools around the world was ranked in the top 22nd in the Financial Times Executive MBA ranking in 2010, a remarkable achievement given this was the fourth year this program was eligible for the ranking and it is considered to be the largest and perhaps the best of the truly Global MBA programs.

Gaining a global perspective

The only truly Global Executive MBA in Asia is offered by the Chinese University of Hong Kong

G

raduated students who are already in the workforce but are looking for advancement in their careers are often interested in obtaining an MBA degree. They have many choices in Hong Kong but the student with global aspirations looks very closely at the OneMBA programme offered by the Chinese University of Hong Kong (CUHK). The OneMBA course is the only global executive MBA program designed and managed by professors and administrators from five top ranked business schools on four continents – Asia (India, China and Hong Kong), Europe, Latin America (Brazil and Mexico), and the United States. Its mission is to develop and connect executives from around the world, thus creating a network of global business leaders among its students. Designed especially for senior managers who are competing or want to compete in the international business arena, the OneMBA course requires its students to work with an international team made up of executive students living and working on four continents. This enables them to hone their leadership and team skills by managing cultural differences and working across multiple time zones. CUHK OneMBA Associate Director, Mr. Didier Guillot, said “We feel this programme is unique. Our OneMBA curriculum is the only MBA curriculum designed with equal input from the top faculty of the five partner schools. This curriculum has been designed to incorporate the best business practices and diverse issues pertinent to doing business in each world region. The OneMBA Global Residencies are continually updated and refined on the basis of current business

and political agendas”. The 21-month curriculum includes global core and regional courses at the home university as well as four 7-day global residencies in the US, Europe, Latin America and Asia. During the global residencies, participants are taught by local faculty and visit local companies. In this way, participants not only learn global business: they experience it. With each global residency, students get to immerse themselves in economic and political issues affecting the US, Europe, Latin America and Asia. Hosted by the local OneMBA partner school, students study local business practices and meet with corporate and government leaders to discuss the challenges affecting and opportunities available to businesses in that part of the world. During their stay, they will also visit local and multinational corporations and enjoy cultural and social events. This is an important time for networking, as they are not only able to meet their global team members, but other OneMBA students from around the world. By integrating knowledge and best practices from each region through the five universities, OneMBA students learn to analyze problems, think strategically and develop team skills and cultural awareness to effectively lead global organizations. The OneMBA program begins with an Opening Week held in North America. This residency brings participants, faculty and staff together for the first time. Students examine the role of the United States in the global business environment while engaging with executives from top multinational companies and renowned faculty on topics that include leadership, ethics, and culture. This is also an opportunity for


MBA PROGRAM This page clock-wise: Teaching Building located at Chak Cheung Street, Shatin, Hong Kong, Group Photo taken in Hong Kong during Asian Residency in May 2010, Graduates with Dean’s List taken on 18 December 2010 Opposite Page: Mr. Didier Guillot

FAST FACTS

participants to meet their first global team. The European global residency compares the challenges and opportunities of operating and doing business within developed and emerging economies in Europe. In an emerging economy, like Turkey for example, students meet with local business leaders to exchange views about its transformation and the challenges companies face as they enter the global economy. In the Netherlands, participants discuss complexities in international business with faculty and representatives from leading European companies to learn about their approach and their views on the role and future of Europe in the global economy. Similar benefits accrue from those studying in Mexico, the USA and Europe, each region offering its lessons. For example, students learn about two significant emerging economies: Brazil and Mexico. Regionally sensitive issues such as the socioeconomic context of business are the focus in Brazil. In Mexico, participants discuss topics as diverse as finance, marketing, business ethics and development. The last residency in Asia examines complex issues relating to risk and uncertainty, political and economic transformation, and knowledge management. Combining academic lectures with company visits, participants have the unique opportunity to compare and contrast thebusiness environments of mainland China, Hong Kong and India. Prominent local political leaders and business executives share their perspectives on the global strategy components of doing business in Asia. Participants gain first-hand knowledge of Asian best

practices and explore critical factors in successes and failures of joint ventures in this region. The OneMBA Global Residencies are continually updated and refined on the basis of current business and political agendas. In addition to global residencies and core courses, each OneMBA partner school offers executive MBA courses proven to accelerate career success in their region. To qualify for admissions to the OneMBA course, a person must have at least seven years of professional work experience. This rewarding and highly sought after program attracts achievement-oriented, fast-track executives who desire to operate on the global stage lead, manage, source, market, and compete anywhere in the world. Program participants include senior executives, entrepreneurs and professionals from around the world. They have an average of 13 years’ working experience and eight years’ managerial experience and they come from such diverse sectors as accounting, banking, engineering, government, law, logistics, pharmaceuticals and technology. Fortune 500s and household names as well as a healthy cross-fertilization of mid-sized firms and entrepreneurial startups, are represented. Whether uplifting or updating your skill portfolio, OneMBA provides mid-career and seasoned professionals with the tools necessary to lead, operate effectively, and excel in a dynamic global business environment. Our Global Executive MBA program is the right choice for organizations in Hong Kong and the region.

