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ANNUAL '13

2012

10 PAGES KEY ECONOMIC STATISTICS 17 TOP INDUSTRIES REVIEWED Hiring trends for 2013 revealed Accounting industry to be haunted by regulations Home prices to suffer from abrupt correction in 2013 Foreign law firms dominate Hong Kong Display to 20 December 2013

HONG KONG BUSINESS ANNUAL 2013 1


2 HONG KONG BUSINESS ANNUAL 2013


Contents Annual 2013

2013 OUTLOOK 10 12

14 16 18 20

Hong Kong economy poised for modest recovery by 2013 Hong Kong’s accounting industry to be haunted by regulations in 2013 Home prices to suffer "abrupt correction" in 2013 Retail sector to edge up at a gingerly pace Check out what jobs will be in demand come 2013 Hong Kong legal industry seizes more opportunities for growth

14

MOST READ IN 2012 22

A month-by-month review of Hong Kong’s top stories in 2013

COMPANIES AND INDUSTRIES Demand for home healthcare equipment surges Hong Kong is world’s second largest exporter of computer parts 32 Hong Kong faces intensifying competition in jewellery exports 34 The key to enhance HK’s competitiveness 36 Hong Kong is the world’s 10th largest trading economy 38 Why Hong Kong is a regional leader in construction 40 Hong Kong clothing companies excel in ODM, OEM production 42 A peek inside Hong Kong’s telco industry 44 The key to electronics industry’s success revealed 46 Textiles industry responds swiftly to fashion trends 48 Hong Kong as a major printing center of the world 50 Hong Kong lures more foreign investments in F&B 52 The future of telematics in Hong Kong 54 Lighting companies move their production to China 56 Value of travel goods exports up 14% to HK$35.3b 58 HK’s top market for leather goods revealed

30

28 30

56

BY THE NUMBERS

Labour Force, Unemployment and Underemployment Number of Establishments, Persons Engaged and Vacancies (Other than those in the Civil Service) by Industry Section 66 Wage Indices by Industry Section and Broad Occupational Group 69 Salary Indices for Middle-level Managerial and Professional Employees by Selected Industry Section 70 Consumer Price Indices and Year-on-year Rates of Change at Section Level for November 2012 60 61

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Contents Annual 2013

72

High-Flyers 2012 72 AIA Pension And Trustee

100 Godiva

102 Hästens

Co. Ltd. 76 Ageas Insurance Company (Asia) Limited 78 ALTRUIST 80 AV Consultant (Int ’l) Ltd 82 Canadian International School 84 Chartis Insurance Hong Kong Limited 86 CLP Power Hong Kong Limited 88 Cosmo Hotel Hong Kong Cosmo Hotel Mongkok 90 Bao Gallery by Crystallize•Me Ltd 92 FreyWille 94 Fuji Xerox (Hong Kong) Ltd. 96 Fujitsu 98 Galaxy Macau

4 HONG KONG BUSINESS ANNUAL 2013

82

92

104 Hong Kong Matchmakers 106 HSBC Insurance 108 M800 LIMITED 110 Shama Management Ltd. 112 Rhombus International

Hotels Group

114 Standard Chartered Bank

100

(Hong Kong ) Limited

116 The Cityview 118 The Mercer 120 Thomas, Mayer & Associes 122 Ultra Active Technology Ltd 124 Universal Audio &

Video Centre

126 Wharf T&T Limited 128 Zchron Design

112

126


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HONG KONG BUSINESS ANNUAL 2013 7 SINGAPORE BUSINESS REVIEW | JUNE 2012 49


OPINION

HEMLOCK

The Joys Of Charging Non-Residents More

HEMLOCK www.biglychee.com hemlock@hellokitty.com

O

ne quick way of reducing Hong Kong’s air pollution would be to raise cross-harbour tunnel tolls. The main (Causeway Bay-Hung Hom) tunnel’s toll has been HK$20/HK$10 for cars/taxis for what seems like decades. Increase that charge, say, fivefold and cut the other tunnels’ fees by a few bucks, and you would almost certainly migrate a lot of commuters onto buses (currently underutilized) and trains, and spread the rest out onto the less popular routes, thus reducing congestion significantly. It won’t happen because assorted vocal scumbags who want to leech off the rest of the population one way or another would wet themselves about the ‘unfairness’ of it all and the supposed impact on their sorry livelihoods. By contrast, the charges for non-residents at public hospitals went up relatively recently – a mere nine years ago. As for residents, these are flat-rate per-day fees in basic categories like out-patient, in-patient and intensive care; you do not get an itemized bill for each test, procedure or drug. The decision to raise the charges for what are mainly in practice visitors and not for locals seems a bit illogical – if costs rise, they rise for all users. Since raising the rock-bottom hospital bills for entitlement-minded residents would be near-impossible, the obvious thing to do would be to just leave this whole area alone. For some reason, officials want to go ahead and push up nonresidents’ charges. If the only people affected were tourists, it would be no big deal. But Mainland spouses of Hong Kong residents count as non-res. Cue a great wailing and gnashing of teeth, as affected Hongkongers complain that it’s ‘unfair’ and Chief Executive CY Leung’s enemies in the Legislative Council pounce with glee on another policy to fight to the death over. On the face of it, Mainland spouses are indeed non-residents, so should be treated as such, and the Court of Final Appeal endorsed the principle earlier this year (concerning maternity fees). However, the disgruntled have a point. If a Hongkonger marries someone from Timbuktu, Greenland or Tahiti, the spouse gets to live here instantly with an ID card, thus cheap local hospital bills. Marry a Mainlander, and your spouse joins a lengthy waiting list to come here. It is hard to see why the government is choosing this particular fight. Maybe the idea is just to burden Legco’s oppose-everything brigade with yet more causes. Far better to clamp down on the great tourism menace. I’m not sure what free meds columnist Lau Nai-keung is getting from Queen Mary’s these days, but his lapses into lucidity seem to be getting more frequent – to the extent that we’re in danger of missing the rabid mouth-frothing venom and hate of past times. In an article on thinking out of the box, he questions the value of the tourism industry and asks why no-one proposes slapping a hefty tax on all the designer-label junk visitors buy, so at least we get some revenue out of it (and hopefully drive some of the crowds away). Hong Kong has long been in a trance about tourism. Years of official boasting about rising visitor numbers have left people unable to imagine that the industry might cost most of us more than it’s worth. The equation for finding out would start with what visitors spend, 8 HONG KONG BUSINESS ANNUAL 2013

then subtracting how much of it promptly leaves the city’s economy (most of it, given that we don’t manufacture the junk). You would also include luxury retailers’ higher rents, at least some of which will also end up overseas as part of big landlords’ offshore investment portfolios. And you would add luxury retail outlet staff’s incomes, minus what they were earning before the tourism boom drove their locally-oriented employers out of business. Then we get to the fun part: the externalities. This includes the costs arising from the extra pollution caused by tour buses, like the medical treatment of additional cases of pulmonary diseases. It includes the cost of cleaning up the wee-wee and other items deposited in public areas by tourists. It includes the cost of extra time it takes locals to buy things they need after their local shops close down, or the higher prices for infant formula in their neighbourhood. And of course it includes the rising rents that surviving locally-oriented retailers pass on to us. Then there is the mental stress, as I, and a million others, get increasingly irritated at having to drag Japanese, European and the inevitable Mainlanders out of the way every time I go to my local 7-Eleven for a few cans of drink. (I can say “Who said you can come to this neighbourhood?” in Korean, Italian and Polish.) Net outcome, probably: a few landlords and luxury brands are raking in billions that won’t trickle down, some retail workers might have seen a pay rise, while the other 98% of us are net financial losers – subsidizing the landlords and designer labels. It’s a parasite industry, and we should start spraying some DDT. This is a battle nearly all parts of the non-tycoon part of the population could agree on. But it’s ‘a pillar industry’, and ‘less tourists = more wealth’ is too counterintuitive for most people to bear. At least we could put cross-harbour tunnel tolls up for non-residents.


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ECONOMIC OUTLOOK

Hong Kong economy poised for modest recovery by 2013 GDP expected to grow but below long-run potential of 4.5%

E

xperts believe that the economic outlook of 2013.  Hang Seng Bank economist Ryan Lam points out that the quarterly growth trajectory will be similar to what happened in 2012, with a slow start and gradually gaining traction from 2Q13.  “Marginal improvements in exports and steady consumption will serve to lift Hong Kong’s GDP growth to 3% in 2013, from an estimated 1.5% in 2012 but still below its long-run potential growth of around 4.5%,” he says. Nomura shares the same view adding that fiscal stimulus and a moderate improvement in external demand are expected to lift real GDP growth from 1.2% in 2012 to 2.5% in 2013.  Nomura’s analyst Young Sun Kwon believes that Hong Kong’s fiscal stimulus in 2013 will be expansionary as the budget for fiscal year 2012 includes not only inflation-mitigating measures but also an income tax reduction for individuals of up to HK$12,000 per person and a 14.8% increase in capital expenditure. “We 10 HONG KONG BUSINESS ANNUAL 2013

“Hong Kong’s fiscal stimulus in 2013 will be expansionary."

expect the FY13 budget to also be expansionary given that external demand remains weak. We also expect the government to continue implementing more macro-prudential property tightening measures, such as hikes in stamp duty if house prices continue to rise, although so far these piecemeal measures have had limited success in cooling the property market. Because of the USD/HKD peg, Hong Kong is importing the super loose monetary policy of the US, and it remains unclear whether tighter macro-prudential measures can provide a sufficient offset in the long run,” says Young.

second quarter. An exports recovery began in August and picked up momentum in September. Domestic demand remains strong, especially in relation to the property market. There is a recovery underway in much of the region that should result in a similar recovery in Hong Kong’s fourth quarter. On the mainland, monetary easing and investment approvals are restarting the investment cycle and should mean that third quarter GDP growth was the trough. A recovery on the mainland will boost Hong Kong’s re-export business, as well as the offshore renminbi market and finance sector in general,” he says.

Optimistic Moody’s Analytics analyst Alastair Chan is the most optimistic noting that GDP could accelerate to as high as 3.3%. Chan believes that there are already signs that the city-state is turning a corner starting 3Q12. “Hong Kong’s economy recovered in the third quarter after a contraction in the

Trade Incoming trade figures have been highly volatile over the past two months but Hang Seng Bank believes that Hong Kong’s seasonally adjusted growth suggests the export sector has been on the mend since September. Exports unexpectedly dropped 2.8% in October, after a strong gain


ECONOMIC OUTLOOK of 15.2% in September. Lam notes that the significant volatility likely reflected both the base effect due to a strong October growth last year at +11.5% as well as launch of major tech products in October.  “Overall, we expect a sustained recovery to prevail in the course of 2013. The International Monetary Fund projects that the growth of global economy will accelerate from 3.3% in 2012 to 3.6% next year. Our study finds that a 3.6% rise in the global GDP translates into a 10.4% export growth in Hong Kong. Of note, the export growth has been about five percentage points below the growth rate implied by the regression analysis since 2011, probably due to stronger structural headwinds such as rising labor costs in the mainland and faster relocation of low-end manufacturing enterprises to the ASEAN countries,” says Lam. Trade balance Moody’s Analytics notes that Hong Kong’s trade balance remained firmly in deficit even as trade is picking up in the region and across the world. The situation however, it says, is expected to improve come 2013, thanks to China boosting Hong Kong’s re-export business. “Recent data show firming domestic demand in China, which accounts for 52% of Hong Kong’s trade. China’s industrial production (+9.6%), fixed asset investment (+20.7%) and retail sales growth (14.5%) accelerated year over year in October. Purchasing managers’ indexes confirm that trend continued in November. Fixed investment

is growing on account of stimulus measures enacted since the end of 2011 and steady approvals of infrastructure projects, which is supporting gains in electricity, rail equipment and crude oil output. This all should support Hong Kong’s manufacturing exporters,” it says. Hong Kong’s trade deficit narrowed to HK$42.7 billion in October from September’s HK$45.2 billion. Labour market Hang Seng Bank believes that the unemployment rate may rise in a way to reconcile the discrepancy with lackluster economic performance since 1Q12 but it does not see much risk for a spike in the jobless rate beyond 4%. “A closer examination of the job figures suggests that structural factors might have played an important role in improving the resilience of the labour market. The key difference between the current and previous downturns is that manufacturing, import & export trade, wholesale & retail and transportation & storage sectors, which tend to be hardest hit by the global slowdown, are much less labour intensive than they were a decade ago. Specifically, it takes at least 20% less amount of workers to produce one unit of output in these sectors. The fact that the hardest-hit sectors contribute much to GDP but relatively little to employment, help explain why jobless rate is not responsive to the slowdown in GDP growth,” Lam says. Consumption Hang Seng Bank says that the

Quarterly projection for Hong Kong GDP (% YoY)

Sources: Census & Statistics Department of HKSAR Reuters EcoWin, Hang Seng Bank

“Recent data show firming domestic demand in China, which accounts for 52% of Hong Kong’s trade."

momentum gained in consumer spending, which now accounts for 66% of real GDP, will carry over into 2013 since labour income growth has been on a positive trend and wealth effects have turned from neutral to positive. Retail sales growth volume increased by 8.5% y-o-y in September from 3.2% in August while the PMI rose to 50.5 from 49.6.  Hang Seng Bank however cautions that renewed inflation pressure will weigh on purchasing power to some extent. Nomura believes that domestic fixed asset investment will also give a boost to private consumption but Hang Seng Bank cautions that the scale and timing of any re-acceleration in capital spending remains the principal source of uncertainty among the GDP components. Lam notes that firms have not been steering away from long-term capital expenditure plans so far. “Growth in gross fixed capital formation is 8.8% year-todate and this might allude to some underlying improvement in corporate confidence. On the back of the ongoing acceleration in infrastructure projects of the authority and a steady property market, capital expenditure on building and construction is expected to witness eye-catching growth. The investment cycle in machinery and equipment should remain strong as well for a variety of reasons, ranging from reduced macroeconomic uncertainty, exceptionally low funding cost, to improving foreign direct investment in Hong Kong,” he says. Inflation Renewed capital inflows and further asset market rallies pose as upside risks to the inflation outlook for the year ahead. Hang Seng Bank believes that inflation is likely to be higher by mid2013 than it is now in the territory. CPI inflation ticked up to 3.8% y-o-y in October from 3.7% in September on food prices.  “Headline inflation will rebound gradually throughout next year, reaching 5% by year end and averaging 4.3% for the whole of 2013,” says Lam. Nomura agrees while noting that the uptick will be partly offset by inflation-mitigating fiscal measures such as a temporary waiver of public housing rent and electricity subsidies. “We expect CPI inflation to rise from 4.0% in 2012 to 4.3% in 2013,” says Young. HONG KONG BUSINESS ANNUAL 2013 11


ACCOUNTING OUTLOOK

Hong Kong’s accounting industry to be haunted by regulations in 2013

IPOs are also expected to finally rebound, and more Chinese firms are seen to merge with local firms.

H

ong Kong’s accounting industry has been mired in different challenges over the years, most of which involve fast-changing rules and regulations that affect every firm’s client such as accounting standards, disclosure requirements, listing and corporate governance rules. The inevitable link between China and Hong Kong is also one of the biggest factors affecting the industry. Against this backdrop, accounting firms strive to stand out in the market by embracing change and offering quality service to their clients. According to Roy Lo, deputy managing partner at SHINEWING, they have witnessed the rapid growth of China, in which Hong Kong accountants have been playing an increasingly important role. Lo is expecting a positive outlook on the 12 HONG KONG BUSINESS ANNUAL 2013

“the IPO market in Hong Kong has become rather quiet in the past few months with fewer companies going listed."

accounting industry in this coming 2013, based on the fact that the capital market in China will continue to flourish. He adds that the demand for professional accountants would remain high as China’s economy is boosting. And the demand is not just in the auditing and tax field, but increasing number of specialists are also required in other new scopes, such as risk management, internal control, corporate governance, forensic accounting and corporate finance. IPOs will finally rebound Ernst & Young notes that after a slow start to 2012, momentum lifted in the second quarter, but significant macroeconomic volatility and changes in political leadership in many parts

of the world weighed on global IPO activity for the remainder of the year. However, Lo reckons that while the IPO market in Hong Kong has become rather quiet in the past few months with fewer companies going listed, he sees more PRC companies going to Hong Kong for listing in 2013. “Our estimation is that the number could reach around 100.” The Hong Kong, Shanghai and Shenzhen exchanges only completed 214 deals which raised US$27.9b, down 62% by capital raised compared to 2011. According to Jacky Lai, assurance partner at Ernst & Young, despite investors showing signs of scepticism, the Greater China market has seen signs of improvement in the last quarter – thanks to the People’s Insurance Co of China raising US$3.4b, the largest deal on HKEx


ACCOUNTING OUTLOOK this year. Ernst & Young also expects to see more H-share IPO offerings in Hong Kong following the introduction of new supportive policies that allow medium to small privately-owned enterprises to list in Hong Kong’s H-share market. Ringo Choi, Asia-Pacific IPO Leader at Ernst & Young, agrees with Lo’s positive outlook for IPOs in 2013 as he notes that many new supportive policies - which were on hold amid leadership change – will start to take effect. They include economic initiatives that will be rolled out in the Mainland and expected to benefit companies in certain preferential sectors. “With expected reduced stock market volatility, supportive new economic policies, and better and brighter economic prospects, IPO activities in the latter half of 2013 is set to improve – suggesting that it could be the right time for companies currently in the pipeline to list next year,” he adds. More merging firms More Chinese accounting firms are looking to merge with Hong Kong firms in 2013, says Lo. SHINEWING is actually the first of its kind, a PRCbased firm that has integreated with a local company. Such integration will be a trend, notes Lo, and is powerful in creating synergy, in terms of deep indigenous knowledge, extensive network and strong manpower resources. A majority of listed companies in Hong Kong come from PRC. “Under integration, the PRCbased accounting firms could utilize their profound knowledge of the development of China’s capital market as well as the business practices of those PRC firms, while the Hong Kong-based accounting firms could make use of their familiarity with the listing requirements and procedures in Hong Kong,” says Lo. This way, both firms could establish a platform bridging between Chinese financial practices and international accounting standards, offering the genuine integration for clients in China, Hong Kong as well as overseas. Another pressing challenge that the industry will be facing in 2013 is dealing with regulations. As Andrew Ross, managing director at Baker Tilly Hong Kong puts it: “There are

only three key issues for the Hong Kong accounting industry in 2013: regulation, regulation, regulation.” Haunting regulations The first, but continuing issue is that of the US regulators, the SEC and the PCAOB, requesting information from Hong Kong audit firms about the audits of their PRC clients which are registered in the USA, notes Ross. He adds that the SEC, and more recently the SFC (HK’s equivalent of the SEC) has taken legal action against a number of audit firms to try to obtain the audit information and, subsequently, to charge the firm with regulatory breaches when they refuse to provide the information. The core of the issue, reckons Ross, is that the PRC authorities (nominally the CSRC) forbid PRC companies and their auditors from releasing this information to foreign regulators on the grounds that it may contain ‘state secrets.’ The problem is, of course, that PRC authorities can and often do, regard all information in or about the PRC as ‘state secrets.’ “Consequently, the auditors are caught in a regulatory sandwich between the increasingly aggressive demands of the SEC and the stonewall position of the PRC authorities. The SEC actions follow on from the more restrained, but persistent and continuing, efforts of the PCAOB. It is reported that around 15 HK audit firms have been subject to SEC/ PCAOB examination,” adds Ross. Another key issue to watch out for in 2013 is the introduction of statutory enforcement of Hong Kong’s ‘continuous disclosure’ regime for ‘price sensitive information’ or PSI. Hong Kong, like Australia, Singapore, and Malaysia, has a continuous disclosure requirement for release of PSI by listed companies. There are carve-outs and safe harbours in all the continuous disclosure jurisdictions but whether these protections are available to the company in any particular situation can be very difficult to judge, reckons Ross. The new PSI Law begins operation on 1 January 2013 and will be operated by the SFC but Ross reveals some trepidation amongst directors and company secretaries about how aggressive the SFC enforcement of the

Andrew Ross

Roy Lo

new PSI will be. The new statutory penalties include barring officers from managing a listed company and barring them access to the financial markets for up to 5 years, costs of the investigation and prosecution and a fine on each guilty officer of up to HKD8 million (USD1 million). “Given that the previous SEHK prosecutions seemed to run at about one or two cases per month, these fears may be well founded,” warns Ross. From the FRC to HKICPA Lastly, the pending transfer of audit practice review responsibilities to the Financial Reporting Council or FRC is also expected to make a noise in the industry in 2013. While the FRC’s main work is to regulate financial reporting by HK listed companies and the auditor’s work on those financial reports, the job has inevitably been focused on the work of auditors rather than the responsibilities of the directors of listed companies. Ross notes that the HKICPA, the statutory body responsible for registration and regulation of accountants, has run a full-on programme of practice review by HKICPA staff for over 20 years. But the government has decided that the practice review should be transferred to the FRC as the HKICPA is not perceived overseas as a body independent of the profession. “In my view, this reason is a triumph of form over substance because in my lengthy and extensive experience in regulation in a number of countries, the HKICPA regulatory performance in terms of response, investigation and prosecution is amongst the most (if not the most) thorough and aggressive in the World. It is certainly much more active and successful than most formally independent accounting regulators that I have had experience of in other countries,” he says. All this comes on top of the perennial issues such as: the world economy; squeeze on audit fees; retaining staff during a market downturn; staying competitive etc; which all seem relatively pale compared to the three Kings of the three regulation issues, Ross concludes. HONG KONG BUSINESS ANNUAL 2013 13


PROPERTY OUTLOOK

Home prices to suffer "abrupt correction" in 2013 Experts note some pieces of evidence that HK’s housing investment appeal is waning.

T

he International Monetary Fund recently warned that the property sector remains the main source of economic risk in the city-state by 2013. It cautioned that the sharp rise in Hong Kong's home prices especially in the mass market segment has spurred the chances of an ‘abrupt’ correction that could severely batter the economy. Home prices in 2012 rose by 20% which was twice that of late 2008. IMF says that half of the outstanding loans are currently from the property sector, and the use of real estate as collateral also poses risks. Moving forward, many believe that housing market may be set to boom further following the U.S. Federal Reserve’s announcement of a third round of quantitative easing. Some indications of a waning investment appeal of the city-state’s housing market however emerged recently. Property investments Colliers International predicted a promising year for Hong Kong’s property market in 2013 except for 14 HONG KONG BUSINESS ANNUAL 2013

"Home prices especially in the mass market segment has spurred the chances of an 'abrupt' correction that could severely batter the economy."

the residential sector, especially the luxury segment due to government cooling measures. Colliers notes that investment appetite shifted to the office sector which was particularly evident after the extension of Special Stamp Duty (SSD) and implementation of Buyers’ Stamp Duty in the residential market. Nomura believes likewise while noting that apart from the cooling measures that have brought policy risk back to the fore, affordability and growth will be the dominant themes in 2013, with the property market walking a tightrope between growth and inflation. “As growth slows and the marginal price setter becomes increasingly elusive, the affordability issue will re-engage. Conversely, if growth accelerates, interest rates may rise earlier than expected. In either case, we expect physical prices/rents to stall with only a mid-single digit annual rise over the next two years.” Nomura says that there are some disturbing undercurrents developing behind the seemingly fairly healthy

fundamentals of the property market. Private median household income vs housing rents for instance suggests that in order for rents to catch up to incomes, there is scope for rents to rise another 28%. Nomura however cautioned that income growth is slowing – although the private median household income rose by 7.1% y-y in 2Q12, this is much slower than the 12% y-y increase in incomes in 2Q11. Having peaked at 14.8% y-y in December 2011, the household income growth rate has slowed for two quarters already. “Given the recent push back on next year’s planned minimum wage hike to HKD30/hour and the continued pressure faced by the financial services industry, we see a real risk that income growth will continue to slow.” Residential market Residential sales started 2012 with a volume rally in the 1Q, which weakened soon afterwards particularly on the luxury market. The average luxury residential price increased by


PROPERTY OUTLOOK 4% between January and October but Colliers sees downward adjustment pressure and expected it to soften to the end-2011 level in average by the end of 2012. With the government’s intention to curb speculation in the housing market and the implementation of BSD, end users are expected to dominate the market, says Colliers. “Short-term price consolidation is anticipated in 4Q 2012 and 1Q 2013 while end users are expected to return to the market after the Lunar New Year when lenders become more active in offering mortgage loans.” Colliers projects the average luxury residential rent and price to edge down by 5% and 10% respectively. Dragon babies Nomura meanwhile is not seeing the usual boom in Dragon babies spurring demand. “Even on the demographic front, we are witnessing something very unusual. In the first eight months of 2012, there were only 60,103 births in Hong Kong. Compared to the same period in 2011, this is down 5.2% y-y. In the past two Years of the Dragon (2000 and 1988), the number of births rose by 6% and 4% even as the marriage numbers declined by 1% and 7%. Thus, the current condition of a 5% drop in births while marriages are up by 5% is highly unusual. Considering that this is the Year of the Dragon and private hospitals’ zero quota on mainland babies does not come into effect until 1 January 2013, the decline in the birth rate may suggest that Hong Kong may have become so unaffordable that local

fundamental demand is now being curtailed.” Looking over the past two years, overall private housing sales declined by 37% in 2011 which experts say is understandable given government measures. But Nomura says that it is important to note that in 2011, the top end was still relatively resilient, falling by only 3%. Comparatively, in the first ten months of 2012, while home prices had rallied by 20%, volume had continued to contract by 5%. More importantly, this 5% decline in volume was nearly across the board. “Stripping out the primary market where the developers’ product offerings could distort the picture, in the secondary market, we see that the HKD5-10mn category was the only segment to see a rebound of 6%. Combined with the change in transaction velocity that our mainland demand survey shows, this suggests that demand is now very narrow and is largely driven by local end-users.” Nomura believes that investment appeal of Hong Kong housing to mainlanders has now been greatly diminished only by looking at the yields that have compressed since 2010. “Over the past two years, mass housing yields have compressed from 3.62% to 3.20%, while luxury housing yields have come down from 2.68% to 2.41%. While headline deposit rates are still at 0.01% and there is still arguably positive carry on mortgage rates around 2.1%. Grade A office market Colliers projects that despite tenants’ sustained cautious attitude on their

Private housing sales by price range

Source: Centaline, Nomura Research

“In the first ten months of 2012, while home prices had rallied by 20%, volume had continued to contract by 5%, nearly across the board."

operation cost, limited supply and an increase in leases due to expire in late 2013 are expected to fuel the average Grade A office rent to rise by 5% and office price by 9% over the next 12 months. The average Grade A office rent in Central/Admiralty fell most notably in the 1H2012, but has witnessed stabilising signs since mid 2012. Colliers believes that in the other key business hubs such as Wan Chai/ Causeway Bay, Island East and Sheung Wan, lease renewal is expected to dominate in 2013 due to the low vacancy rates in the areas. Over in Kowloon East, Colliers notes that the rental gap with individual sub-markets, such as Island East is seen to be narrowing due to the surge in rents experienced by Kowloon East since the government announced the CBD2 project. In recent months, the consulting firm says that Kowloon East is no longer seen to be the top option when it comes to relocation options for cost-saving reasons. Instead, a new trend is surfacing in the district. It shared that, “As more owners of industrial and industrialoffice (I-O) buildings opt to demolish or revitalise their properties for other uses such as hotel or office, the tenants in these premises would be forced to move out. This creates a new wave of domestic demand from the district itself which fuels leasing demand in Kowloon East.” Property consulting firm DTZ believe otherwise noting that rentals for prime office space are seen to dip by a further 5% in 2013 after plummeting 20% so far this year with financial firms expected to continually cut costs. The rental slump in the Central/ Admiralty areas weighed on the overall Hong Kong office rents causing them to drop by 9% y-y to HK$61 psf in the 4Q. Retail market Retail property registered the most outstanding performance in 2012 with 11% growth in average rents of high streets and 28% rise in overall retail property prices between January and October. But retail sales are slowing from 21% at the end of 2011 to only 7% in September 2012, notes Nomura. Retail sales value of jewellery, watches, clocks and other valuable gifts saw the first single-month dip in August 2012 since July 2009. HONG KONG BUSINESS ANNUAL 2013 15


RETAIL OUTLOOK

Retail sector to edge up at a gingerly pace With sluggish improvement in the global economy, 2013 may not be a far cry from 2012’s bleak performance.

A

nalysts had expected a gray picture for the retail sector in their 2012 outlooks, citing bigger challenges, further growth moderation, and weak consumer sentiment as factors that drag the sector down. Colliers International describes the local retail sales market as facing “mounting challenges from the contracting Eurozone and the still struggling United States.” Lacklustre 2012 performance According to Lily Lo, Assistant Economist with DBS, retail sales growth has been disappointing, particularly in 2H12. Low retail sales growth figures of late, such as 3Q’s 5.9% versus 2Q’s 10.3%, can be explained by weaker tourist spending. “Although Chinese tourist arrivals grew steadily at 23.8% YTD versus 23.7% YTD in October last year, their contribution to retail sales value growth has declined,” she says. Values now stand from 44.3% in 1Q12 to just 11.7% in 3Q12, according to DBS’ calculations.

16 HONG KONG BUSINESS ANNUAL 2013

“The critical data to watch in 2013 is mainland tourist spending, as this has been supporting the growth of the industry for the last few years.”

Tourists from the mainland have apparently been spending less on luxury items. A market analyst who requested anonymity, agrees with Lo, saying, “For the first ten months of 2012, total retail sales increased by 9.9% yoy in value and 7.0% yoy in volume, significantly lower than those at the same period a year earlier.” The market analyst notes that a few subsectors like consumer durable goods and daily goods sold in supermarkets performed relatively well. But Lo says that spending on jewellery, watches, clocks and valuable gifts have all decelerated from an average of 0.3% in 2Q to -1.8% in 3Q. She also says that other popular tourist items such as electrical goods and photographic equipment, which serve as a ‘proxy’ for locals’ retail spending, displayed bearish trends. Growth tapered considerably from an average of 28.8% in 2Q to just 12.0% in 3Q. “Travel Industry Council of Hong Kong reported that average

tourist spending decreased 25% from last year to $5,000 to $6,000 per person over the Golden Week,” Lo further explains. Impact of slashed GDP forecast Nomura revised down its GDP growth forecast from 1.5% to 1.2% in mid-November, but it kept its 2013 forecast unchanged at 2.5%. The research firm cites Hong Kong’s weaker-than-expected 1.3% Q3 GDP growth from Q2’s 1.2%. “This downside surprise was largely the result of a weak contribution from external trade, even as domestic demand remained supported by a stable job market as well as fixed investment and government spending,” it reports. Looking ahead, research firm Credit Suisse lowered its GDP growth forecast for Hong Kong in 2013 to 3.4% from 3.9%. Colliers International, on the other hand, foresees a slightly higher economic growth of 4.9% next year. It admits though, that the uncertain economic situation in the Eurozone


RETAIL OUTLOOK and slowing economic growth in China will restrain overall economic growth in Hong Kong. “However, the introduction of QE3 will boost the world’s economy in nominal terms,” Colliers explains. Effects in the retail sector With this slash in GDP growth forecast, will there be any effects on the retail sector? “The effect should be minimal,” Lo remarks. The forecast, according to the DBS economist, reflects the government’s view of the economy; thus economic fundamentals shouldn’t react to GDP forecasts. But the market analyst that Hong Kong Business interviewed remarks that a lower 2013 forecast certainly means lower growth in the retail sector, most particularly in durable goods and daily goods sold by supermarkets. He also explains that there are three things which retail sales mainly depend on: local GDP growth and job market, inflation pressure, and Chinese tourist per-capita spending. As Hong Kong is a small open economy, the first two factors are actually dependent on global market by large. “Given the current slightly better outlook for US, Euro area, and China’s growth, I would think that the slowdown in Q3 may not affect next year’s performance much,” he asserts. Gabriel Chan, an analyst with Credit Suisse, explains that the answer to the nagging question of whether inflation is bad for retailers depends on the pricing power and cost structure of the retailers. “During inflationary periods, retailers may find it easier to raise

prices, but at the same time, key cost items, including product costs, staff costs and rental rates, are on the rise as well,” he elaborates. What does 2013 hold? According to Hang Seng Bank’s Hong Kong Economic Monitor report, marginal improvements in exports and steady consumption will help lift Hong Kong’s economic growth to 3% in 2013, from an estimated 1.5% in 2012 but still below its long-run potential of around 4.5%. “Annual inflation is, however, set to edge up to 4.3%, mainly driven by a rebound in grain prices and rising rents,” the report notes. It also mentions that the 2013 forecast for retail sales value is pegged at 13.0, a three percentage point increase as compared to its 2012 forecast of 10.0. In addition to this, DBS analyst Lo says that consumption will get a boost from an uptick in the Chinese economy. “China’s economic recovery in 2013 will exert a positive impact on locals’ consumption via better equity market performance, sustained property price levels and generally more upbeat consumer sentiment,” she comments. The Tourism Board reports that visitor arrivals in Hong Kong were up 11.9% year-on-year for October to reach 4.24 million. Tourists from mainland China still form a big chunk as they contributed over 1.28 million overnight arrivals. Meanwhile, sameday, in-town visitor arrivals rose 20.6% to more than 2.22 million. Lo says tourists have been spending less on luxury items in Hong Kong. On the surface this is directly due

Projection on personal consumption expenditure (% YoY)

Sources: Census & Statistics Department of HKSAR, Hang Seng Bank estimates

Joanne Lee

Lily Lo

to China’s economic slowdown this year, she says, but there are no guarantees that spending on these items will pick up considerably as China’s growth reaccelerate. “That’s because Chinese tourists’ spending habits might have changed. For instance, there are more channels to purchase luxury items now, including reputable online shopping sites. Also, more mainlanders are flocking to Taiwan to shop,” she explains. Looking forward, the market analyst who requested anonymity says that steady tourism inflows will continue to support the retail sales business next year, particularly during the promotions season generally covering the year-end until early next year. Lo warns though that should weakness in retail sales extend into Christmas, pressure on retail employment will start to mount as retail sales growth will have weakened for over a quarter already as unemployment is a lagging indicator, she says. Edward Fung, research head of Maybank Kim Eng, says that both sales and expenditure on customer side haven’t been performing well recently. “Judging from the statistics released by the HKSAR Government, retail sales and consumer spending have been struggling in the past few months, particular on the high end luxury segment,” Fung says. Consumers, on the other side, are generally trading down. High rental costs and increase in wages pose as key risks to retailers. The critical data to watch in 2013 is mainland tourist spending, as this has been supporting the growth of the industry for the last few years, Fung says. Lo asserts, “Weak retail sales is expected for the remainder of 2012. We are penciling in 9.0% growth for retail sales value growth in 2012, versus 24.8% in 2011,” she says. Joanne Lee of Colliers International says that 2013 still has to be cautious about the softening economic growth in China as Chinese spenders will continue to tighten their belts. But on a more positive note, Lee says “The strengthening of the yuan, combined with Hong Kong’s minimal tax rates, suggest Hong Kong will continue to attract mainland shoppers, especially those from second and third tier cities of China where luxury retailers are still lacking.” HONG KONG BUSINESS ANNUAL 2013 17


HIRING & SALARY OUTLOOK

Check out what jobs will be in demand come 2013

The year will start slow but a hiring rebound is expected in the second half of 2013.

J

ob seekers looking to land a job in 2013 are in for an unpredictable ride as the start of the year forebodes slow hiring activities due to the global risk and weak demand. But don’t fret. If the property bubble does not burst and China’s growth rate moves forward, Hong Kong’s servicesdriven economy should rebound in the second half of 2013 and signs are pointing to a more positive third and fourth quarter which will no doubt have a positive impact on hiring, according to Matthew Bennett, managing director at Robert Walters. He adds that with manufacturing and trade beginning to look a little more solid on the Mainland, it will only take a couple of consecutive quarters for this confidence to return. Jobs in demand in 2013 So what will be the hiring and 18 HONG KONG BUSINESS ANNUAL 2013

“Randstad 2012 World of Work Report revealed that 58% of employees are expecting to leave their jobs."

recruitment trends in Hong Kong in 2013? What jobs will be in demand? Bennett says industries that are still hiring are retail, logistics, tourism, telecommunication and traditional banking front office roles and corporate and transactional banking.  Most jobs in demand will be those that can have a direct impact on the bottom line. Randstad director Brien Keegan adds that as their 2012 World of Work Report revealed that 58% of employees are expecting to leave their jobs, there is likely to be demand across all industries for organisations to stay intact. “Certainly in Hong Kong, we are seeing an increasing demand for those with language skills that have worked for multinational environments.  Additionally in different sectors, we see large demand for staff, for instance

within the retail and luxury brand sector we see a high demand for merchandising talent at all levels,” says Keegan. Anthony Thompson, senior managing director for Hong Kong & Southern China at Michael Page concurs that there will be continued demand for talented professionals with Chinese and English language skills. However, he warns that employers will keep a watchful eye on economic conditions in Europe which continue to have a material impact, particularly on the financial services sector and manufacturingrelated industries. This sentiment is likely to create some nervousness around recruitment activity within these industries. Demand for multilingual talents As international law firms continue to expand in Hong Kong,


HIRING & SALARY OUTLOOK multilingual legal practitioners for private practice might be in luck in 2013. With the growing importance companies are placing on talent management, quality human resources practitioners will also continue to be in demand. Within sales, Thompson adds that employers will keep looking for professionals with proficiency in English and Chinese and a good understanding of local markets along with an international perspective. There will be increased demand for digital marketing and online marketing specialists as the growth in technology and sophistication of social networking continues to change the way people communicate and impacts how businesses deal with their customer base. Demand for audit and compliance pros “There will also be demand for audit and compliance professionals as regulatory requirements for organisations in Hong Kong become tighter, including areas in the manufacturing sector such as quality assurance, quality control and social compliance which are becoming more important,” he notes. Robert Half director Pallavi Anand also recognised this increase in demand for, and shortage of compliance professionals in Hong Kong. Due to the talent shortage, she notes that many companies are considering to hire people directly from consultancy firms and the “Big Four” and that companies are looking for candidates with experience of between five and 12 years. “We see a compelling opportunity

for professionals with experience at auditing firms to consider going into the compliance profession. Top candidates with a strong background in compliance can expect a salary increment of 20% to 40% on the average when moving to another company, while those with the relevant skills but no previous compliance experience can still expect a salary increment of 10%15%,” reckons Anand. She adds that regulatory changes, the rise in the number of mergers and acquisitions, and the subsequent integration process are also driving the increase in demand for contract staff, particularly those with PMP (project management) qualification, change management experience and knowledge of new regulations e.g. the Dodd-Frank Act. Pay rise and bonus Employers will definitely have to reconsider their proposition of bonuses and salary increases as 95% of employees are expecting a pay raise and a one-time bonus in 2013, according to the Randstad Workmonitor Report. “With the expectations of salary increases and bonuses, those that do not receive them may look elsewhere.  As a result, organisations need to look at their overall employer value proposition of bonuses and salary increases,” reckons Randstad’s Keegan. Robert Walters’ Bennett says these salary increases can reach 4% with inflation being forecasted at around 4% in 2013.  Bonuses will be paid predominantly around the profitability of an organisation as a whole so he says there could be a drop in bonuses paid

Key reasons employees are likely to leave

Source: Michael Page

Anthony Thompson

Brien Keegan

Matthew Bennett

Pallavi Anand

in Hong Kong due to poor results in the US and Europe.   “All in all I would say that 2013 will be very similar to 2012 in terms of overall packages. However a stronger second half in 2013 could help with some upside for bonuses paid in 2014,” says Bennett. Michael Page’s Thompson agrees and says that experienced and talented professionals will continue to be offered financial incentives to join new organisations in 2013. There have also been many organisations that offer inducements to retain staff and Thompson expects this to continue next year. Challenges in 2013 The stability and slow pace of the market still poses the biggest challenge for employers and employees alike in 2013. Bennett notes that it has been over 12 months now of a weak global economy and it is getting harder to motivate staff through increased earnings and promotions when the market will not let a business scale. Talent attraction and retention will remain a key employer challenge in 2013, according to Thompson. There continues to be a shortage of quality professionals in the market across all sectors, with the best talent receiving multiple job offers. At the same time, recruitment decisionmaking processes have become slower therefore employers risk losing good candidates to other offers when they take too long to make a decision. To retain their best people, Thompson reckons employers will need to be more proactive in communicating with staff and managing their career expectations while providing opportunities to keep them challenged and engaged in their role. “This will be more challenging for multinational employers managing their Asia-based employees, with potential restrictions around the ability to offer incentives and advancement opportunities due to many decisions being made at head offices in either Europe or the United States where there is a higher focus on cost control. With these unpredictable economic market conditions, those companies that best adapt to local markets will be the most successful in both retention and attraction,” he adds. HONG KONG BUSINESS ANNUAL 2013 19


LEGAL OUTLOOK

Hong Kong legal industry seizes more opportunities for growth Optimism lingers despite a week IPO outlook.