The OneMBA Advantage OneMBA differs from other Executive MBA’s in many ways: • Solves critical & complex business issues in global scale; • Immediately enhances job performance through a world-class grounding in the latest leadership and business skills and practices; • Equips executives with the ability to compete anywhere around the world, work effectively in multi-cultural work environments, and interact with multinational organizations; • Works closely with classmates, faculty, and leading experts around the world on real-life and emerging business problems; • Harnesses an unparalleled global network of alumni and business contacts; and • Continues to study in our partner universities.

.

- Bonnie E. Engel

HONG KONG BUSINESS ANNUAL 2011 | 123


THOMAS, MAYER & ASSOCIES

PHILOSOPHY

Our approach is to focus on making a valuable contribution to the progress of our clients’ business in a potentially complicated international environment. We develop long-term relationships built on mutual understanding and trust.

French lawyers clear the path for deals

A French law firm is opening doors to European businessmen seeking opportunities in China and Hong Kong by providing efficient legal resources and services

A

French entrepreneur trying to get a foothold in China to manufacture a product, sell a service, distribute goods or even invest, needs to first understand the market, the corporate tax and labour regulations and a numerous other requirements he or she needs to fulfil before a deal can materialise. This is where Thomas, Mayer & Associés (TMA), a firm of French lawyers established by Eric-Jean Thomas and Eric Mayer, who came to Hong Kong in 1995, can step in and chart the path through the maze that is China for an entrepreneur. They literally extend a guiding hand and offer appropriate counsel. Eric-Jean Thomas says the firm helps to bridge the gap between continental Europe and China for businesses. His partner, Eric Mayer adds that “the Hong Kong advantage offered by TMA to penetrate and invest in the Chinese market enables French and other foreign entrepreneurs to optimise their project which often not only targets China or the Chinese market but also international markets”. “We facilitate the understanding by European investors of the Chinese laws and business culture, and at the same time offer them the most legally secured and advantageous solutions by using Hong Kong as a platform”. Eric-Jean Thomas points out that the firm provides legal advice and assistance in all business related matters such as drafting commercial agreements, employment agreements, joint venture agreements, as

well as assisting clients in immigration related matters, setting up companies and structuring various types of legal entities in an international environment, and providing international tax advice. “As we generally assist our clients in all areas of their international development in the Asian region, we hold their hand,’’ adds Eric Mayer. TMA, represented in advertisements by a fencer, is one of the largest French law firms in Asia with a team of as many as 10 French lawyers based in Hong Kong, and clients are engaged in disparate industries. The practice also acts as legal adviser to the ConsulateGeneral of France in Hong Kong and Macau. The firm maintains a presence in Hong Kong and France. “We have an office in Paris, a subsidiary of the Hong Kong partnership,’’ says Eric Mayer, pointing to the firm’s reach in Europe. There are 10 staff (including five lawyers) in the Paris office and 22 in Hong Kong. Clients operate in sectors such as retail, medical, pharmaceutical, stones and other construction material, telecom, energy, industrial, textiles, accessories, and even lingerie, just to name a few. A great number of clients that the firm serves are in the textiles and fashion sector, as well as in the industrial sector. Eric Mayer says the industries ranges from plastic engineering, manufacturing crowns for dentists, humidors, musical instruments, and food and beverage. In China, the firm has advised clients in Guangzhou,


LAW FIRM This page clock-wise: TMA’s 10th anniversary celebration, A great number of clients that the firm serves are in the textile and fashion sector, Lippo Centre in Hong Kong where TMA is headquartered Opposite Page: The two founding partners of TMA, Eric Mayer (Right hand side) and Eric-jean Thomas (Left hand side)

FAST FACTS • The practice is celebrating 15 years. • Paris office, a subsidiary opened in September 2010. • Practice areas- International Business law, Mergers and Acquisitions, Joint Ventures, Company and Commercial Law, International Tax Law, International Arbitration, International Private Law, and Immigration Law.