H

ong Kong’s legal industry continued to attract foreign firms and professionals in 2012 with 23 foreign registered law firms forming associations with local firms as of the end of April 2012, data from Hong Kong Trade Development Council (HKDTC) show. In total, Hong Kong, known as the international law capital of Asia, had more than 9,000 practising solicitors and barristers. HKTDC notes that 788 local solicitor firms and 70 foreign law firms had set up presence in Hong Kong during the said period, including more than half of the Global 50 law firms with a presence in Hong Kong. In terms of size, foreign law firms continue to dominate the market. Foreign law firms have topped Hong Kong Business's inaugural Top 25 law firm rankings for 2012 based on the number of employees with only six local firms making it to the list. US

20 HONG KONG BUSINESS ANNUAL 2013

"In total, Hong Kong, known as the international law capital of Asia, had more than 9,000 practising solicitors and barristers."

law firm Baker & Mckenzie landed the top spot based on size with 273 law professionals, beating out Hong Kong’s oldest local law firm, Deacons, who took the second spot. As Hong Kong is a leading international financial centre, HKTDC expects that the growing demand for services related to finance, such as initial public offering (IPO), will help stimulate continual demand for legal services. Yun Zhao, associate professor of law at the University of Hong Kong meanwhile notes that the industry presents huge growth opportunities moving forward as Hong Kong-based law firms are yet to maximize their full advantage in the Mainland under the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and the Mainland compared with law firms from other jurisdictions. “Hong Kong law firms failed to make

full use of these favorable measures. On the one hand, the measures have been in force for a relatively short period of time, Hong Kong law firms will need some time to congest these measures and take concrete measures; on the other hand, it takes some time for some Hong Kong law firms to satisfy the requirements in the measures. With the CEPA almost in place for 10 years and more attention has been put to this document, Hong Kong law firms should be able to grasp this golden opportunity to expand their existence in the mainland market.” As of 1 May 2012, HKDTC notes that Hong Kong law firms, including many Hong Kong-based foreign law firms, had set up 111 representative offices on the Chinese mainland. Beijing, Shanghai and Guangzhou are the most popular cities to establish mainland presence. Six Hong Kong


LEGAL OUTLOOK law firms have also entered into association arrangements with their mainland counterparts under CEPA such as Woo Kwan Lee & Lo. Arbitration Hong Kong Legal Training Institute believes that the Hong Kong legal industry will keep on growing in 2013, particularly in the arbitration or related sectors given the international trade activities in Asia and China. “The growing need for legal practitioners to know about these areas would mean more focus being placed in the development of their Alternative Dispute Resolution. We see specialised practices such as arbitrators or counsel to have very promising opportunities for growth.” Secretary for Justice Rimsky Yuen was quoted in a forum held recently that as regards arbitration, the new Arbitration Ordinance (AO) which came into effect in June 2011 will continue to shape the HK legal landscape moving forward. “The new Arbitration Ordinance in Hong Kong is modelled on the UNCITRAL Model Law adopted by the United Nations Commission on International Trade Law. The Ordinance reinforces the advantages of arbitration, respecting the parties' autonomy as well as saving them time and expense, and at the same time protecting confidentiality in arbitration proceedings and related court hearings.” Norton Rose partner Jim James notes that a key feature of this AO was the different regimes for domestic arbitrations (i.e. arbitrations involving Hong Kong parties) and international arbitrations (effectively, arbitrations with an international element). “The AO abolishes this distinction and establishes a unitary regime based on the Model Law, which will apply to all arbitrations and not merely to 'international commercial arbitration'. This approach is similar to the approach taken in other jurisdictions such as the United Kingdom and Singapore.” Zhao notes meanwhile that the industry can expect more competition in arbitration services with the establishment of the International Chamber of Commerce’s office in HK which will be in direct competition with the Hong Kong International Arbitration Center. “This year China International Economic and Trade

Arbitration Commission (CIETAC) also set up a Hong Kong office; on December 2012 the Shenzhen Court of International Arbitration was formally set up. With all these developments, it is expected that the arbitration market in Hong Kong will also become more competitive.” Mediation Another significant development in HK’s dispute resolution methods was the enactment in June this year of the Mediation Ordinance which will take effect January 2013. Mediations are generally conducted on a confidential and without prejudice basis. Such terms are generally agreed upon by the parties prior to the mediation. DLA Piper explains that the Mediation Ordinance gives legislative force to those rights and obligations. By doing so, DLA Piper notes that the parties to a mediation in Hong Kong can have the comfort and certainty of knowing that: its communications will remain confidential save for specific exceptions; and those communications cannot be disclosed or admitted in evidence without prior court approval. According to DLA Piper, this statutory assurance of confidentiality is important in the context where a party may be penalised for refusing to mediate. For instance, in Hong Kong a court, it said, is required to consider a party's (un)willingness to participate in mediation in determining whether or not it should make an adverse cost against it. The law firm however notes that that the Mediation Ordinance does not address the accreditation of mediators - therefore as it stands, any impartial individual can be engaged act as mediator. “The Mediation Ordinance is also silent on the question of whether mediators can, following the mediation provides any professional advice or opinion to any of the disputing parties. Therefore this issue should be addressed by the parties in the mediation agreement to avoid any later conflict.” IPO Clyde & Co’s managing director in Asia Michael Parker sees the IPO market in Hong Kong to remain in the red next year even as two giant accountancy firms already expressed optimism. Hong Kong’s IPO market hit a fouryear low in 2012 but KPMG and Ernst & Young in separate reports predict a

"The new Arbitration Ordinance (AO) which came into effect in June 2011 will continue to shape HK legal landscape moving forward."

pick up in 2013 with the recovering Chinese economy boosting sentiment for fund raising. The Hong Kong Stock Exchange fell to fourth place in the global ranking for IPOs in 2012 after holding the top position from the previous three years. KPMG forecasts that Hong Kong's IPO market will total $16.1 billion, with about 85 offerings, while Ernst & Young estimates that the amount raised will be about $16.7 billion. The estimates are far greater than an estimated $11 billion in IPO funds this year, a four-year low and about one-third of the amount raised in 2011, according to KPMG. Among firms planning IPOs next year according to a Reuters report include Sany Heavy Industry, Huishan Dairy, Lukoil, Hong Kong Airlines, Erdenes Tavan Tolgoi coal mine, and China Galaxy Securities. Major sources of growth While it has been pretty grim year so far with the IPOs, Clyde & Co’s Parker believes that mergers & acquisitions should be bullish next year even if IPO will continue to be very poor. “We've got a lot of clients who are interested to make acquisitions in the region whether it be China or Indonesia and are charging pretty well.” Construction is also expected to become a major growth source amid a huge amount of construction going on in Hong Kong and the Asian region. “The infrastructure plans are so much for this region including huge plans in China, for their airports in particular which is going to be a long -term construction project, a 10-year project I suspect. And also, they plan to have new airlines coming into the market while the existing ones are looking to expand,” said Parker. Aside from Hong Kong and China, the new countries to which Clyde & Co expects to source growth include Myanmar, Vietnam, Cambodia as well as Korea. The insurance industry, Parker added, will give a big boost. “The insurance industry, is very active at the moment and there is a lot of potential there because people in this region compared to let’s say, Europe or America, do not have as much of insurance as they do in other parts of the world.” HONG KONG BUSINESS ANNUAL 2013 21


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RETAIL

Graff Diamonds to open second Hong Kong branch More IPO glitter comes to Hong Kong. Graff Diamonds, the Londonbased jeweler that claims to have handled more exceptional gems than any other, will launch an IPO in Hong Kong to finance its expansion within Asia, especially in China. Graff’s IPO could raise up to US$1 billion and increase the company’s equity to some US$5 billion. MARKETS & INVESTING

Easy money draws droves of Hong Kong investors What should have been a humdrum day of selling banknotes marking the Bank of China’s 100th anniversary spun out of control into a “Get rich quick” opportunity that drew frantic investors by the hundreds. Persons eyeing instant fourfold profits mobbed the bank’s 50 branches in the city beginning Feb. 12, the day before the sale started, and on Feb. 13. TRANSPORT & LOGISTICS

Goodbye to cross-border permits? Motoring to Guangdong from 22 HONG KONG BUSINESS ANNUAL 2013

Hong Kong will be easier starting March—but only for a few. Owners of Hong Kongregistered private cas will be allowed to travel to neighboring Guangdong next month in the first phase of a scheme that should eventually pave the way for less complicated road travel.

growth. RESIDENTIAL PROPERTY

Hong Kong’s most outstanding companies were once again recognized at the Hong Kong Business High-Flyers. Hong Kong Business Magazine holds this prestigious event every year to formally acknowledge the excellence of top enterprises that offer innovative products and exceptional services.

Global crisis + low season = floundering property market The January numbers for Hong Kong’s property market sectors mostly make for disheartening reading. Residential sales again plummeted, this time to 18% month-on-month to 3,507 units this January, the lowest figure since November 2008. Sales of luxury homes valued over HK$10 million fell 17% to 385, said Knight Frank LLP, the British global residential and commercial property consultant.

ECONOMY

HR & EDUCATION

Ailing Hong Kong needs more than band-aid therapy Petty solutions aren’t going to do it for Hong Kong, which stands to take a tremendous hit from the explosive Eurozone debt crisis.

Employers not firing staff, but aren’t hiring either Over 90% of all businesses surveyed in HSBC’s December PMI reported no changes to their headcount. Comments Donna Kwok, the bank’s economist for Greater China:    "Although unemployment growth is no longer as strong as it was in early 2011, employers have kept staffing levels steady despite slower new business inflows. Over 90% of all businesses surveyed in HSBC’s December PMI reported no changes to their headcount."

ECONOMY

Hong Kong domestic exports plunge 20.6% yoy Exports continue to wilt before the worldwide economic slowdown. The Census & Statistics Department reported that domestic exports dropped sharply by 20.6% from January to November 2011 compared to the same period in 2011. Exports for November alone were also down significantly: they plummeted 37.6% yearon-year.

Chief Executive Donald Tsang rang the alarm bells for Hong Kong at the Fifth Asian Financial Forum, saying the city urgently needs wholesale strategies that promote sustainable growth in light of another impending global economic downturn. ECONOMY

MEDIA & MARKETING

Hong Kong Business HighFlyers awardees revealed Hong Kong’s best companies were recognized at this year’s awards held at Hotel LKF. Hong Kong Business Magazine has been giving recognition to industry-leading businesses since 2004. This year,

Taiwan prefers China over Hong Kong In banking as well as trade, size truly matters. Despite its ongoing travails, China’s huge economy is attractive enough for Taiwan’s bankers to rate it as their top overseas market this year and the one promising the highest

MARKETS & INVESTING

Microfinance pilot scheme a definite go The highly-anticipated microfinance pilot scheme will begin loaning start-up capital to qualified business owners in the middle of this year. The Hong Kong Mortgage Corporation, Ltd said the three-year microfinance pilot scheme aims to assist people who want to start their own business or receive training for skills upgrading or certification, but who lack the financial means or have difficulties in obtaining loans from traditional finance sources.


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ECONOMY

shows that persistent leasing demand drove up rents by 4.5% for both prime street shops and premium centres. Capital values for prime street shops also rose a further 9.7% in the first two months of 2012. FINANCIAL SERVICES

RETAIL

February a good month for retail Total retail sales volume for February less the effects of inflation rose 10% compared to the same month a year earlier. The Census & Statistics Department said the gross value of total retail sales in February is initially placed at $33.8 billion, a 15.7% increase year-on-year.

January. AVIATION

HKIA scheduled to open third runway by 2023 The Executive Council’s endorsement of the construction of a third runway at Hong Kong International Airport should see the new runway completed by 2023. FINANCIAL SERVICES

Loan approvals rise sharply in February The Monetary Authority has announced upbeat news for the property sector. It said new loans approved during February rose 44.1% to $14.4 billion while new mortgage loans drawn down that month increased 25.8% to $7.6 billion compared to January.

Swiss private bank to do business in Hong Kong Hong Kong now has 154 licensed banks. The Swiss private bank, Pictet & Cie (Europe) S.A., received a banking licence that took effect April 18, said the Monetary Authority. Pictet & Cie is today one of Switzerland’s largest private banks, and one of the premier independent asset management specialists in Europe.

ECONOMY

COMMERCIAL PROPERTY

Inflation slows in February One-off government relief measures helped tame inflation in February. The Census & Statistics Department said inflation rose 4.7% in February over the same month last year. The inflation rate was 6.1% this

Retail drives Hong Kong property prices upwards Despite rising rents, local and international retailers continued their aggressive expansion to secure retail premises in prime locations. Property consultants Jones Lang LaSalle’s latest research

COMMERCIAL PROPERTY

BOC Hong Kong’s preprovision operating profit up by 27% to HK$6.8b The reported PPOP figure is 22% higher than operating expenses. BOCHK’s net interest income expanded as NIM of Rmb business made gains and core NIM remained stable. Furthermore, there were small write-back in loan provisions. BOCHK was tagged the best performer among all HK/China banks. ECONOMY

A look into Leung’s mind Hong Kong’s Chief Executiveelect Leung Chun-ying has been a media darling since his election. Among the more interesting revelations about his plans for Hong Kong as reported by local and international media: - He intends to set up a new investment fund to grow the economy, using the Exchange Fund as a model.

GNP, GDP improve in 4Q 2011 Hong Kong’s gross national product rose 7% to $511.3 billion in the fourth quarter last year over the same period in 2010. The Census & Statistics Department also reported that the city’s gross domestic product improved 6.5% to $505 billion. FOOD & BEVERAGE

Swire Pacific and China Foods: off the hook on disinfectanttainted Coke Nine batches were reported to have snuck in to the market and the plant of origin may be owned by Coca-Cola.

In a research by Maybank Kim Eng sourced from the mainland press, nine batches of disinfectant-tainted Coke produced in a Coke’s Shanxi bottling plant had entered the market, according to official investigation notice. Latest news from Shaxi Food Quality Supervision and Inspection centre confirmed the products are safe. MARKETS & INVESTING

HKEx has a new Chairman Sir Chung-kong Chow, former boss of Hong Kong’s MTR metro system, now heads the Hong Kong Exchanges and Clearing, Ltd. Chow’s appointment as HKEx Chairman has been endorsed by Chief Executive Donald Tsang. Financial Secretary John Tsang appointed Chow as a director of HKEx earlier this month for a two-year term. HONG KONG BUSINESS ANNUAL 2013 23


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ECONOMY

MARKETS & INVESTING

Dim economic outlook confronts Hong Kong Tourism remains only one of a few bright lights in the otherwise gloomy economic landscape facing Hong Kong this year. Hong Kong’s export volume to Europe dropped 9% year-on-year in the first four months of the year while new export orders weakened. Secretary for Financial Services & the Treasury Prof KC Chan told lawmakers that Hong Kong’s near-term export outlook remains bleak.

Gujarat seeks Hong Kong investments A business delegation from the western Indian state of Gujarat examined bilateral business opportunities with Hong Kong. The 12-member business delegation also pitched Gujarat as a destination for large infrastructure investments through public private partnerships. It briefed Hong Kong’s top corporate groups and business organisations about the state-sponsored private equity investment company, Gujarat Venture Finance, Ltd., its operations and funds for Hong Kong investments.

ECONOMY

Swipe it! Credit card transactions up 3.4% in 1Q12 People continued to spend but at a slower pace compared to 2011 because of the unfavourable economic environment. The total value of credit card transactions in the first quarter 2012 was $121.2 billion, up 3.4% on the previous quarter and 15% year-on-year, the Monetary Authority said. The quarter saw 103.5 million credit-card transactions, down 2.2% on the previous quarter and up 8.4% year on year. 24 HONG KONG BUSINESS ANNUAL 2013

FINANCIAL SERVICES

Hong Kong opens financial dispute resolution centre Hong Kong takes another step to preclude massive investor losses from unregulated equities trading. The city’s newly opened Financial Dispute Resolution Centre was established to help customers seeking claims against banks or brokers. The centre provides an avenue for customers with claims of up to US$64,000 and will allow them to settle disputes with banks

and brokers outside of court. MARKETS & INVESTING

IPO investors score a victory In a first for Hong Kong, investors burned in a bungled IPO can get some of their money back. A milestone court settlement reached in Hong Kong will see investors get most of their money back from a Chinese textile company accused by regulators of exaggerating its earnings in an IPO. COMMERCIAL PROPERTY

Leasing demand for warehouses on the rise Some logistics operators have already pre-committed yet-tobe vacated warehouses due to the current high occupancy level. The steady local retail sales performance is driving continuous demand for warehouses from third-party logistics companies. Ramp access warehouse premises with sizes in the range of 50,000 to 100,000 sq ft are preferred in the market. AVIATION

Turbulence up ahead for Cathay Pacific Airways? Cathay Pacific reports being badly hit by high fuel costs. Plans to reduce frequencies of several long-haul routes is already underway. In a news release, Cathay Pacific Airways issued a trading statement to the Hong Kong Stock Exchange advising that its financial results for the first half of 2012 are “expected to be disappointing”. ECONOMY

Tsang arrives in Taipei

Financial Secretary John Tsang is in Taipei as head of a delegation that officiated at the opening of the Hong Kong Economic, Trade & Cultural Office. Tsang told Taipei media this was his second visit to Taiwan as the Honorary Chairperson of the Hong Kong-Taiwan Economic & Cultural Cooperation & Promotion Council. ECONOMY

Capital duty to be banished by June 1 It’s another move to grow a faltering economy by telling foreigners that Hong Kong is great for their businesses. Registrar of Companies Ada Chung said the capital duty currently levied on Hong Kong companies under the Companies Ordinance will be abolished starting June 1. She said the abolition of the capital duty aims to enhance Hong Kong’s attractiveness as a company domicile and its competitiveness as an international business centre. COMMERCIAL PROPERTY

Hong Kong office rent increases slowing Professional real estate services firm Jones Lang LaSalle said rents in top tier markets aren’t increasing. Its Q1 Asia Pacific Office Index Report in 27 key markets in Asia Pacific found that in Q1 2012 compared to Q4 2011, rents increased in 13 markets, were static in three markets and fell in 11 markets. The Index monitors grade A net effective rents.


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Its fleet will consist initially of three Airbus A320s, a number that is expected to rise to 18 aircraft in 2015.

propels profits of Hang Seng Bank Ltd by 14%. Hang Seng Bank, which is controlled by HSBC Holdings Plc, saw its net income rise to HK$9.3 billion from HK$8.2 billion year-on-year. Net interest income rose 8.5% to HK$8.3 billion while net fee income, derived mostly from credit cards, stockbroking services and mutual funds, fell 5% to HK$2.41 billion. ECONOMY

RESIDENTIAL PROPERTY

TRANSPORT & LOGISTICS

AVIATION

MTR net profit crashes by over a third A weaker property market inflicts a 33% plunge in net profit on MTR Corporation, Ltd during the first half. MTR runs the Hong Kong MTR metro system and is also a major property developer and landlord in the city. Net profit for the first half plummeted 33% to HK$5.9 billion from HK$8.8 billion a year earlier due to smaller revaluation gains. MTR posted a revaluation gain of HK$1.74 billion, sharply lower than the revaluation gain of HK$4.41 billion a year earlier.

Hong Kong Airlines cuts services to London The last flight from London to Hong Kong will be on September 10. General Manager Albert Chan said the airline will end its service between Hong Kong and London due to poor demand. The last flight from London to Hong Kong will be on September 10. ‘’Given the profitability of our regional routes, we believe that we now have the optimal fleet to continue to build a business . . . focused on Asia Pacific,’’ an HKA spokesperson said.

Here’s how HK property market struggled amid the global lull Market remained resilient thanks to investor interest, low lending rates and rising rental returns. According to Jones Lang LaSalle’s quarterly Global Market Perspective, following a lull in activity during Q1, the global property market has resumed a steady recovery path. Investment volumes recovered to US$108 billion in Q2, 24% up q-o-q, signaling that capital markets are on track to achieving US$400 billion volumes for full-year 2012. Other key highlights on the quarter include: • The global economic outlook has weakened as euro strains reemerges. Asia Pacific markets will continue to drive global growth this year, however, a deceleration is increasingly apparent.

HOTELS & TOURISM

AVIATION

RETAIL

Mainland and Philippine visitors boost Hong Kong’s tourism The Hong Kong Tourism Board said 16% more visitors came to the island during the first half compared to the same period in 2011. Of Hong Kong’s 22.3 million visitors, 15.6 million were from mainland China, or a rise of 22.7% year-on-year. Visitors from the Philippines were the highest from Southeast Asia, growing 16.9% in overall arrivals and 18.2% in overnight arrivals.

Jetstar Hong Kong to fly next year Budget airline Jetstar Hong Kong will begin operating next year with some of its rates 50% cheaper than full service options in regular airlines. Jetstar Hong Kong, a subsidiary of Australia’s Qantas Group, is on track to start services next March but subject to regulatory approval. Its fares are expected to be up to 50% cheaper to a number of destinations including mainland China, Japan, South Korea and South East Asia.

H&M refuses rent increase Swedish retail clothing company H & M Hennes & Mauritz AB will shutter its flagship store in Hong Kong due to an increase in rent. The 2,800-square-meter store is located in the business district and will be shut down in the next few months. H&M, however, will retain its 11 other branches in Hong Kong.

Renminbi accounts to be available to non-HK residents Renminbi services will be available to them from August 1.

Authority Chief Executive Norman Chan said banks in Hong Kong may begin offering renminbi services to non-Hong Kong residents next month, adding this was another important milestone for the development of offshore renminbi business in Hong Kong. MARKETS & INVESTING

FINANCIAL SERVICES

Hang Seng Bank grows in a slowing economy A growth in lending income

HKEx completes acquisition of LME Shareholders of the London Metal Exchange have approved their company’s takeover by the Hong Kong Exchanges & Clearing Ltd. The vote to approve taken on July 25 will see HKEx take over ownership of the world’s leading commodity exchange for US$2.2 billion. It saw 99.24% of shareholder in favor, said LME. The proposal needed the support of more than 50% of shareholders and owners controlling at least 75% of the stock. HONG KONG BUSINESS ANNUAL 2013 25


TOP NEWS IN 2012

MOST READ

Daily news: www.hongkongbusiness.hk

President Vagit Alekperov said the company has been faced with a number of legal complications concerning the Hong Kong listing. ECONOMY

names www.dxjrw.com, www. dxjrj.com, www.dxjrj.net and www.dxjrw.net. The website looks similar to the official website of Dah Sing Bank, Limited (Dah Sing Bank). Dah Sing Bank has clarified that it has no connection with the fraudulent website.

More rich becoming less richer in Hong Kong The continuing economic slump reduced the ranks of the rich in Hong Kong by over 17% in 2011.

ECONOMY FINANCIAL SERVICES

BOC Hong Kong profits up 5% in 3Q MayBank highlights latest operating trends. BOCHK’s 9M12 reported pre-provision operating profit (PPOP) rose by 5% YoY to HKD18.9b. Stripping out the Lehman Brothers related write-back, MayBank noted that core PPOP rose by 24% YoY, as rise in income (20%, higher net interest income and trading gain) was much higher than rise in expenses (12%). LEISURE & ENTERTAINMENT

Hong Kong loses to Singapore in English speaking skills English skills are ‘significantly below’ peers. According to Education First’s English Proficiency Index (EF EPI), Hong Kong’s English skills fall significantly below those of other territories in East Asia where English is an official language. FINANCIAL SERVICES

What you need to know about HKMA’s surprising intervention A whopping $1.85bn was bought. According to Bank of America Merrill Lynch, after intervening for the first time 26 HONG KONG BUSINESS ANNUAL 2013

since 2009 at the strong end of the peg last Friday, The Hong Kong Monetary Authority (HKMA) intervened again earlier in the week. A combined $1.85bn was bought according to an emailed statement by HKMA.

Hong Kong inflation higher than expected due to rising rental rates Inflationary pressures will persist.

COMMERCIAL PROPERTY

“Ginza-style” comes to Causeway Bay Hong Kong’s world record high rents are forcing more shops and restaurants to stay open until well into the evening. Shops and restaurants in main districts such as Causeway Bay are operating longer hours to cope with soaring rents. This trend is encouraging developers to build “Ginza-style” commercial projects to support 24-hour businesses. Ginza-style means that two businesses share the same space.

According to BBVA, Hong Kong’s inflation rate rose to 3.8% y/y (consensus: 3.5% y/y) from 3.7% y/y the previous month. Although still on a broad declining trend, inflation was somewhat higher than expected due to rising housing rental rates. “We expect inflationary pressures to remain in this range due to a buoyant property market and loose global monetary policies.”

FINANCIAL SERVICES

Beware of this fraudulent website: HKMA Domains are similar to the official website of Dah Sing Bank. The Hong Kong Monetary Authority (HKMA) wishes to alert members of the public in Hong Kong to a fraudulent website with the domain

MARKETS & INVESTING

LUKoil delays Hong Kong listing to 2013 LUKoil, Russia’s second largest oil company, has postponed its Hong Kong listing to 2013. The oil major, which is also the world’s second largest public company, said the delay was caused by legal restrictions.

The fairly large loss in the number of rich residents was traced to the volatile stock market that wiped out a great portion of the wealth of those who are no longer “High Net Worth Individuals” (HNWIs), according to the latest AsiaPacific Wealth Report 2012. Many of Hong Kong’s wealthy derive their wealth from substantial exposures in the stock market, whose falling fortunes have reflected the economic downturn plaguing the city. ECONOMY

Hong Kong is again world’s freest economy Hong Kong has again been cited as the economy that offers the highest level of economic freedom worldwide. The Economic Freedom of the World: 2012 Annual Report co-published by the Cato Institute, Canada’s Fraser Institute and think tanks around the world showed Hong Kong leading the ranking of 144 countries and economies. It said Hong Kong offers the highest level of economic freedom worldwide, with a score of 8.90 out of 10. Behind Hong Kong were Singapore (8.69), New Zealand (8.36), and Switzerland (8.24).


TOP NEWS IN 2012

MOST READ

Daily news: www.hongkongbusiness.hk

wherein it described the challenges to the business in passenger and cargo revenues as well as cost pressures. CCB International Securities notes that 2013 appears to be equally challenging, at least at the start. RESIDENTIAL PROPERTY

World Development (17)) led the list with 9 units sold. MARKETS & INVESTING

RESIDENTIAL PROPERTY

Asia’s “jet set” forsake Hong Kong for Singapore Rich and well-traveled Asians would rather buy property in Singapore. Almost a third of Asia’s “mobile millionaires” who live, work or spend more than half their time outside their countries of origin prefer Singapore as a second home, said a joint survey by RBC Wealth Management and The Economist Intelligence Unit.

and third place, respectively, and Munich is in fourth place, followed by Vancouver, which ranked fifth. Düsseldorf dropped one spot to rank sixth followed by Frankfurt in seventh, Geneva in eighth, Copenhagen in ninth, and Bern and Sydney tied for tenth place. FINANCIAL SERVICES

HSBC study spots a dark new twist in aviation sector by 2013 Asian LCCs at most risk of declining capacity growth. HSBC expects full service airlines, especially those with large cargo operations, to improve the most in 2013. In contrast, off a stronger base, risks are rising for LCCs, it said.

Hong Kong to become world’s largest financial center by 2017 Jobs boom to fuel rise as World Number One. The Institute of Chartered Accountants in England and Wales (ICAEW) said other reasons for Hong Kong’s future dominance are a less burdensome regulatory environment and continuous investor interest. ICAEW also said the internationalisation of the Chinese Renminbi or yuan will boost finance growth and jobs in Hong Kong.

ECONOMY

RESIDENTIAL PROPERTY

Singapore beats Hong Kong in quality of living ranking Singapore is Asia’s best but only ranked 25th globally. Vienna retains the top spot as the city with the world’s best quality of living, according to the Mercer 2012 Quality of Living Survey. Zurich and Auckland follow in second

Only 15 residential units sold over the weekend That is a 25% drop. According to Maybank Kim Eng, over the weekend, only 15 units of primary residential properties were being transacted, a 25% WoW drop. The Reach (Yuen Long, JV of Henderson Land (12) and New

AVIATION

Li expands Australian business empire Buys third Aussie company this year. Hong Kong and Asia’s richest man, Li Ka-shing, is buying Cheetham Salt, Australia’s largest salt producer. The deal worth US$157 million was made through a subsidiary, Cheung Kong Life Sciences. Cheetham Salt operates eight solar salt fields and five refineries in Australia and has the capacity to produce 1.4 million tonnes of salt annually. The deal is expected to be completed by February 2013 following regulatory approval.

Asia’s top real estate investment ranking for 2013 excludes Hong Kong You won’t believe the country which topped the list. Real estate investor sentiment in the Asia Pacific property sector remains relatively positive, despite continuing global economic uncertainty, according to Emerging Trends in Real

HOTELS & TOURISM

Tourist count surges 11.9% to 4.24m Visitors from Mainland are still a big chunk. According to a release, visitor arrivals to Hong Kong were up 11.9% year-on-year for October to reach 4.24 million, the Tourism Board said today. Of these, more than 2.01 million were overnight arrivals, up 3.6% on last year. Mainland China contributed over 1.28 million overnight arrivals. Meanwhile, same-day, in-town visitor arrivals rose 20.6% to more than 2.22 million. AVIATION

Cathay Pacific reduces passenger capacity by 1.6% 2013 is seemingly another difficult year for Cathay. Cathay Pacific (CX) hosted a quarterly analyst briefing, following closely on its trading statement of 23 November

Estate® Asia Pacific 2013, a real estate forecast jointly published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC). TRANSPORT & LOGISTICS

MTR buys 23 Chinese trains for US$2.57m New diesel/electric trains pollute less and are less noisy. The Mass Transit Railway Corporation has bought 23 trains for US$25.7 million from China CNR Company. The new trains, which will be used in the city’s transit system, will become operational in early 2014. The CKD0A locomotives ordered by MTR meet the strictest global emission standards and reduce operational noise to less than 70 decibels, lower than the 78-decibel standard on the Chinese mainland. HONG KONG BUSINESS ANNUAL 2013 27


company and industry - medical & healthcare equipment industry

Demand for home healthcare equipment surges Ageing population and increased health consciousness are driving up demand.

I

n the first seven months of 2012, Hong Kong’s total exports of medical and healthcare equipment increased by 3%. Exports to the Chinese mainland, the largest market for Hong Kong’s medical and healthcare equipment exports, grew by 9%. However, exports to the US and the EU dropped by 13% and 6%, respectively. Among different product categories, Hong Kong’s exports of miscellaneous medical instruments and appliances which include sight testing instruments and veterinary science appliances, increased by 11% in the first seven months of 2012, while exports of electro-diagnostic apparatus (including apparatus for functional exploratory examination or for checking physiological parameters) increased by 13%. 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

28 HONG KONG BUSINESS ANNUAL 2013

manufacturers or as sourcing partner given their edge in quality assurance and IPR protection. 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. Wellestablished suppliers, such as Osim and OTO, have set up their own specialty shops. Many of Hong Kong’s medical and healthcare goods are exported under OEM arrangements with supplied product specifications and designs. Hong Kong manufacturers maintain a great reputation for handling customer’s intellectual properties (IP) and sensitive technology. Recently, Hong Kong manufacturers have been increasingly involved in product design and development, engineering, modelling, tooling and quality control. Many

“In the first seven months of 2012, Hong Kong’s total exports of medical and healthcare equipment increased by 3%.” Hong Kong manufacturers apply different international certifications for their products to differentiate them from lowerend products. Industry Trends Demographic trends have important impact on the medical and healthcare equipment industry. According to World Health Report released by the a 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 759 million people aged 60 or above which accounts for 11% of the world’s total population. According to the United Nations, there will be 2 billion people in the world who are aged 60 and over by 2050. These trends have resulted in an increasing demand for medical and healthcare products designed for the ageing population. The increasing share of medical services or healthcare in household expenditures in some developing countries can be translated into more opportunities for Hong Kong exporters of medical and healthcare products.


medical & healthcare equipment industry - company and industry Performance of Hong Kong’s Exports of Medical and Healthcare Equipment^ 2010 2011 Jan-Jul 2012 HK$ Mn. Growth % HK$ Mn. Growth % HK$ Mn. Growth % Domestic Exports 23 -21 15 -35 9 +4 Re-exports 10,057 +5 10,933 +9 6,394 +3 Of Chinese Mainland origin 4,108 +3 4,382 +7 2,553 +3 Total Exports 10,080 +5 10,948 +9 6,403 +3 by Markets 2010 2011 Share% Growth% Share% Growth% Chinese Mainland 54.4 +6 55.7 +11 US 13.7 +8 14.3 +14 EU (27) 9.6 +7 9.4 +7 Germany 3.3 +11 3.7 +21 Netherlands 1.8 +16 1.8 +10 Japan 5.6 -21 4.7 -9 ASEAN 3.1 +3 2.7 -3 Russia 1.4 +66 1.6 +23 Taiwan 1.8 +3 1.5 -14

J an-Jul 2012 Share% Growth% 58.2 +9 12.9 -13 8.8 -6 3.5 +4 1.5 -21 4.7 +6 3.1 +18 1.9 +112 1.3 +5

by Categories 2010 2011 Jan-Jul 2012 Share% Growth % Share% Growth % Share% Growth % Miscellaneous Medical Instrument and 26.9 -11 23.6 -5 24.2 +11 Appliances Miscellaneous Electro-Diagnostic Apparatus 16.2 * 19.0 +27 21.1 +13 Syringes/Needles etc for Medical/Surgery 12.9 +72 12.5 +5 12.8 +1 ^ 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 Source: HKTDC Research

CEPA Provisions Under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), all items can enjoy duty-free access to the mainland beginning from 1 January 2006 by meeting the CEPA rules of origin. According to the stipulated procedures, products which have no existing CEPA rules of origin will enjoy tarifffree treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met.

regulations cover various aspects of design, clinical evaluation, manufacturing, packaging, labelling and post market surveillance of medical devices. In the EU, medical devices are covered by three main directives which set out the requirements for performance and safety of medical devices and procedures for checking product compliance. A product is required to have a CE mark to show full compliance with relevant directives. The CE mark enables the product to be marketed in any EU member country.

General Trade Measures Affecting Exports of Medical and Healthcare Equipment Equipment for medical purposes face stringent regulations in overseas markets. In the US, the Food and Drug Administration is responsible for ensuring that medical devices comply with the safety and effectiveness requirements stipulated in the Federal Food, Drug and Cosmetic Act. The US

Product Trends As a result of the ageing population, treatments for cardiopulmonary disease, diabetes, and neurological disorders will see rapid growth, and so will 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-

“Innovations such as microminiature 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 new medical and healthcare devices.”

based or self care equipment such as commode chair, pill alarm box, ionizers and positioning aids, shower chairs, walkers, canes, crutches and patient lifts. These equipment 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 microminiature and remote surgery techniques, DNAbased diagnostics, tissueengineered 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 2013 29


company and industry - information technology equipment

Hong Kong is world’s second largest exporter of computer parts Find out what the future holds for Hong Kong’s exports of IT equipment.

H

ong Kong exports a wide range of information technology (IT) products, especially computer parts and accessories like motherboards, keyboards, computer cases, power supplies, display cards, memory cards, LAN cards and cables and harnesses. According to the latest available statistics, Hong Kong was the world’s second largest exporter of computer parts and accessories in value terms in 2010 after the Chinese mainland. Most Hong Kong manufacturers have relocated their production facilities to the Chinese mainland, where various production processes like PCB assembly, plastics injection moulding and sheet metal working are carried out. The success of Hong Kong’s IT equipment industry also lies in efficient

30 HONG KONG BUSINESS ANNUAL 2013

management. Against the fast-changing markets, Hong Kong companies emphasise quick response to ensure effective marketing services to their customers, and to monitor the changing product trends. Many Hong Kong companies have strengthened their quality assurance and environmental management systems, and are accredited with ISO 9000 - an internationally recognised standard for quality management system, and ISO 14000 - a standard for environmental management system. Hong Kong’s exports of IT equipment expanded steadily by 6% in the first seven months of 2012. Exports of computer parts and accessories declined by 2%, while exports of complete computers and office machines grew by double digits in the period.

“Hong Kong’s exports of IT equipment expanded steadily by 6% in the first seven months of 2012.”