Dongguan, Shenzhen, Shanghai, Ningbo, Hangzhou, Suzhou, Beijing, Tianjin, Harbin, Wuhan, and many other second-tier cities. Chinese entrepreneurs seeking a foothold in France, through acquisitions or joint-ventures, also seek counsel from TMA. Regulations and rules in Europe are many and complying with many laws is tough. Rules and regulations are not easily navigated by businesses from China trying to operate in the market. Eric-Jean Thomas says Chinese clients are attracted by French brands, just as much as the French business people are eager to go into China. “They look for relatively unknown brands that have gone into decline, but have a glorious past,’’ he says. There are other entrepreneurs from China who are eager to develop their own brands and desire the added value of French design that will in itself be a selling point for their products among the mainland’s

consumers who are attracted to all things French. Chinese entrepreneurs willing to take this route reach out to the firm for guidance and advice in design related matters as well. Providing the connections and opening the doors on these matters is also another speciality of TMA. Chinese business people who prefer French design have the capital and the manufacturing capability but not the style, Eric-Jean Thomas points out. For both French businessmen and Chinese entrepreneurs what TMA offers is 15 years of experience and expertise in structuring business deals, says Eric Mayer. In Europe and Asia where any number of things can go wrong for the unwary businessmen, having experienced counsel is one way to ensure that they start on the right foot.

.

- Kapila Bandara

HONG KONG BUSINESS ANNUAL 2011 | 125


ULTRA ACTIVE TECHNOLOGY LTD

PHILOSOPHY

UAT is dedicated to its customers and employees, to the quality of its products and services, and to giving something back to society. These core values are central to the corporate spirit. To fulfill its corporate social responsibility, the company sponsors community events, promotes culture and sports in the city, and takes on interns in the summer. It considers the staff its biggest asset and offers an excellent working environment with benefits such as educational subsidies, team building activities and overseas training. UAT insists on quality, value and simplicity to ensure a clear message is always communicated, helping to create a world without boundaries.

Trusted name brings innovations to the conference room

Market pioneer UAT continues to innovate collaboration solutions that adapt to the ever-changing needs of their elite clients

A

market leader in videoconferencing and audiovisual technology integration, Ultra Active Technology Limited (UAT) is continuing to elevate its service offering to private and public sector customers in Hong Kong and Macau by introducing innovative new technologies. UAT has accomplished projects with large customers including 50 percent of the top 20 banking and finance companies, all four large famous worldwide sports wear companies, 80 percent of the large telecommunication companies listed in Hong Kong and 100 percent of the universities in Hong Kong. Responding fast to the demands of high profile clients to deal with an emergency, a training session, a board meeting, or even a routine conversation across international borders, is an art that UAT has mastered over the years. UAT provides the best audiovisual collaboration solution and boardroom equipment. The company is the premier provider with dominance in major video conferencing solutions. The company leverages on its expertise in mixing and matching suitable solutions and vast experience in handling diverse requirements, to deliver just the right solution. UAT brings many innovative desktop solutions. The company offers Polycom Converged Management Application (CMA) which can centrally manage and deploy visual communication across the entire organization to individual desktop. It is a one-touch personal video device which can

connect up to 1500 concurrent calls. It offers high definition video call, integrated camera, color touchscreen, support H.323 and SIP environments. Chief executives or managers can now conduct a conference in the privacy of their own workspace through this centralised videoconference. Another innovative solution is the Polycom streaming and recording system RSS 4000 which is perfect for corporations who want to web cast company meetings or conduct training. It is a centralised server for recording, streaming and archiving multimedia conferences. Polycom RSS 4000 supports both unicast video on demand and multicast video for streaming to a large number of desktops. Another important facet of UAT’s service proposition is being able to put together custom AV solution for a company, and involves designing and installation of video conferencing products. This expertise ranges from sophisticated voice infrastructure including IP telephone solutions, displays such as projectors, LCDs, plasma screens, video wall, 200-inch rear projection or over 100-inch display panel, and installing matrix switchers to direct multiple audio and video sources to many audio and video destinations. Most of all, UAT undertakes to design effective lighting in conference rooms combining lighting with audiovisual equipment, as well as designing and building contemporary corporate audiovisual environments. UAT also has the capability to undertake modifications


INNOVATIVE TECHNOLOGY This page clock-wise: Full screen, cinematic view and seating capacity for 4 to 28 participants, Polycom One-touch business media phone, HD video conferencing with capability of content sharing Opposite Page: Vanessa Choi, The Marketing Manager of UAT