Sales Channels Hong Kong companies usually appoint agents, which may be exclusive distributors, to cater to distribution, technical support and after-sales services. Small manufacturers of computer parts usually sell to local dealers, who assemble the complete set computers with parts imported or sourced locally. Promotion via participation in trade fair missions organised by the Hong Kong Trade Development Council (HKTDC) is an effective way for Hong Kong’s IT equipment companies to explore market opportunities. Important trade fairs include the CES Show held in the US, CeBit in Germany, Japan Electronics Show and Hong Kong Electronics Fair. Business missions organised by the HKTDC to the Chinese mainland and other emerging markets also provide opportunities for Hong Kong IT equipment companies to establish connections with potential buyers. Industry Trends Increasing competition from the mainland


information technology equipment - company and industry Performance of Hong Kong’s Exports of IT Equipment 2010 2011 Jan-Jul 2012 HK$ Mn. Growth % HK$ Mn. Growth % HK$ Mn. Growth% Domestic Exports 1,142 -4 2,381 +109 1,488 +22 Re-exports 331,677 +34 377,004 +14 231,014 +6 Of Chinese Mainland origin 238,925 +37 275,162 +15 170,954 +7 Total Exports 332,819 +33 379,386 +14 232,502 +6 2010 2011 Total Exports by Major Markets Share% Growth% Share% Growth% Chinese Mainland 69 +37 68 +12 US 6 +14 6 +10 EU (27) 6 +20 6 +11 Netherlands 2 +10 1 -4 Germany 2 +30 2 +18 ASEAN 7 +32 8 +45 Japan 3 +30 3 +11

Jan-Jul 2012 Share% Growth% 69 +7 6 +22 5 -7 1 -7 1 -16 9 +5 3 +17

2010 2011 Jan-Jul 2012 Total Exports by Categories Share% Growth % Share% Growth % Share% Growth % Computer Parts & Accessories 49 +31 46 +7 45 -2 Computers 30 +34 33 +28 35 +13 Office Machines 21 +39 20 +10 21 +11 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. Source: HKTDC Research

and other Asian suppliers has long been a threat to Hong Kong companies. In response, many manufacturers have shifted the more labourintensive 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. 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. CEPA Provisions Since the implementation of the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in

January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariffs. According to the stipulated procedures, products which have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. Detailed information, as well as the origin rules for electronic items, is available from the following hyperlink: http://www.tid.gov.hk/ english/cepa/tradegoods/files/ mainland_2012.pdf General Trade Measures Affecting Exports of IT Products Hong Kong exporters should be attentive to the growing popularity of green concept in the marketplace. Especially in Europe, consumers are generally conscious of environmental protection. Not surprisingly, the EU has adopted a number of directives

“The industry is in the process to launch computer products with interfaces of faster communication speed or higher data transfer rate, especially those in USB 3.0 specification.”

for environmental protection, which may have an impact on the sales of IT equipment. These include the restrictions on batteries and accumulators that contain mercury, as well as the Directive on Waste Electrical and Electronic Equipment implemented in August 2005, and the Directive on Restriction of Hazardous Substances that came into effect in July 2006. Product Trends The industry is exploring business opportunities by applying 3D display technology to computer products. Indeed, a number of industry players are in the pipeline to promote their 3D computer devices, such as shutter glass 3D monitors, naked-eye 3D monitors and 3D webcams. Also, the industry is in the process to launch computer products with interfaces of faster communication speed or higher data transfer rate, especially those in USB 3.0 specification. HONG KONG BUSINESS ANNUAL 2013 31


company and industry - jewellery industry

Hong Kong faces intensifying competition in jewellery exports Blame it on suppliers from China, India, and Thailand.

H

ong Kong is the world’s fifth largest exporter of fine jewellery after India, the US, Switzerland and Italy. In the first eleven months of 2011, the growth of Hong Kong’s total exports of precious jewellery accelerated to 37% year-on-year, following an increase of 21% in 2010. However, prices of precious metals and stones have surged dramatically. In volume terms, Hong Kong’s exports of precious jewellery actually declined. The top three markets of Hong Kong’s precious jewellery exports are the US, the EU and Switzerland, collectively accounting for some 60% of the total. Sales (in value terms) to most traditional markets continued with their growth momentum in the first eleven months of 2011. For example, Hong Kong’s exports to the US and the EU increased 32% and 20% respectively after increasing 20% and 8%, respectively, in 2010. Hong Kong’s jewellery exporters are facing intensifying competition from suppliers in

32 HONG KONG BUSINESS ANNUAL 2013

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 already in a better position 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. Sales Channels The jewellery industry of Hong Kong is by and large export-oriented. The trade is characterised by a subcontracting system under which small- and medium-sized factories provide subcontracting services, such as mould making, precision casting, gemsetting, polishing and electroplating, to larger manufacturers or local jewellery retailers. Mass production of jewellery products is normally restricted to established

“Hong Kong is leading in the production of pure gold items, and a major centre for the production of jade jewellery.”

manufacturers which are equipped with more sophisticated and automated production machines. The jewellery items made for export usually bear buyers’ brand names or logos. Some jewellery makers have set up overseas offices and outlets to promote sales. Online display is another growing trend. Some Hong Kong manufacturers are making inroads into retail and distribution in Hong Kong, helped by the flourishing tourist industry. According to Hong Kong Tourism Board’s survey, in 2010, vacation overnight visitors’ spending on jewellery and watch accounted for 25% of their total spending on shopping; as for those from the Chinese mainland, the share was higher at 28%. Industry Trends 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


Jewellery industry - company and industry Performance of Hong Kong’s Jewellery Exports^ Precious Jewellery 2009 2010 Jan-Nov 2011 (SITC 897.3) HK$ Mn. Growth % HK$ Mn. Growth % HK$ Mn. Growth% Domestic Exports 5,789 -35 7,219 +25 7,830 +20 Re-exports 22,718 -20 27,378 +21 35,074 +42 Of Chinese Mainland origin 15,421 -22 19,069 +24 21,990 +26 Total Exports 28,507 -23 34,597 +21 42,903 +37 Precious Jewellery 2009 2010 by Markets Share% Growth% Share% Growth% US 35.7 -27 35.2 +20 EU (27) 24.1 -24 21.4 +8 France 5.4 -21 5.8 +30 United Kingdom 6.8 -24 5.7 +2 Italy 4.2 -22 3.5 +2 Switzerland 6.9 -25 7.8 +38 Macau 2.9 +30 3.6 +53 ASEAN 4.7 +9 4.9 +25 Chinese Mainland 7.1 +68 6.3 +8 India 1.2 -33 1.1 +9

J an-Nov 2011 Share% Growth% 34.1 +32 19.0 +20 5.6 +29 5.6 +33 2.8 +4 7.5 +38 6.7 +184 5.6 +66 5.0 +8 4.9 +521

Precious Jewellery 2009 2010 Jan-Nov 2011 by Categories Share% Growth % Share% Growth % Share% Growth % Articles of Jewellery, of Precious Metal 95.4 -24 96.3 +23 97.3 +38 Articles of Pearls, Precious or Semi-precious Stones 4.4 -2 3.2 -11 2.6 +12 Goldsmiths’ & Silversmiths’ Wares, Precious Metal 0.2 -13 0.5 +180 0.1 -66 Pearls, Gem-Stones and Rough Diamonds 2009 2010 Jan-Nov 2011 (SITC 667) HK$ Mn. Growth % HK$ Mn. Growth % HK$ Mn. Growth% Domestic Exports 202 -5 130 -36 97 -18 Re-exports 69,971 -17 95,678 +37 115,118 +34 Of Chinese Mainland origin 4,341 -23 5,672 +31 5,495 +9 Total Exports 70,173 -17 95,808 +37 115,215 +33 Imitation Jewellery 2009 2010 Jan-Nov 2011 (SITC 897.2) HK$ Mn. Growth % HK$ Mn. Growth % HK$ Mn. Growth% Domestic Exports 83 -26 101 +21 88 -3 Re-exports 6,954 -17 8,293 +19 8,138 +7 Of Chinese Mainland origin 6,585 -18 7,810 +19 7,554 +6 Total Exports 7,038 -17 8,394 +19 8,226 +7 Note: ^ 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. Source: HKTDC Research

method for Hong Kong jewellers in promoting their products. CEPA Provisions Under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), the mainland has given all products of Hong Kong origin, including jewellery, tarifffree treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin can enjoy tarifffree treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. Non-Hong Kong made jewellery products remain subject to tariff rates as high as 35% when entering the mainland. The promulgated rules of

origin for jewellery to benefit from CEPA’s tariff preference are basically similar to the existing rules governing Hong Kong’s exports of these products. Generally speaking, for jewellery articles of precious metal, moulding, identified as the principal process for the purpose of delineating their origin, is required to be carried out in Hong Kong. If assembling is required, it must also be done in Hong Kong. General Trade Measures Affecting Jewellery Exports In China, all gold trading at the wholesale level for producers and wholesalers now takes place in the Shanghai Gold Exchange, introducing market prices to the transactions. In 2004, China removed all barriers to

“Hong Kong is the world’s second largest exporter of imitation jewellery and the fifth largest exporter of precious jewellery.”

gold licensing for manufacture, distribution and retail of gold jewellery products, and allowed some mainland companies to import gold jewellery. In August 2010, China announced to let more banks import and export gold, to open trading further to foreign companies, to increase foreign members on the Shanghai Gold Exchange, and also to study ways to allow foreign qualified bullion suppliers to deliver to the exchange. Effective from May 2005, the value added tax (VAT) on exports of jewellery articles of gold and precious materials under general trade is exempted, but the VAT on the import content of such trade, collected when imported into China, is not rebated. Starting from July 2007, for certain pearl, precious stones and precious metal, the rebate rate was reduced from 13% to 5%. On the other hand, effective from April 2009, the export tax rebate on imitation jewellery has been lifted from 5% to 9%. Diamond (including rough diamond and unset polished diamond) imports and exports under general trade are required to go through the declaration formalities with the customs located inside the Shanghai Diamond Exchange (SDE). Diamonds directly entering SDE from overseas are exempted from import duty, value-added tax and consumption tax. All diamonds traded in SDE are exempted from value-added tax. 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 the human body. It is also worth noting that, in recent years, consumption of diamond jewellery has increased rapidly, particularly in emerging economies. HONG KONG BUSINESS ANNUAL 2013 33


company and industry - household electrical appliances industry

The key to enhance HK’s competitiveness

According to the latest available figures, Hong Kong was the world’s second largest exporter of hair dressing apparatus in value terms in 2010.

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. According to the latest available figures, Hong Kong was the world’s second largest exporter of hair dressing apparatus, and the fifth largest exporter of electric food grinders, mixers and juicers in value terms in 2010. Hong Kong’s total exports of household electrical appliances increased by 5% in the first half of 2012. Sales of major products like household lighting products and hair dressing/hand drying apparatus expanded in the period, while exports of thermic domestic

34 HONG KONG BUSINESS ANNUAL 2013

appliances declined by 3%. Sales Channels Hong Kong manufacturers of household electrical appliances mostly produce on OEM and ODM basis for reputable brand names, of which some have set up buying offices in Hong Kong for direct sourcing. Hong Kong companies also sell to specialised importers and traders in North America and Europe, who may distribute the merchandises through their own channels or re-sell to their clients for further distribution. There are a few large Hong Kong manufacturers like Goodway and Megaman marketing electrical appliances under their own brand names, while smaller companies also sell their brand products to smaller importers and distributors overseas. Their sales network covers not only the developed economies, but also emerging markets like Latin America and Eastern Europe. Promotion via participation in trade fairs is an effective way for Hong Kong companies of household electrical appliances to explore

“Hong Kong’s total exports of household electrical appliances increased by 5% in the first half of 2012.” market opportunities. Important trade fairs include the CES Show held in the US, CeBit Home Fair and Domotechnica in Germany, and Hong Kong Electronics Fair organised by the Hong Kong Trade Development Council (HKTDC). 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 Asian suppliers and local Chinese enterprises. Against this background, Hong Kong companies have enhanced their value-added. While maintaining their OEM production, they have focused more on ODM business, rendering increased value-added services to overseas customers. Although this would normally require more investment in aesthetic and technical designs than OEM production, developing ODM business is deemed to be an important strategy for Hong Kong companies to enhance their competitiveness. CEPA Provisions Since the implementation of the third phase


household electrical appliances industry - company and industry Performance of Hong Kong’s Exports of Household Electrical Appliances ^ 2010 2011 Jan-Jun 2012 HK$ Mn. Growth % HK$ Mn. Growth % HK$ Mn. Growth% Domestic Exports 59 +4 54 -8 14 -47 Re-exports 21,487 +20 22,008 +2 10,948 +5 Of Chinese Mainland origin 20,594 +22 21,172 +3 10,609 +6 Total Exports 21,546 +20 22,062 +2 10,962 +5 2010 2011 Total Exports by Major Markets Share% Growth% Share% Growth% US 31 +27 30 -1 EU 23 +8 20 -8 Germany 5 +16 5 -2 United Kingdom 5 +23 3 -27 France 3 +44 3 +1 Japan 16 +33 20 +26 Chinese Mainland 6 +11 7 +6 Autralia 3 +16 3 +1

Jan-Jun 2012 Share% Growth% 28 -1 18 -13 4 -9 3 -8 3 -14 25 +38 6 -7 3 +9

2010 2011 Jan-Jun 2012 Total Exports by Categories Share% Growth % Share% Growth % Share% Growth % Household Lighting Products 22 +8 24 +17 23 +7 Thermic Domestic Appliances 23 +67 23 +1 20 -3 Hair Dressing / Hand Drying Apparatus 10 +14 9 -2 10 +13 Table/Floor/Wall/Window Fans, Output < 125W 5 +4 5 +1 8 +27 Domestic Vacuum Cleaners 4 +20 4 +4 5 +89 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. Source: HKTDC Research

of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariffs. According to the stipulated procedures, products which have no existing CEPA rules of origin will enjoy tarifffree treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. In the main, the CEPA origin criteria for Hong Kong items include: (1) change in tariff heading; (2) performance of specific manufacturing process in Hong Kong; and (3) fulfillment of value-added requirement, under which at least 30% of the FOB value of the products, and that the final manufacturing or processing operations should be completed in Hong Kong. General Trade Measures Affecting Exports of Household

Electrical Appliances Hong Kong exporters should be attentive to the growing popularity of green concept in the marketplace. Especially in Europe, consumers are generally conscious towards environmental protection. The Chinese mainland has adopted similar environmental protection regulations. These include the already effective Management Methods on Prevention and Control of Pollution Caused by Electronic Information Products since March 2007 and the Management Methods on Prevention of Waste Electronic Equipment Pollution on Environment since February 2008. The regulation on recycling and treatment of waste electrical and electronic equipment has also come into effect since 1 January 2011. Product Trends Household electrical appliances carrying a single function are

“Industry players are focusing on the development of LED lamps, which can reduce power consumption with an even longer lifetime than the electronic compact fluorescent lamps.”

much sought after in Western markets. These include heatingbased products, like coffee/tea makers and toasters; and motorbased appliances such as food choppers, blenders and juiceextractors. Regarding household lighting products, aesthetic design is among the major elements manufacturers harness 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 environmental protection, the provision of environmentally appealing electrical appliances which comply with, for instance, European or North American eco-labelling and energysaving schemes, is becoming a competitive edge of Hong Kong exporters of household electrical appliances. HONG KONG BUSINESS ANNUAL 2013 35


company and industry - import and export industry

Hong Kong is the world’s 10th largest trading economy In 2011, Hong Kong’s total merchandise trade increased by 11% to US$910.5 billion.

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ong Kong’s import and export trading firms are active in sourcing various types of goods, including raw materials, machinery and parts, and a wide range of consumer goods. There are three main types of sourcing activities: (1) sourcing goods produced in Hong Kong; (2) sourcing goods from around the region for re-exports; and (3) sourcing goods from one country to be shipped directly to a third country without touching Hong Kong ground. According to the Census and Statistics Department, Hong Kong’s sales value of offshore trade (includes both “merchanting” and “merchandising for offshore transactions”) in 2010 amounted to HK$3,886.3 billion, up 32.6% over 2009. In comparison, the value of re-exports was HK$2,961.5 billion in 2010, up 22.8% over 2009. The amount of offshore trade has surpassed the value of Hong Kong’s reexports.

36 HONG KONG BUSINESS ANNUAL 2013

Service Providers Hong Kong’s import and export trading firms are typically small, employing around 6 persons each on average. There were 102,273 import and export trading firms in Hong Kong in 2011, with less than 300 of these firms having more than 100 employees each. There are three broad categories of import and export trading firms: • Left hand-right hand traders: these refer to trading firms which match sellers and buyers without adding any significant value to the process. These firms rely on their specialist knowledge of the sources of products in the region and the low costs of their supplies as their main competitive advantages. • Traders with some value added services: Many firms now source raw materials for their suppliers and provide finance for these materials. They often use letters of credit from their customers as a guarantee for raising finance for their purchase orders.

“As at December 2011, 495,847 people were employed in the import and export trade sector, which had 102,273 establishments.” • Traders with sophisticated value-added services: In certain cases exporting firms have added value to their traditional activity to such an extent that it may be difficult to retain the label of being exporters. The business environment for Hong Kong’s trading firms is becoming more challenging amid the growing trend toward direct dealing between customers and manufacturers, known as “trade disintermediation”. In 2010, the rate of gross margin1 of merchanting was 6.1%, down from 6.9% and 8.6% in 2009 and 2004 respectively, illustrating the squeeze in margin. In the same period, the commission rate of merchandising2 for offshore transactions was 5.5% (2004: 3.6%; 2009: 5.5%), while the rate of re-export margin was 15.9% (2004: 17.3%; 2009: 16.9%). Exports Hong Kong’s import and export trading sector exports its services mainly in the form of offshore buying and selling of goods. Given Hong Kong’s proximity and the relocation of In 2011, Hong Kong earned US$35.2 billion


import and export industry - company and industry Industry Data Import and Export Trade : December 2011 Number of Establishments : 102,273 Employment : 495,847 (US$ BILLION)

2005

2006

2007

2008

2009

2011

Export of Merchanting and Trade-related Services

20.8

22.9

25.5

27.7

26.5

35.2

Year-on-year (YoY) growth

+10.7%

+9.9%

+11.6%

+8.5%

-4.3%

+12.6%

Contribution to Services Exports

32.7%

31.5%

30.1%

30.0%

30.9%

29.2%

Source: Gross Domestic Products (Quarterly), Census and Statistics Department

Major Export Markets of Merchanting and Trade-related Services (US$ million) 2009

Share %

YoY growth

2010

Share %

YoY growth

US

7,790

29.4%

+0.9%

9,657

30.9%

+24.0%

China

5,518

20.8%

-16.9%

6,632

21.2%

+20.2%

UK

1,596

6.0%

-4.1%

2,067

6.0%

+29.5%

Germany

1,316

5.0%

-18.0%

1,561

5.0%

-18.6%

Japan

1,383

5.2%

+0.3%

1,522

4.9%

+10.1%

Source: Report on Hong Kong Trade in Services Statistics, Census and Statistics Department

from exporting merchanting and trade-related services, accounting for 29.2% of total services exports. The Chinese mainland accounted for 21.2% of Hong Kong’s exports of merchanting and trade-related services in 2010. Industry Development and Market Outlook • Despite the gloomy global economy, Hong Kong’s total merchandise trade increased 11% to US$910.5 billion in 2011, helped to an extent by the economic gravity shifted from West to East. This followed a strong trade performance in 2010, recording a surge of 23.9% to US$820 billion. Many other countries in Asia also showed remarkable growth in exports and imports in both 2010 and 2011. • In addition, over the past few years, there has been an increase in companies in developed economies treating Asia as a market instead of a pure production base. Based on WTO statistics, North America’s exports to Asia expanded 27% in 2010, surpassing 13% in respect of its exports to Europe for the same year. Similarly, Europe’s exports to Asia expanded 22% in 2010, surpassing 13% in respect of its

exports to North America for the same year. The Closer Economic Partnership Arrangement between Hong Kong and the Mainland(CEPA) According to the “Measures for the Administration on Foreign investment in Commercial Fields”, which became effective in December 2004, foreign-owned enterprises are allowed to enter the mainland market to engage in trading business, not being subject to any minimum annual trading value. However, foreignowned enterprises need to meet the regulations on the minimum registered capital (as stipulated in the related rules of Company Law3), registered capital and investment value. Under CEPA, Hong Kong service suppliers (HKSS) can provide commission agents’ services in respect of chemical fertilisers, processed oil and crude oil, and wholesale trade services and retailing services in respect of chemical fertilisers. In addition, for the same HKSS which open more than 30 stores accumulatively on the mainland, if the commodities for sale include pharmaceutical products, pesticides, mulching films,

“In 2011, about 14% of the Chinese mainland’s exports (US$258 billion) and 13% of imports (US$220 billion) were handled via Hong Kong and 61.6% of Hong Kong’s total re-exports were originated from the Chinese mainland.”

chemical fertilisers, vegetable oil, edible sugar and cotton, and the above commodities are of different brands and come from different suppliers, the Hong Kong service supplier is allowed to operate on a whollyowned basis. Currently, a single foreign enterprise under the same condition can only hold a maximum 49% share in the business. 1 “Rate of gross margin” refers to the gross margin from merchanting expressed as a percentage of the sales value of goods involved, while “commission rate” is the commission from merchandising for offshore transactions expressed as a percentage of the sales value of goods involved. “Rate of re-export margin” is defined as the re-export margin expressed as a percentage of the value of re-exports. 2 The difference between “merchanting” and “merchandising” is that, an establishment engaged in “merchanting” takes ownership of the goods involved, whereas one engaged in merchandising transactions does not take ownership of the goods involved. 3 According to Company Law, the minimum registered capital is RMB 30,000. HONG KONG BUSINESS ANNUAL 2013 37


company and industry - building and construction industry

Why Hong Kong is a regional leader in construction The adoption of specialised construction techniques, such as reclamation and design-and-build methods, has made Hong Kong a regional leader.

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onstruction activities can broadly be classified into three categories, namely buildings (residential, commercial, and industrial/storage/service), structures and facilities (transport, other utilities and plant, environment, and sports and recreation), and nonsite activities (decoration, maintenance and repair, etc.). The overall gross value of construction work performed by main contractors in Hong Kong (in real terms) has been rising since 2009. A strong growth of 35% in the value of public sector sites drove up the construction activity by 16% to HK$129 billion in 2011. Recently the rise in public expenditure on infrastructure has mainly been driven by the Ten Mega Infrastructure Projects and transport infrastructural projects, including the Guangzhou-Shenzhen-Hong Kong Express Rail Link, and the Hong KongZhuhai-Macau Bridge. To expand land supply and enhance infrastructure, the government will carry out

works in new development districts such as Tseung Kwan O, Kai Tak, Tuen Mun and Yuen Long. These works include land formation, road construction and laying of water mains. As the infrastructure projects are being rolled out as scheduled, the demand for construction services in Hong Kong, particularly demand from the public sector, will remain high. Services Providers Hong Kong’s construction industry is characterised by a small number of large local contractors, a high level of subcontracting, presence of a large number of overseas contractors, with a substantial proportion of companies being both developers and contractors. Most of Hong Kong’s construction companies are small in size and those with less than HK$10 million (US$1.3 million) in annual gross value of construction work account for as high as 97% of the construction industry. The majority of the small ones act as

“The ten mega infrastructure projects announced in 2007 are being rolled out in phases as scheduled, boosting Hong Kong’s construction market.” subcontractors to the large companies, which tend to be main contractors. There are quite a number of very big construction companies capable of handling projects requiring sophisticated technology and strong financial background and are expanding their business across the region. Hong Kong contractors are experienced and highly skilled in building works. Because of the growing size and complexity of the projects, the current industry trend is to award large and complex building contracts as a single package to multi-disciplinary contractors. There is no formal restriction for entry to the contracting business in Hong Kong. Foreign and local contractors are treated alike, and they can tender public sector projects so long as they have good track records and sufficient financial capability. Many services professionals are involved in the building and construction industry, notably architects, surveyors and engineers. Exports Hong Kong’s expertise in timely construction of quality high-rise residential and commercial buildings is internationally renowned and in great demand in overseas markets, especially on the Chinese mainland. The Middle East has arisen to be a market with growing potential for Hong Kong’s construction companies. Government infrastructure plans as well as stimulus packages provide good support to construction activities in the Gulf region. Taking Saudi Arabia for example, the government launched a stimulus package valued over US$100 billion in 2011, with nearly half of the investment going to the infrastructure development. According to the country’s infrastructure report released in the first quarter of 2012, the construction industry is expected to grow at 5.4% in 2012. Major types of Hong Kong’s exported services include project management, contracting and engineering consulting. Industry Development and Market Outlook To achieve the objective of promoting economic growth through infrastructural development, the Hong Kong government has been increasing its infrastructure investment over the past few years. Some of the mega infrastructure projects announced

38 HONG KONG BUSINESS ANNUAL 2013


building and construction industry - company and industry Summary of 10 infrastructure projects Project

Description

Value (US$min)

Commencement

Target completion

1. South Island Line (SIL)

Linking Admiralty to the Southern District on Hong Kong Island

1,590

2011

2015

2. The Shatin to Central Link (SCL)

•Connecting the northeast New Territories and Hong Kong Island

8,321

2012

2018 / 2020

3. The Tuen Mun Western Bypass and Tuen Mun Chek Lap Kok Link

• Linking up Deep Bay in Shenzhen, the northwest New Territories and Hong Kong International Airport

Over 2,500

To be announced

2016

4. The GuangzhouShenzhen-Hong Kong Express Rail Link

• Linking up the national rail network of the Chinese mainland • Connecting West Kowloon to Shibi, Guangzhou

8,000

2010

2015

5. Hong Kong-Zhuhai Macau Bridge

• 29.6 km-Bridge with 6 lanes • Linking up Hong Kong, Zhuhai and Macau

2,740

2010

2016

6. Hong Kong-Shenzhen Airport

• A dedicated rail link between Shenzhen Airport and Hong Kong International Airport

N.A.

N.A.

N.A.

7. Hong Kong-Shenzhen Joint Development of the Lok Ma Chau Loop

• Lok Ma Chau Loop, an area near the Hong KongShenzhen border • Working with Shenzhen authorities to develop the area

N.A.

N.A.

N.A.

8. West Kowloon Cultural District (WKCD)

• The flagship art and culture development in Hong Kong with aims to provide a platform to enhance arts education and cultural exchange and cooperation.

Over 2,769

2013

2015 ( first phase)

9. Kai Tak Development Plan

• An area consisting of former Hong Kong airport and its adjoining parts • To be developed into an area for commercial, residential, recreational, tourism and community uses together with supporting infrastructure.

Over 16,700

2009

2013 / 2016 / 2021 ( In 3 phases)

10. New Development Areas (NDAs)

• In the Northern New Territories • Purposes of land use include housing, employment, high value-added and non-polluting industries

N.A.

N.A.

2019 (first phase)

Source: Various press and government sources

in the Policy Address in October 2007 have had their details published and tenders released, thereby driving up local construction activities. Apart from the ten infrastructure projects, the Hong Kong government has also forged ahead with other works, such as Operation Building Bright and Revitalising Historic Building. In addition, further development of the Hong Kong International Airport, including the construction of the third runway, has been approved. In the Budget 2012/13, the Hong Kong government projected that total public spending on infrastructure will go up by 7.4% to HK$62 billion (US$7.9 billion) for the fiscal year ending 31 March 2013. As a result, the total value of infrastructural projects is expected to rise significantly

from HK$62 billion in 2007/08 to HK$184 billion in 2012/13. In the next few years, the public infrastructure expenditure is estimated to exceed HK$70 billion annually. Infrastructure Projects in the Region Many Asian countries need to upgrade their basic infrastructure such as road networks, port facilities, and housing. The rise of Asian consumerism has also led to rising investment in modernising their retail distribution channels. Shopping malls are springing up in many Asian countries, typically India, Indonesia, the Philippines, Thailand, Malaysia and Vietnam. Hong Kong construction companies are actively seeking opportunities in these markets. Luks Group, for example, engages in cement production and property

“Hong Kong’s construction industry performed well in the second quarter of 2012, with the gross value of construction work performed by main contractors amounting to HK$39.2 billion (US$5.0 billion), gaining 34% year-on-year (YoY).”

development in Vietnam. The Middle East is another market which has attracted many Hong Kong companies, with many projects won in many Middle East countries. Hip Hing Construction has won contracts in Abu Dhabi’s (the capital city of the UAE) carbon-free city Masdar, as well as contracts in Dubai to construct a 72-storey residential building called HHHR Tower together with Al Ahmadiah Contracting & Trading. Paul Y was awarded a contract worth US$77 million to build the 54-storey Arraya Office Tower in Kuwait. Another Hong Kong construction company, Chun Wo Development, also entered the Middle East market with initial investments in two residential projects in Abu Dhabi (expected to be completed by 2013). HONG KONG BUSINESS ANNUAL 2013 39


company and industry - clothing industry

Hong Kong clothing companies excel in ODM, OEM production They are able to deliver quality clothing articles even in short lead times.

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tarting 1 January 2009, textile and clothing products originating in China no longer require any import licence or surveillance document before entering the EU. Meanwhile, textile and clothing shipments to the US made on or after 1 January 2009 are no longer subject to any quotas. Hong Kong clothing companies are reputable for ODM and OEM production. They are able to deliver quality clothing articles in short lead time, as foreign importers and retailers request clothing suppliers to tighten up supply chain management to ensure the ordered merchandise reaching the store floor at the right time. Increasingly, Hong Kong clothing companies, the established ones in particular, have shown enthusiasm for brand promotion. Hong Kong’s total exports of clothing decreased by 7% year-on-year in the first four months of 2012, when domestic exports and re-exports declined by 23% and 6%, respectively. During January-April 2012, Hong Kong’s clothing exports to the US and EU, the two largest markets that accounted for 65% of the total, rose by 1% and fell by 19%,

respectively. The clothing industry is a major manufacturing sector of Hong Kong. It is the third largest manufacturing employer in Hong Kong, with 1,034 establishments hiring 11,375 workers as of December 2011. Performance of Hong Kong’s Exports of Clothing Hong Kong and mainland clothing manufacturers have relocated their production of lower-end and mass products to Southeast Asian countries like Bangladesh, Vietnam and Indonesia. Their manufacturing operations on the mainland are now focused on more sophisticated and higher valueadded items or urgent orders. Hong Kong’s total exports of clothing fell by 7% year-on-year in the first four months of 2012 after an increase of 2% in 2011. During January-April 2012, Hong Kong’s domestic exports of clothing saw a decline of 23%, while re-exports fell by 6%. Productwise, Hong Kong’s exports of woven wear fell by 8% year-on-year in the first four months of 2012, with woven wear for men/

“Hong Kong’s total exports of clothing decreased by 7% year-on-year in the first four months of 2012.”

boys and women/girls decreasing by 4% and 10%, respectively. Meanwhile, knitted wear fell by 6%, with items for men/boys and women/ girls dropping by 5% and 7%, respectively. Clothing accessories fell by 2%, while other apparel articles slid by 7%. Sales Channels Hong Kong’s clothing manufacturers have comprehensive knowledge about sourcing and products. They are able to understand and cater for the preferences of the dispersed customer bases. Exporters also have good knowledge of international and national rules and regulations governing clothing exports, such as rules of origin, quota restrictions, tariff rates and documentation requirements. Cut, make and trim (CMT) arrangements are common, although many Hong Kong manufacturers have moved to higher value added activities such as design and brand development, quality control, logistics and material sourcing. As a global sourcing hub in Asia, Hong Kong attracts a number of international trading houses and major retailers. Buyers sourcing from Hong Kong include American and European department stores (e.g. Macy’s, JCPenney, Federated, Karstadt Quelle, C&A), discount stores (e.g. Sears, Target and Carrefour), specialty chains (e.g. The Gap, The Limited) and mail order houses (e.g. Otto and Great Universal Stores). Industry Trends Online shopping and marketing: Online shopping is increasingly popular in Hong Kong’s major markets, including China. According to China Internet Network Information Center (CINNIC), the total number of online shopping transactions on the Chinese mainland exceeded RMB $750 billion in 2011, boasting 173 million online shoppers. Growing importance of private labels: 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. Rising green consciousness: Consumers are becoming more practical, thoughtful and socially conscious. For instance, according to Textile Exchange, retail sales of organic cotton products will likely grow to US$7.4 billion in

40 HONG KONG BUSINESS ANNUAL 2013


clothing industry - company and industry Lorem 2010 2011 Jan-Apr 2012 (HK$ billion) Value Growth % Value Growth % Value Growth% Domestic Exports 3.2 -28 2.8 -14 0.7 -23 Re-exports 183.6 +7 18.78 +2 48.6 -6 Of Chinese Mainland origin 176.9 +6 177.7 +1 44.9 -8 Total Exports 186.8 +6 190.6 +2 49.2 -7

2010 2011 by Markets Share% Growth% Share% Growth% US 36.6 +8 35.0 -3 EU 35.2 +1 33.0 -5 Germany 8.6 +5 8.4 * United Kingdom 9.7 -3 8.2 -14 France 3.6 +7 3.5 -3 Italy 3.6 +7 3.5 +1 Netherlands 3.5 +4 3.2 -6 Japan 6.5 -3 7.3 +15 Chinese Mainland 3.6 +18 4.8 +39 Australia 2.6 +1 2.8 +8 Canada 3.5 +2 3.5 +4

Jan-Apr 2012 Share% Growth% 35.9 +1 28.7 -19 7.4 -21 7.1 -22 3.1 -18 2.8 2.5 -26 6.9 -9 6.0 +9 3.5 -6 3.4 -9

2010 2011 Jan-Apr 2012 by Categories Share% Growth % Share% Growth % Share% Growth % Woven wear 33.1 +2 33.6 +3 37.8 -8 For men or boys 11.5 +7 12.6 +12 13.9 -4 For women or girls 21.6 * 20.9 -1 23.9 -10 Knitted wear 16.5 +10 15.9 -2 16.3 -6 For men or boys 5.1 +13 5.1 +4 5.6 -5 For women or girls 11.4 +9 10.8 -4 10.7 -7 Clothing accessories 6.9 +12 7.7 +14 7.1 -2 Of textile fabrics 2.1 +10 2.3 +12 1.9 -8 Of non-textile fabrics 4.8 +14 5.4 +15 5.2 +1 Other apparel articles 43.4 +6 42.8 +1 38.8 -7 ^ 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 Source: HKTDC Research

2012. Growing interest in China’s domestic market: The rapid expansion of mainland’s economy has drawn the attention of both Hong Kong and foreign clothing companies. While some well-established foreign players including C&A, Uniqlo and H&M are seeking to expand in the lower-tier cities, those which are not yet present on the mainland are working hard to mark their inroads. CEPA The promulgated rules of origin for clothing items to benefit from CEPA’s tariff preference are basically similar to the existing rules governing Hong Kong’s

exports of these products. Generally speaking, the principal manufacturing process of cutand-sewn garment is sewing of parts into garments. If linking and/or stitching is/are required, such process/processes must also be done in Hong Kong. For piece-knitted garment, if it is manufactured from yarn, the principal process is knitting of yarn into knit-to-shape panel. If the piece-knitted garment is manufactured from knitto-shape-panels, the principal process is linking of knit-toshape panels into garment. If stitching is required, it must also be done in Hong Kong. Detailed information is available from the following hyperlink: http://

“During January-April 2012, Hong Kong’s clothing exports to the US and EU, the two largest markets that accounted for 65% of the total, rose by 1% and fell by 19%, respectively.”

www.tid.gov.hk/english/cepa/ tradegoods/files/mainland_2011. pdf. General Trade Measures Affecting Exports of Clothing Despite the elimination of textile quotas among WTO members in 2005, the US and EU had subsequently imposed safeguard measures against imports from the Chinese mainland. Starting 1 January 2009, however, textile and clothing products originating in China no longer require any import licence or surveillance document before entering the EU. Meanwhile, textile and clothing shipments to the US made on or after 1 January 2009 are no longer subject to any quotas. HONG KONG BUSINESS ANNUAL 2013 41


company and industry - telecommunications equipment industry

A peek inside Hong Kong’s telco industry

Hong Kong exports a variety of telecommunications equipment, ranging from basic telephones, mobile phones to sophisticated system products.

H

ong Kong’s exports of telecommunications equipment rose by 11% in the first seven months of 2012. Exports to the Chinese mainland, the largest market, expanded by 15% in the period, while exports to the US and the EU increased amid continued consumer demand for telecommunications products. Sales of mobile phones with advanced features, particularly the so-called smart phones, are rising rapidly. Broadband applications for the fixed-network, especially those making use of optical communications technologies, are hot areas for development. With respect to domestic products, higher frequency cordless phones are sought after in the market. Industry Features Hong Kong exports a variety of telecommunications equipment, ranging

from basic telephones to sophisticated system products. Major export items include corded phones, cordless phones, mobile phones, etc. According to the latest available statistics, Hong Kong was the world’s largest exporter of telephone sets in value terms in 2010. Another major export category is parts and accessories, including parts for system products and a variety of mobile phone accessories. Hong Kong also exports different kinds of telecommunications apparatus with radio reception, like walkie talkies and base stations for telecommunications. Other items include navigational apparatus like GPS devices and telephone switching/exchange equipment. Sales Channels Hong Kong companies usually sell their products on OEM and ODM basis to overseas telephone companies and specialised

“Hong Kong’s exports of telecommunications equipment rose by 11% in the first seven months of 2012.”

importers of telecommunications equipment, which are capable of obtaining approvals from relevant telecommunications authorities in the corresponding markets. After-sales services, such as installation and maintenance, are usually undertaken by the overseas buyers, while Hong Kong suppliers provide technical support to their buyers. On the other hand, a few Hong Kong companies market their own brand products in markets like the US and the EU. Some companies also have offices in overseas countries to monitor local distribution and/or after-sales services. Industry Trends Increasing competition from mainland and other Asian suppliers has long been a threat to Hong Kong companies. In response, many Hong Kong companies have differentiated their products by enhancing product features, and enriched their product lines through new product development. Meanwhile, Hong Kong companies put more emphasis on ODM manufacturing. Buyers can now provide the industrial design only, such as cosmetic drawings and features, and their Hong Kong suppliers undertake other operational activities, which range from hardware design, software programming, mechanical drawing, building prototype and samples, to tool-making and production. Some industrial designs may even be done by Hong Kong companies. As more design works are 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. CEPA Provisions Since the implementation of the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariffs. According to the stipulated procedures, products which have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met.

42 HONG KONG BUSINESS ANNUAL 2013


telecommunications equipment industry - company and industry Performance of Hong Kong’s Exports of Telecommunications Equipment ^ 2010 2011 Jan-Jul 2012 HK$Mn. Growth % HK$Mn. Growth % HK$Mn. Growth % Domestic Exports 10,257 +33 2,466 -76 114 -95 Re-exports 284,282 +33 354,327 +25 221,461 +13 of Chinese Mainland Origin 247,478 +35 315,183 +27 194,188 +11 Total Exports 294,540 +33 356,793 +21 221,575 +11 Total Exports by Major Markets Chinese Mainland US EU(27) Netherlands Germany ASEAN Singapore India

2010 2011 Share% Growth% Share% Growth% 41 +41 44 +28 13 +35 10 -7 13 +22 12 +11 5 +31 4 -4 2 +21 1 +4 7 +26 6 +9 3 +26 2 -6 5 +86 5 +22

Jan-Jul 2012 Share% Growth% 45 +15 10 +12 11 +3 4 +11 1 -2 6 +2 2 -16 5 +1

Total Exports by Categories 2010 2011 Jan-Jul 2012 Share % Growth % Share % Growth % Share % Growth % Parts of Telecommunications 46 +39 47 +25 47 +10 Equipment Other Apparatus for 33 +28 28 +2 30 +19 Transmission or Reception Telephone Sets 20 +30 24 +45 22 +3 Radar/radio Navigational Aid Apparatus 1 +50 1 +5 1 +17 ^ 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. Source: HKTDC Research

General Trade Measures Affecting Exports of Telecommunications Equipment Hong Kong exporters should be attentive to the growing popularity of green concept in the marketplace. Especially in Europe, consumers are generally conscious of environmental protection. Not surprisingly, the EU has adopted a number of directives for environmental protection, which may have an impact on the sales of IT equipment. These include the restrictions on batteries and accumulators that contain mercury, as well as the Directive on Waste Electrical and Electronic Equipment (WEEE) implemented in August 2005, and the Directive on Restriction of Hazardous Substances (RoHS) that came into effect in July 2006. The Chinese mainland

has adopted similar environmental protection regulations. These include the already effective Management Methods on Prevention and Control of Pollution Caused by Electronic Information Products since March 2007 and the Management Methods on Prevention of Waste Electronic Equipment Pollution on Environment since February 2008. The regulation on recycling and treatment of waste electrical and electronic equipment has also come into effect since 1 January 2011. Product Trends Spurred by the demand for high-speed data transmission and Internet access via the fixed-network, broadband applications, especially those making use of optical communications technologies, are hot areas for development.