FAST FACTS • 1997 UAT is founded • 1998 begins video conferencing business. • 1999 becomes distributor of Polycom • 2002 Marks fifth anniversary. • 2003 Supports the Department of Health during SARS • 2004 Expansion and new logo introduced • 2005 Offers student attachment programme • 2006 creative solution: UAT PresencePro • 2007 Celebrates 10th Anniversary • 2009 Installs first RPX, top VC series • 2010 Three core businesses created – Videoconferencing collaboration, Audiovisual Integration & Deluxe boardroom design

to existing furniture and fixtures to blend in with AV settings. A nondescript meeting room is transformed in to a professional, well-equipped conference room with HD videoconferencing, HD voice, professional acoustic tuning, HD large displays, ceiling microphones, wireless table microphones, specialised videoconferencing lights, lighting zone design, automatic window shades, and wireless central control panel. These custom design undertakings, too, have raised the profile of UAT in the videoconferencing space. Over the past decade UAT has completed thousands of projects to integrate of audio, video and data

presentation. The technology know-how and ability to deploy the most suitable AV products and solutions handled by a creative team which keeps up to date with everevolving technologies is the value proposition that UAT brings to customers. This is backed up by the company’s founding philosophy of “providing with the best’’. The corporate culture it has nurtured best serves the customers, helps to develop its staff and contributes to the sustainable development of society by providing innovative and quality solutions and services. - Kapila Bandara

.

HONG KONG BUSINESS ANNUAL 2011 | 127


ZUNG FU COMPANY LTD

PHILOSOPHY

“The love of inventing never dies” -- Carl Benz

Service promise ensures MercedesBenz remains the leading brand

Zung Fu’s dedication to making customers happy is being rewarded by satisfied patrons buying more Mercedes Benz

F

or 60 years, Zung Fu Company Limited has been selling an undiluted promise to Mercedes-Benz drivers in Hong Kong, not just the pleasure of German engineering. Over these six decades, owners of all manner of Mercedes-Benz saloons regardless of whether they own an A-Class, B-Class, C-Class, E-Class, S-Class, R-Class, or SLS-AMG, have experienced the consistent, quality service that glues their loyalty to the brand. This faith in Mercedes-Benz combined with the solid reputation of the luxury cars, have helped Hong Kong to emerge as the German luxury carmaker’s largest market in the world in terms of market share. “Mercedes Benz has 14 per cent of the total market share,’’ says Michael Lee, Chief Executive of Zung Fu Company Limited, a subsidiary of Jardine Motors Group, which is a member of the Jardine Matheson Group. “Of every 100 cars sold in Hong Kong, 14 are Mercedes-Benz sold by Zung Fu.’’ Comparatively, Mercedes-Benz accounts for 8 per cent market share in Germany and about 1 per cent in mainland China, Mr Lee points out. Zung Fu is the exclusive retailer of Mercedes-Benz in Hong Kong and Macau. Long before it became a part of Jardine Matheson, Zung Fu had sold 1,000 Mercedes-Benz cars in the first year after it began importing the vehicles. The Mercedes-Benz showroom that opened in 1955, a year after the formal signing of an agreement between Zung Fu and Mercedes-Benz, was actually in a similar location to today’s main Causeway Bay

showroom. Within three years after the first MercedesBenz arrived in Hong Kong, Zung Fu welcomed 1,000 new owners to the growing Mercedes-Benz family. In a market where image takes precedence over the convenience of a luxurious conveyance, MercedesBenz has come up trumps in earning the trust and maintaining the loyalty of customers, be they entrepreneurs or professional achievers, men or women, expatriates or locals. “Our customers seldom drop out; customer retention is high because of the product quality and customer care,’’ Mr Lee says with pride. Mr Lee, a veteran in the motor vehicle trade and who is also Chairman of the Hong Kong Motor Traders Association of Hong Kong, explains that the focus on customer care has translated into a distinct advantage. He points out that Mercedes- Benz market share in Hong Kong has edged up from 10 per cent to 14 per cent in the past few years. Mr Lee attributes this achievement to how welltrained mechanics in the Mercedes-Benz service centres make the customers feel. It is a feeling of importance that owners of Mercedes Benz – one of the finest motor vehicles in the world – experience when they deal with the well-equipped workshops spread out across the city. There are five service centres in Hong Kong, including whole buildings in Aberdeen and Hung Hom. The locations are within easy reach. “We focus a lot on the success rate of the first fix … a 98 per cent rate of success in the first fix, including parts,’’ Mr Lee assures, adding that the experience


CAR DEALER This page clock-wise: E-Class Cabriolet, smart fortwo from smart, Tucson from Hyundai Opposite Page: Mr. Michael Lee, Chief Executive, Zung Fu Company Limited