“Sales of mobile phones with advanced features, particularly the so-called smart phones, are rising rapidly.”

But some companies have continued to concentrate on the digital subscriber line (DSL) technology, which utilises the existing copper telephone lines to deliver highspeed data services. With respect to domestic telephone products, there is a constant appetite for cordless phones. Thanks to changing regulations of telecommunications authorities, a certain radio frequency spectra have been opened for cordless phones operating at higher frequency, including the DECT phones for Europe, and the 900MHz, 2.4GHz and 5.8GHz cordless phones for the US. Higher frequency products are well sought after due mainly to their better communication quality and enhanced security. Yet corded telephones are not expected to become obsolete in the medium term. HONG KONG BUSINESS ANNUAL 2013 43


company and industry - electronics industry

The key to electronics industry’s success revealed

Hong Kong’s electronics industry is the largest merchandise export earner of the territory, accounting for 55% of Hong Kong’s total exports in 2011.

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ong Kong’s electronics industry is the largest merchandise export earner of the territory, accounting for 55% of Hong Kong’s total exports in 2011. According to the latest available statistics, Hong Kong was the world’s largest exporter of telephone sets; the second largest exporter of calculators, sound recording apparatus, computer parts/accessories and video recording/ reproducing apparatus (including DVD recorders/players); and the world’s third largest exporter of radios and video cameras/recorders (including digital cameras) in value terms in 2010. The success of Hong Kong’s electronics industry lies in efficient management. Against the fast changing markets, Hong Kong companies emphasise quick response to ensure effective marketing services to their customers, and to monitor the changing product trends. Hong Kong’s

electronics exports rose by 4% in the first half of 2012, after a 9% growth in 2011. Exports of IT equipment, telecommunications equipment and AV equipment grew by different degrees. But exports of semiconductor items were lacklustre. Sales Channels Hong Kong manufacturers of finished electronic items mostly produce on OEM and ODM basis for reputable brand names in overseas markets. Some of these major buyers have set up buying offices in Hong Kong for direct sourcing. Hong Kong companies also sell to specialised importers and traders in North America and Europe, who distribute the merchandise under their own channels or re-sell to their clients for further distribution. Hong Kong is an important trading hub for electronic parts and components in Asia- Pacific. Many items from the US,

“Hong Kong’s electronics exports rose by 4% in the first half of 2012.”

Europe, Japan, Taiwan, and South Korea are reexported via Hong Kong to the Chinese mainland, and vice versa. A number of multinational manufacturers of parts and components have set up their offices in Hong Kong, engaging in sales, distribution and sourcing activities in the Asia-Pacific region. Industry Trends Increasing competition from mainland and other Asian suppliers has long been a threat to Hong Kong companies. 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. 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 in product features and specification 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. CEPA Provisions Since the implementation of the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariffs. According to the stipulated procedures, products which have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. In the main, the CEPA origin criteria for Hong Kong items include: (1) change in tariff heading; (2) performance of specific manufacturing process in Hong Kong; and (3) fulfillment of value-added requirement, under which at least 30% of the FOB value of the products, and that the final manufacturing or processing operations should be completed in Hong Kong.

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electronics industry - company and industry Performance of Hong Kong’s Exports of Electronics ^ 2010 2011 Jan-Jun 2012 HK$ Mn. Growth % HK$ Mn. Growth % HK$ Mn. Growth% Domestic Exports 17,156 +14 9,532 -44 3,449 -41 Re-exports 1,673,793 +28 1,841,149 +10 930,284 +4 Of Chinese Mainland origin 1,072,585 +28 1,202,871 +12 612,577 +6 Total Exports 1,690,949 +28 1,850,680 +9 933,733 +4 210 2011 Total Exports by Major Markets Share% Growth% Share% Growth% Chinese Mainland 63 +29 64 +10 EU (27) 8 +24 8 +3 Germany 2 +27 2 +7 Netherlands 2 +26 1 -9 US 7 +25 6 -4 ASEAN 6 +26 6 +15 Singapore 2 +22 2 +6 Japan 4 +20 3 +3

Jan-Jun 2012 Share% Growth% 64 +4 7 * 2 * 2 +11 7 +7 6 +4 2 -2 4 +11

2010 2011 Jan-Jun 2012 Total Exports by Categories Share% Growth % Share% Growth % Share% Growth% Finished Products 25 +26 26 +14 28 +12 Parts and Components 75 +29 74 +8 72 +1 2010 2011 Jan-Jun 2012 Total Exports by products Share% Growth % Share% Growth % Share% Growth % AV Equipments & Parts 14 +12 13 -2 13 +7 IT Equipment & parts 20 +33 20 +14 22 +8 Telecom. Equipment & Parts 17 +33 19 +21 20 +13 Semiconductors, Electronic Valves & Tubes 29 +24 29 +7 27 -4 ^ Since offshore trade has not been recorded by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant Source: HKTDC Research

General Trade Measures Affecting Exports of Electronics Hong Kong exporters should be attentive to the growing popularity of green concept in the marketplace. Especially in Europe, consumers are generally conscious of environmental protection. Not surprisingly, the EU has adopted a number of directives for environmental protection, which may have an impact on the sales of electronic products. These include the restrictions on batteries and accumulators that contain mercury, as well as the Directive on Waste Electrical and Electronic Equipment (WEEE) implemented in August 2005, and the Directive on Restriction of Hazardous Substances (RoHS) that came into effect in July 2006. The Chinese mainland has

adopted similar environmental protection regulations. These include the already effective Management Methods on Prevention and Control of Pollution Caused by Electronic Information Products since March 2007 and the Management Methods on Prevention of Waste Electronic Equipment Pollution on Environment since February 2008. The regulation on recycling and treatment of waste electrical and electronic equipment has also come into effect since 1 January 2011. Product Trends On the back of technological advancement and falling prices amid keen competition, conventional IT products like desktop and notebook computers have become mass

“Hong Kong was the world’s largest exporter of telephone sets; and the second largest exporter of calculators, sound recording apparatus, computer parts/accessories and video recording/ reproducing apparatus in value terms in 2010.”

products. Now, the industry is focusing on further technological enhancement to sustain their business. Notably, mobile computer devices with wireless connectivity, in particular the tablets such as the iPad, are well received in the market. Meanwhile, the industry is exploring business opportunities by applying 3D display technology to computer products. Indeed, a number of industry players are in the pipeline to promote their 3D computer devices, such as shutter glass 3D monitors, naked-eye 3D monitors and 3D webcams. Also, the industry is in the process to launch computer products with interfaces of faster communication speed or higher data transfer rate, especially those in USB 3.0 specification. HONG KONG BUSINESS ANNUAL 2013 45


company and industry - textiles industry

Textiles industry responds swiftly to fashion trends

Hong Kong’s textiles industry serves not only the local clothing manufacturers, but also those on the Chinese mainland and other offshore production bases.

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he textiles industry – comprising spinning, weaving, knitting and finishing of fabrics – had a total of 766 manufacturing establishments as of December 2011, employing 5,787 workers, or 5.2% of the local manufacturing workforce. The textiles industry is one of Hong Kong’s major export earners, accounting for 2.5% of the total exports for the first four months of 2012. After levelling off in 2011, Hong Kong’s textile exports fell by 13% in the first four months of 2012. Re-exports, accounting for more than 98% of total textiles exports, experienced a decline of the same magnitude, while domestic exports continued its downtrend with a 17% slide. With 72% of them originating from the Chinese mainland, re-exports also registered a decrease of 13% in January-April 2012. Product-wise, Hong Kong’s exports of textile yarns (down 21%), woven fabrics (down 16%), knitted or crocheted fabrics (down 7%) and cotton (down 16%) all suffered decline, in the first four months of 2012. Sales Channels The industry is capable of producing either

a wide range of quality products in bulk or specialised items within a short lead-time. Its competitive edge lies in the superb quality and swift response to fashion trends and market demand. The industry has also earned a worldwide reputation for unique quality, expertise, workmanship and flexibility. Hong Kong is an ideal one-stop shopping centre for buyers looking for new and trendy fabric materials. The Interstoff Asia International Fabric Show, held twice a year in spring and autumn, is a significant marketing and sourcing platform in the region for both fabric manufacturers and buyers alike. Industry Trends In line with the global manufacturing landscape and fierce competition across the board, Hong Kong’s textiles industry has been moving up the value chain to cater to the demand for upmarket textile products with original designs or brands. Today, the operation of the textiles industry in Hong Kong is focused mainly, if not all, on higher valueadded activities such as sales and marketing, quality control, designs and development, while offshore plants are specialised in production operations. This, in turn, results in a high

“Asia is the leading market for textiles exported from Hong Kong, accounting for more than 92% of the total textile exports.” proportion of re-exports (98%) in Hong Kong’s textiles exports portfolio. With rising labour costs, RMB appreciation, fluctuations in raw material prices and stricter environmental regulations on the Chinese mainland, many Hong Kong’s textiles manufacturers have re-allocated their production facilities to other Southeast Asian countries, like Vietnam, Cambodia and Bangladesh. A few companies have even set up offshore production in Latin America (e.g. Mexico) to take advantage of preferential treatments allowed by regional trade agreements such as North American Free Trade Agreement (NAFTA). CEPA Provisions On 18 October 2005, the mainland and Hong Kong agreed to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Under CEPA III, the mainland agreed to give all products of Hong Kong origin, including textiles, tariff-free treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. But nonHong Kong made textile products will remain subject to average tariff rates of 10-25% when entering the mainland General Trade Measures Affecting Exports of Textiles Despite the elimination of textile quotas among WTO members in 2005, the US and EU had subsequently imposed safeguard measures against imports from the Chinese mainland. Starting 1 January 2009, however, textile and clothing products originating in China no longer require any import licence or surveillance document before entering the EU. Meanwhile, textile and clothing shipments to the US made on or after 1 January 2009 are no longer subject to any quotas. Product Trends Among various kinds of fibres, cotton remains the most preferred material for consumers in the apparel market. With reference to the 2012 survey by the Cotton Incorporated, more than 8 out of 10 UK

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textiles industry - company and industry Performance of Hong Kong’s Exports of Textiles^ (HK$ Billion) 2010 2011 Jan-Apr 2012 Value Growth % Value Growth % Value Growth % Domestic Exports 1.954 -10 1.576 -19 0.474 -17 Re-exports 85.895 +14 86.215 * 25.926 -13 Of China-origin 666.549 +13 61.016 +1 18.600 -13 Total Exports 87.848 +14 87.791 * 26.400 -13 by Markets 2010 2011 Share% Growth% Share% Growth% China 71.0 +13 67.6 -5 Vietnam 5.3 +21 6.3 +19 Cambodia 3.2 +35 3.8 +18 Indonesia 3.6 +16 4.0 +12 Bangladesh 3.1 +22 3.4 +12 Sri Lanka 1.6 +7 1.6 +2 US 1.5 +12 1.6 +9 Thailand 1.1 +25 1.5 -3 Philippines 0.9 +6 1.3 +24 India 0.9 +27 1.0 +9

J an-Apr 2012 Share% Growth% 65.5 -17 6.8 -4 4.8 +22 4.0 -13 4.0 -6 1.7 -4 1.7 +6 1.5 -15 1.3 -10 1.0 -9

by Categories 2010 2011 Jan-Apr 2012 Share% Growth % Share% Growth % Share% Growth % Textile Yarns 29.0 +18 26.9 -7 28.3 -21 Woven Fabrics 30.1 +7 30.8 +2 28.3 -16 Knitted or Crocheted Fabrics 22.3 +11 23.0 +3 22.8 -7 Cotton 18.0 +4 18.1 +1 16.9 -16 Special Yarns and Fabrics 8.3 +29 8.3 * 8.6 -8 Man-made Textile Materials 8.3 +14 9.0 +8 8.5 -8 Finishing accessories 7.0 +21 7.5 +8 8.4 +4 Textile Made-up 2.9 +5 3.0 +5 3.0 -2 Others 3.8 +9 3.7 -2 2.9 -33 Floor Coverings 0.4 +16 0.4 +19 0.7 +61 ^ 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 Source: HKTDC Research

consumers prefer cotton clothing because of comfort (87%), nature (87%) and quality (85%). Meanwhile, some man-made fibre fabrics, such as polyester and polyester blends, are gaining popularity, partly due to the technical improvements such as moisture absorption. From the perspective of product innovation, microfibers are drawing greater attention from textiles manufacturers. The major benefits of textile products made of microfibers are its light in weight and superior performance in keeping warm. Aside from microfibers, many innovative new fibres and fabrics have bought demand in many different areas. To answer the needs, more and

more breathable, flexible, anti-bacterial, anti-ultraviolet, wrinkle-free, water-resistant and environmental friendly materials are being invented and marketed. Consumers, particularly Europeans, are enthusiastic about the environmentally friendly properties of biodegradable natural fibres like organic cotton, soy fibre and ahimsa silk. To keep up with this trend, manufacturers have also expanded their production of green textiles by utilising more bio-degradable materials and environmentally-friendly manufacturing processes, including high-efficiency management practices, process control, special processes, and

“Hong Kong’s textiles industry is reputed as a supplier of quality dyed and printed fabrics. It is also strong in cotton spinning, denim weaving, knit-toshape panel knitting and fine-gauge cotton knit manufacturing.”

recycling of wastewater. Apart from rising green consciousness, product safety remains a major concern for consumers, not confining to developed market, but emerging markets such as the Chinese mainland. With the rapid urbanisation of towns, along with the marriage and baby boom, the demand for high-end household textile products is growing rapidly on the Chinese mainland. It is reported that the annual growth rate of consumption of household textile products will exceed 20% in the next 10 years, while the sector of household products is expected to replace the garment industry to present the leading demand for textiles. HONG KONG BUSINESS ANNUAL 2013 47


company and industry - printing industry

Hong Kong as a major printing center of the world A large number of local and international newspapers, journals, periodicals and religious books and textbooks are printed in Hong Kong.

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rinting is a supporting industry to publishing, advertising and various light consumer goods industries (toys, food, cosmetics etc). It is a leading manufacturing industry in Hong Kong. Overseas customers are increasingly looking for faster turnaround and shorter delivery time in order to maximise return through smaller but more frequent orders. Hong Kong printers are known for quality, quick delivery, competitive pricing and ability to cope with short-notice printing jobs. The quality is comparable to that of the US, Germany and Japan, the pioneers in printing technology. Hong Kong printers are also known for their inventiveness and willingness to find solutions to production problems. Hong Kong’s excellent telecommunication networks are great assets of the industry. In effect, publishers in Hong Kong can quickly access information from various parts of the world, an advantage of vital importance to time-sensitive publications. With proximity

to the mainland market and a high degree of freedom of the press, Hong Kong has attracted many international publishers/news agencies (esp. media firms) to set up regional centres here. The Financial Times (Asia Edition), The Economist, The International Herald Tribute, The Asian Wall Street Journal etc, are all printed in Hong Kong and some are shipped into China for distribution. Sales Channels An estimated 60-70% of the export business is attributable to orders received directly from overseas countries. Within this, about a quarter of them come from major international publishers in Hong Kong. Export orders are mainly handled by larger printers or dealers, who have established business relationships with overseas customers. In order to expand business networks, explore market opportunities, and promote company image abroad, Hong

“More products could now be printed in presses, e.g. wallpaper, desk pads and mouse pads, fabric posters, plastic labels etc.” Kong manufacturers and distributors may participate in trade fairs and study missions organised by the Hong Kong Trade Development Council (HKTDC). Industry Trends Many trends in printing pertain to the advent of new technology or production techniques. Filmless printing, such as computer-to-plate (CTP), is becoming mature. With CTP technology, images can be transmitted onto a zinc plate directly without the process of colour management and making colour separation films. This development can shorten the prepress production time and produce more defined images. Digital printing enables direct imaging texts and graphics going directly from the computer to the printing machine without the use of plates. This shortens production time and cost, and improves speed and accuracy. It is easy to operate and suitable for printing small quantities with flexibility, short lead time and customisation (e.g. advertisements and personalised direct mailing, tickets). Some printers are also offering the “total solution”, including auxiliary services like design, data-processing, translation and editing and electronic publishing etc. Some large printers have developed vertically, such as manufacturing or trading paper, or forming strategic partnerships with suppliers, in order to reduce the effects from paper price fluctuations and allow the company to have better control of material supplies. To reduce operation costs, local printers (mostly larger sized) have shifted a major share of their operations to China. However, they maintain their Hong Kong offices to receive overseas orders. They are also increasingly making use of high tech to cut costs e.g. overseas buyers could place orders from abroad through broadband connections, given they are confident with Hong Kong printers’ reputation and wanted to maintain their long-standing business connections. CEPA Provisions The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was concluded in June 2003 and subsequently expanded in following years. All products made in Hong Kong, subject to CEPA’s rules of origin, enjoy duty-free access to the Chinese mainland.

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printing industry - company and industry Performance of Hong Kong’s Exports of Printed Matter ^ 2010 2011 Jan-Jul 2012 HK$Mn. Growth % HK$Mn. Growth % HK$Mn. Growth % Domestic Exports 1,803 -2 1,656 -8 892 -8 Re- exports 16,729 +14 17,110 +2 8,942 -7 Of Chinese Mainland Origin 15,946 +13 16,347 +3 8,553 -6 Total Exports 18,532 +12 18,765 +1 9,833 -7 by Markets 2010 2011 Jan-Jul 2012 Share% Growth% Share% Growth% Share% Growth% US 28.8 +9 26.9 -5 27.6 -6 EU (27) 27.6 +8 27.8 +2 25.7 -12 United Kingdom 11.9 +3 11.8 * 11.1 -14 Germany 3.9 +9 4.0 +5 3.7 -13 Chinese Mainland 11.5 +14 10.8 -5 12.7 +7 ASEAN 8.0 +21 8.8 +12 9.6 -1 Australia 5.1 +13 5.1 +2 4.8 -11 Japan 3.6 +18 4.3 +21 4.1 +5 2010 2011 Jan-Jul 2012 by Categories Share % Growth % Share % Growth % Share % Growth % Miscellaneous Books Brochures etc. 52.6 +14 54.3 +5 54.1 -5 Paper & Paperboard Label of All kinds 20.4 +18 20.1 -1 22.9 +4 Children’s Picture, Drawing or Colouring Books 9.0 -6 7.6 -15 7.3 -11 Printed or Illustrated Postcards, Printed Cards 5.4 -11 5.1 -3 4.4 -15 Transfers 2.5 +24 2.6 +6 2.9 +2 Trade advertising materials, commercial 2.0 +26 2.2 +10 2.4 -18 catalogues, etc. ^ 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 Source: HKTDC Research

General Trade Measures Affecting Exports of Printed Matters The US Consumer Product Safety Improvement Act of 2008 (CPSIA) requires manufacturers and importers to show their products intending for children under 12 do no contain harmful levels of lead and phthalates. The regulation has also affected products such as children books. However, in August 2011, the US Congress passed an amendment to the CPSIA that exempts ordinary children’s book from third-party testing. The EU’s new toy safety Directive (Directive 2009/48/ EC) came into effect on 20 July 2011. Any books falling under the definition of a toy will have to be compliant with the new Directive if sold on the European market. Product Trends Children books are becoming

more sophisticated as children do not only read books, but they may also listen and talk to them, use them to build models or solve puzzles, or even play with soft toys that are housed inside the book. The rising trend of distance learning, where teachers and students are geographically separated, will rely on electronic devices as well as printed matter for information exchanges. Demand for printed matter related to educational purpose is expected to increase. Traditional printed products are required to have innovative designs to meet the needs of various market segments. For example, everyday items such as calendar can take different forms from desktop models to large 3D wall calendars. Higher printing quality is required, thus 5-colour/7-colour presses are being introduced.

“New printing machines are invented to this regard. Another trend is environmentalism, with the use of environmentally friendly supplies.”