FAST FACTS

that a driver has, is also an important element in the service proposition. This involves keeping the owner informed of the progress of maintenance work or repairs being undertaken as well as delivery and collection. Those who take care of maintenance and repairs of Mercedes-Benz vehicles, Mr Lee says, have to have to understand and embrace the Zung Fu philosophy – PHD. They must have a Passion for cars, they must show they have the Heart for the job, and demonstrate the Determination to keep trying until they success in a repair job, or maintenance work. “PHD is a part of our culture. We keep our people motivated,’’ Mr Lee says. To maintain their vehicles in prime performance mode, Mercedes-Benz owners have the option of selecting from various service plans, in addition to emergency assistance. Various maintenance and repair plans have been drawn up for all models and budgets to instill confidence among owners of Mercedes-Benz and make

them experience a reliable, convenient service. Zung Fu’s service proposition includes, quality parts, technical parts, repair procedures and expertise training that ensure a professional job is done. In 2011, in keeping with the times, Zung Fu is preparing to offer more environmentally-friendly cars. Mr Lee points out that every model that Mercedes-Benz sells in Hong Kong produces 50 per cent less emission compared with Hong Kong government standards. He is looking forward to the introduction of the smart full electric version in the new year. In December, Zung Fu unveiled the new generation smart fortwo, a two-seater city car that meets the Environmentfriendly Petrol Private Car criteria of Hong Kong. The smart fortwo dates back to a Mercedes-Benz study, presented in the early 1980s. The smart car range became a part of the Zung Fu family in 2000, and three years later Hyundai became a part of the product portfolio. Zung Fu also distributes commercial vehicles, including vans and trucks. - Kapila Bandara

• 1954 Zung Fu brings first Mercedes-Benz to Hong Kong • 1965 Zung Fu launches used car trade-in programme • 1969 First Zung Fu motor show is held at Ocean Terminal • 1970 Opens first Kowloon showroom in Ocean Terminal • 1990s Expansion of Zung Fu operations; becomes part of Jardine International Motor Holdings; establishes Zung Fu Macau (Motors) Ltd, launches E-Class • Late 1990s Launch of New roadster SLK, the CLK, the A-Class, the off-road M-Class, the S-Class (220 series), the CL and the new C-Class. • 2000 Adds the smart car and Hyundai ranges to portfolio in 2002 and 2003 respectively • 2011 – 125th Anniversary of Mercedes Benz January 29, 1886, Carl Benz files application in Berlin for a patent on his three-wheeled motor car.

.

HONG KONG BUSINESS ANNUAL 2011 | 129


Index STATISTICAL TABLES AND CHARTS following is an alphabetical lisitng of the statistical tables and the pages where they appear

Average Monthly Salaries of Selected Occupations ..........................................................................................................64 Average Wage Rates for Employees up to Supervisory Level ..............................................................................................65 Statistics on Labour Force, Unemployment and Underemployment ..................................................................................67 Vital Events .............................................................................................................................................................................67 Population by Type of Housing, 1996, 2001 and 2006 ........................................................................................................68 Real Estate Project Statistics ...................................................................................................................................................68 No. of Establishments, Persons Engaged and Vancancies (Other than those in the Civil Service) Analysed Industry .........68 No. of Establishments, Persons Engaged and Vancancies (Other than those in the Civil Service) Analysed ........................69

HONG KONG’S HIGH-FLYERS outstanding enterprises 2010

AIA Pension & trustee Co. Ltd ...........................................74

Hong Kong Matchmakers ..............................................104

ABN AMRO Private Banking ..............................................78

HSBC Insurance ..............................................................106

AGEAS Insurance Company (Asia) Ltd ..............................80

JIA International Ltd .....................................................108

Altruist Financial Group Ltd ..............................................82

Kadriden Interior Design/ Architecture .........................110

Atradius ............................................................................84

Lan Kwai Fong Hotel @ Kau U Fong .............................112

Canadian International School of Hong Kong .................86

Luxury Living .................................................................114

Cathay Pacific Airways ......................................................88

SA SA International Holdings Ltd ..................................116

Chiram Strategic Group ....................................................90

Sound Concepts Ltd ......................................................118

Crystallize.ME ....................................................................92

Starworld Hotel & Casino ..............................................120

Decor House .....................................................................94

The Chinese University of Hong Kong ..........................122

Dentro ..............................................................................96

Thomas, Mayer & Associes ............................................124

Fuji Xerox (Hong Kong) Ltd ..............................................98

Ultra Active Technology Ltd ...........................................126

GODIVA Chocolatier ........................................................100

Zung Fu Company Ltd ...................................................128

Henderson Real Estate Agency Ltd ................................102


HONG KONG BUSINESS ANNUAL 2011 | 131



HONG KONG BUSINESS HIGH FLYER 2011