As emphasis on packaging increased, users of packaging require better quality materials e.g. highly embellished folding boxes, tamper proof and safety features, pressure sensitive self adhesive labels with no label look, media and heat resistence and deep freeze products etc. As publishers pledged to be more environmentally friendly, printshops are pushed to use more environmentally friendly supplies e.g. recycled paper and synthetic paper (which may affect printing quality and needs adjustment on printers’ part), UV ink and ink based on beans (which would reduce the use of chemical solvents in cleansing). The chemical-free plate system is introduced, which does not require the use of chemicals. Although the use of FSC or PEFC-certified paper remains relatively small, it is increasing fast. HONG KONG BUSINESS ANNUAL 2013 49


company and industry - processed food and beverages industry

Hong Kong lures more foreign investments in F&B

Many Hong Kong brands have successfully entered overseas markets as well.

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he processed food and beverages industry in Hong Kong is characterised by its active trading activities. Major food importers/traders in Hong Kong include Dah Chong Hong, Four Seas Food Investment, EDO Trading Co, Kwan Hong Yuen Trading Co Ltd, Yu Kee Trading Co Ltd, Sun Shun Fuk etc. The industry has attracted substantial foreign investment. A notable foreign investor is Nissin from Japan, which produces instant noodles in its factory in Tai Po Industrial Estate and is now the leader of Hong Kong’s instant noodles market. In 2006, Amoy, a frozen dim sum and sauces producer in Hong Kong, was acquired by Ajinomoto, a Japanese food conglomerate. Sales Channels 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 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, Canton Fair in Guangzhou and Style HK Show in various mainland cities. HKTDC also organises from time to time study or matchmaking missions for Hong Kong manufacturers to visit specific markets for establishing new business relations. 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 cholesterollowering 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

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. Purchase of organic food is a major trend in both developed and developing countries. According to the US Organic Trade Association, the growth rate of organic food sales in the US was 8%, and reached US$29 billion in 2010. Organic food encompasses a wide range of products including cheese, meat, wine, spices, nuts, canned goods etc. In beverages, energy drinks are taking young consumers by storm, while ordinary soft drinks and other drinks are lagging behind. 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.

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“Hong Kong’s re-exports of food and beverages accounted for more than 90% of Hong Kong’s total exports of food and beverages.” convenience. As people are getting more health conscious, organic food is becoming more popular nowadays. Organic is a guarantee about how an agricultural product was grown and handled before it reached the consumer. 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. 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 getting popular in big cities such as Beijing and Shanghai, shoppers prefer buying packaged/processed foods and snack rather than fresh food items online. Implications of CEPA for Hong Kong Companies The Chinese mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was concluded in 2003 and subsequently expanded. By meeting the CEPA rules of origin, all products made in Hong Kong, including food and beverages, are eligible for duty-free access to the Chinese mainland. Food and beverages is by far the largest beneficiary of CEPA, with 21,108 COs approved as at 31 July 2012. General Trade Measures Affecting Exports of Processed Food and Beverages • The United States For the US, all food should comply with requirements of the Federal Food, Drug and Cosmetic Act. Imported food should be prepared, packed, and held under a system meeting the requirements of the Imported Foods Safety Improvement Act of 1999, or satisfy the requirements of the Secretary of Health and Human Services. The Food and Drug Administration (FDA) is issuing a final regulation that requires the submission to FDA of prior notice of food, including animal feed, which is imported or offered for import into the United States.


processed food and beverages industry - company and industry Performance of Hong Kong’s Exports of Processed Food and Beverages^ 2010 2011 Jan-Jul 2012 HK$Mn. Growth % HK$Mn. Growth % HK$Mn. Growth % Domestic Exports 2,396 +26 2,807 +17 1,462 -1 Re- exports 34,459 +18 39,418 +14 21,334 +3 Of Chinese Mainland Origin 3,965 +18 5,121 +29 3,471 +27 Total Exports 36,855 +18 42,225 +15 22,796 +2 by Markets 2010 2011 Jan-Jul 2012 Share% Growth% Share% Growth% Share% Growth% ASEAN 24.8 +40 34.9 +61 36.4 +17 Vietnam 22.6 +45 32.3 +64 34.1 +19 Chinese Mainland 44.7 +54 33.7 -14 32.3 -5 Taiwan 7.9 -59 8.1 +18 4.7 -43 Macau 11.8 +22 13.4 +30 14.7 +7 USA 3.4 +9 2.8 -5 3.3 +17 EU 1.8 +16 1.3 -15 1.6 +12 Canada 1.3 +8 1.2 +3 1.2 -5 UAE 0.6 +149 0.6 +23 1.2 +143 2010 2011 Jan-Jul 2012 by Categories Share % Growth % Share % Growth % Share % Growth % Processed food 85.1 +17 83.6 +13 82.7 +4 Poultry cuts and offal (other than liver) frozen 18.2 +43 16.7 +5 14.7 -18 Edible offal of swine, frozen 13.8 +18 8.4 -30 9.3 +14 Edible offal of bovine animals, frozen 3.7 -37 1.8 -45 2.8 +41 Pistachios. fresh or dried 4.3 +80 5.0 +31 3.5 -4 Almond, fresh or dried 3.3 +22 5.3 +87 5.5 +35 Beverages 14.9 +26 16.4 +26 17.3 -2 Spirits obtained by distilling grape wine/marc 5.7 +18 5.8 +17 6.3 +3 Wine of fresh grapes (excl. sparkling wine) 3.5 +80 4.4 +43 4.7 -2 ^ 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 Source: HKTDC Research

• The European Union For the EU market, all imports of food items are subject to the sanitary and phytosanitary regulations of the European Food Safety Authority as well as strict certification requirements lay down by the individual country’s health authorities. In addition, imports of foodstuffs into the EU countries must be accompanied by a Health Certificate. • The Chinese Mainland Recently, the Ministry of Health (MOH) released the Standard for Nutrition Labelling of Prepackaged Foods (GB 280502011). The standard will come into effect on 1 January 2013 and requires the nutrition labelling of prepackaged food to include nutrition information, nutrition claims and nutrient function

claims. It furthermore gives requirements as to nutrition information specifications regarding the content of transfatty acids. The Standard moreover requires a description of the level, content, increase or decrease of energy and nutritional component in the food, with the specific content requirements and limitations set out. • Japan For the Japanese market, all food products are subject to examination under the Food Sanitation Law. Processed foods entering Japan are subject to three types of inspection: examination for bacterial content, testing for chemical content (including food additives), and visual inspection. Processed foodstuffs must also bear labels.

“In the first seven months of 2012, Hong Kong’s total exports of processed food and beverages increased by 3% and reached HK$23 billion.”

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 2008 conducted by the US FDA, when consumers buy a product for the first time, almost 80% would read the food label. The government’s 2010 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 HONG KONG BUSINESS ANNUAL 2013 51


company and industry - auto parts & accessories industry

The future of telematics in Hong Kong

Telematics, that is the integration of computing, wireless communications and GPS, may be another growth area of product and service development.

H

ong Kong exports a large variety of auto parts and accessories. They include safety glass, rear-view mirrors, locks, car seats, electrical lighting, wiring sets and exhaust systems. Hong Kong companies are a major producer of car audio products and car security systems. As consumers are getting more concerned about passenger safety, driving performance and environmental friendliness, these areas may be the focus of innovation by auto parts suppliers. Building new models with different value-added functions or features is also a core strategy for some manufacturers. There is an increasing trend of using more electronic components in automobile. Telematics, that is the integration of computing, wireless communications and GPS, may be another growth area of product and service development. Industry Features Although the auto parts and accessories industry is not a major industry in Hong Kong, a large variety of auto parts and accessories are exported. Product-wise, car

radios are the largest single items amid the strong position of Hong Kong in exporting a wide range of consumer electronics, including audio-visual equipment for in-car entertainment. Hong Kong also exports certain direct parts and accessories for motor vehicles and motorcycles. 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. One salient feature of Hong Kongâ&#x20AC;&#x2122;s exports

"Hong Kong companies are a major producer of car audio products and car security systems."

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 produce 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. 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. Major international trade fairs include 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 shifted 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. CEPA The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was concluded in June 2003 and subsequently expanded in following years. All products made in Hong Kong, subject to CEPAâ&#x20AC;&#x2122;s rules of origin, enjoy duty-free access to the Chinese mainland. In 1994, the USâ&#x20AC;&#x2122;s three largest automotive manufacturers, Chrysler, Ford and General Motor, established the

52 HONG KONG BUSINESS ANNUAL 2013


auto parts & accessories industry - company and industry Export Performance of Hong Kong’s Auto Parts and Accessories Industry^ 2009 2010 Jan-Sep 2011 HK$ Mn. Growth % HK$ Mn. Growth % HK$ Mn. Growth% Domestic Exports 23 -65 27 +20 13 -32 Re-exports 11,291 -16 15,293 +35 12,132 +8 Of Chinese Mainland origin 8,280 -15 11,637 +41 9,192 +8 Total Exports 11,314 -15 15,320 +35 12,144 +8 2009 2010 by Markets Share% Growth% Share% Growth% Chinese Mainland 25.8 -18 25.5 +34 USA 20.5 -7 20.9 +38 EU (27) 22.6 -20 20.6 +24 Germany 6.6 -18 6.5 +34 Netherlands 4.4 +31 3.7 +12 Japan 10.9 -12 9.9 +23 ASEAN 5.5 -20 5.7 +40

Jan-Sep 2011 Share% Growth% 25.2 +7 21.3 +8 19.9 +4 5.0 -24 3.8 +16 8.9 -5 5.8 +11

2009 2010 Jan-Sept 2011 by Categories Share% Growth % Share% Growth % Share% Growth % Radiobroadcast receivers for motor vehicles 15.6 -36 15.4 +34 13.9 -4 Parts and accessories of motor cycles/cycles/ invalid carriage 9.7 -26 8.9 +24 10.2 +27 Radio navigational aid apparatus 10.7 -2 10.2 +29 10.4 +20 Parts and accessories of motor vehicles 6.9 -26 8.0 +58 9.0 +27 Revolution counters, production counters, taximeters, mileometers, etc., speed indicators/ 13.7 +22 14.6 +44 10.7 -24 tachometers Other burglar alarm 8.0 -8 7.5 +27 9.5 +33 Parts for use in the compression ignition internal combustion piston engines, nesoi 6.8 -13 7.9 +59 8.7 +16 Parts for use in the compression ignition internal combustion engines 4.8 +15 5.0 +42 6.0 +29 New pneumatic tyres of rubber 3.6 -8 3.2 +21 3.4 +19 ^ 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. Source: HKTDC Research

Quality System Requirements QS-9000, which is a harmonised standard for the industry world-wide, especially for the supplier network. In Europe, different countries are having their own automotive systems, for example, VDA6.1 in German and AVSQ in Italy. In an effort to align these existing standards, the International Automotive Task Force (IATF), which consists of major vehicle manufacturers, developed the ISO/TS 16949 in conjunction with the International Organisation for Standardisation (ISO). The QS-9000 standard has been replaced by the ISO/TS 16949.

Product Trends 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. It is estimated that electronics components now account for around 35% of the total vehicle components, up from less than 25% in 2000. Telematics, that is the integration of computing, wireless communications and GPS, is expected to be another growth area of product and service development. Among the vast range of

“Many manufacturers are producing auto parts on OEM basis, but some large manufacturers are producing under their own brand names and designs.”

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. In addition, 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. HONG KONG BUSINESS ANNUAL 2013 53


company and industry - lighting industry

Lighting companies move their production to China

Hong Kong exports a wide range of lighting products, including table, bedside, floor-standing and portable lamps.

T

he lighting industry of Hong Kong is largely made up of small- and mediumsized companies. Their products are usually meant for home improvement and domestic purposes. The largest export categories include battery-operated portable lamps, such as torches, hand lanterns, handheld incandescent lamps and LED lamps for outdoor, sports and/or diving uses. 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, marketing and logistic support. Many manufacturers are able to undertake product design, plastics injection moulding, vacuum coating, enamel plating and assembly production in-house. The success of Hong Kong’s lighting industries also lies in efficient management. Against the fast changing market, Hong Kong companies emphasise quick response to the market, while keeping a close eye on product trends. Hong Kong’s total exports of lighting products rose by 2% in 2011, after growing by 10% in 2010. Sales of electric lamps performed

54 HONG KONG BUSINESS ANNUAL 2013

well, while exports of portable lamps were steady. But exports of discharge lamps and filament lamps declined in 2011. Sales Channels Hong Kong’s lighting manufacturers mostly produce on OEM and ODM basis for overseas importers and distributors. In view of intensified competition, ODM has outpaced OEM as their major business. A few manufacturers and traders also promote lighting products with their own brand names or trademarks. Hong Kong companies usually sell directly to overseas buyers, including volume importers and regional distributors of hardware and general merchandise. Some of the companies also deal with buying offices set up by overseas buyers in Hong Kong. Some large Hong Kong companies even sell directly to large-scale retailers like hypermarkets, supermarkets and chain stores, as well as buying groups/cooperatives of smaller retailers in North America and Europe in order to reduce the levels of distribution and associated costs. Industry Trends Intensified competition from mainland and

“Hong Kong’s total exports of lighting products rose by 2% in 2011.”

other Asian suppliers, which are increasingly equipped with automatic production machines, has long been a threat to Hong Kong companies. 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. There are an increasing number of Hong Kong manufacturers applying advanced technology for product design and production. For instance, computer aided design (CAD) has been adopted to improve the aesthetic and mechanical designs of lighting products. Applications such as the use of 3-dimension computer aided industrial design (CAID) also facilitate companies to enhance their design capabilities. Modern technology for plating, polishing, sheet metal cutting, die-casting, etc. has also been applied to improve the product precision and quality. CEPA Provisions Since the implementation of the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariffs. According to the stipulated procedures, products which have no existing CEPA rules of origin will


lighting industry - company and industry Performance of Hong Kong’s Exports of Lighting Products ^ 2009 2010 2011 HK$ Mn. Growth % HK$ Mn. Growth % HK$ Mn. Growth % Domestic Exports 46 -54 55 +21 49 -10 Re-exports 8,726 -21 9,603 +10 9,799 +2 Of Chinese Mainland origin 7,428 -22 8,347 +12 8,661 +4 Total Exports 8,772 -21 9,658 +10 9,849 +2 2009 2010 2011 Total Exports by Major Markets Share% Growth% Share% Growth% Share% Growth% EU (27) 30 -28 29 +4 26 -9 Germany 8 -5 8 +8 8 +4 France 5 -38 4 +4 4 * US 23 -26 23 +9 22 -3 Chinese Mainland 20 -13 19 +6 17 -8 Japan 8 +10 10 +32 15 +61 Australia 2 -8 3 +23 3 +13 2009 2010 2011 Total Exports by Products Share% Growth % Share% Growth % Share% Growth % Battery Operated Portable Lamp 20 -23 21 +15 20 +1 Electric Lamp & Lighting Fittings 18 -26 18 +9 20 +16 Discharge Lamps 18 -5 17 +1 14 -17 Filament Lamps 9 -11 9 +9 8 -9 Chandeliers & Wall Lighting 7 -27 7 +11 10 +46 ^ Since offshore trade has not been recorded by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies. * Insignificant Source: HKTDC Research

enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. In the main, the CEPA origin criteria for Hong Kong items include change in tariff heading, performance of specific manufacturing process in Hong Kong, as well as fulfillment of value-added requirement, under which at least 30% of the FOB value of the products, and that the final manufacturing or processing operations should be completed in Hong Kong. General Trade Measures Affecting Exports of Lighting Products Exports of electric lighting products that required external power for operation are usually subject to relevant safety requirements in overseas markets. Hong Kong exporters should be attentive to the growing popularity of green concept in the marketplace. Especially

in Europe, consumers are generally conscious towards environmental protection. Not surprisingly, the EU has adopted a number of directives for environmental protection, which may have an impact on the sales of lighting products. These include the restrictions on batteries and accumulators that contain mercury, as well as the Directive on Waste Electrical and Electronic Equipment (WEEE) implemented in August 2005, and the Directive on Restriction of Hazardous Substances (RoHS) that came into effect in July 2006, under which lighting products are among the affected items. Product Trends One of the significant developments in the lighting industry is the booming of DIY (do-ityourself) market. DIY products are increasingly popular, especially in North America and Western Europe. Hence, a wide range of hardware items, including lighting products, are offered for DIY

“Due to environmental concerns, energy-efficient items like the integrated electronic compact fluorescent lamps are in demand.”

purposes. Meanwhile, decorative items are no longer limited to Christmas lighting sets. They also include a wide range of domestic lighting products, such as track lights, linear lights and spotlights of different novelty designs. Due to environmental concerns, lighting products of higher energy efficiency and longer lifetime are preferred. Notably, Australia has banned the sale of most incandescent light bulbs that cannot meet the minimum energy efficiency requirements since 2010. The EU and the US have also started to phase out certain incandescent light bulbs by 2012 and 2014 respectively. As a result, energy-efficient items like the integrated electronic compact fluorescent lamps are in demand. In addition, the industry is focusing on the development of LED lamps and lighting apparatus, which are more energy-efficient with an even longer lifetime than the compact fluorescent lamps. HONG KONG BUSINESS ANNUAL 2013 55


company and industry - travel goods and handbags industry

Value of travel goods exports up 14% to HK$35.3b Hong Kong’s travel goods and handbags industry benefits from the production skills developed in other light manufacturing industries, such as clothing, leather, plastics and metal.

H

ong Kong companies export a wide range of travel goods and handbags, which accounted for 46.7% and 53.3% respectively. Major products include leather handbags (30%), cases for binoculars, cameras, musical instruments and spectacles (27%), handbags with plastics/textiles sheeting (24%) and wallets and purses (15%). During the first three quarters of 2011, the value of Hong Kong’s total exports of travel goods and handbags increased by 14% and reached HK$35.2 billion. The US was the largest export market for travel goods and handbags in Jan – Sep 2011 (accounting for 26% of total), followed by the EU (22%), China (13%), Japan (10%) and South Korea (10%). In terms of product categories, exports of travel goods and handbags both increased by 14%. Sales Channels Many of Hong Kong’s travel goods and handbags are exported under OEM arrangements with overseas

56 HONG KONG BUSINESS ANNUAL 2013

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. 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. CEPA Provisions The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was concluded in June 2003 and was expanded in subsequent years. All

“Hong Kong companies produce good quality, middle to low priced luggage bags and handbags on OEM basis.”

products made in Hong Kong, subject to CEPA’s rules of origin, enjoy duty-free access to the Chinese mainland. 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. Trade Measures Affecting Exports of Travel Goods and Handbags Hong Kong’s handbags and briefcases manufacturers also face challenges from the regulatory environment overseas. For health reasons, the EU has adopted a Directive aimed at prohibiting the trading of leather articles which contain azo-dyes, from which aromatic amines


travel goods and handbags industry - company and industry Performance of Hong Kong’s Exports of Travel Goods and Handbags^ 2009 2010 Jan-Sept 2011 HK$ Mn Growth % HK$ Mn Growth % HK$ Mn Growth % Domestic Exports 14 -44 15 +11 15 +33 Re-exports 38,135 -15 41,705 +9 35,224 +14 Of Chinese Mainland origin 31,078 -21 32,908 +6 26,733 +9 Total Exports 38,149 -15 41,720 +9 35,239 +14 by Markets 2009 2010 Share% Growth% Share% Growth% US 28.6 -25 28.5 +9 EU (27) 26.2 -21 23.7 -1 Italy 6.6 -18 5.1 -15 U.K. 5.7 -17 5.1 -1 France 3.8 -21 3.9 +14 China 8.1 +11 10.5 +42 Japan 10.3 -11 10.3 +10 South Korea 8.9 +19 8.3 +2 ASEAN 2.8 -9 2.9 +11

Jan-Sept 2011 Share% Growth% 26.4 +3 21.8 +5 5.4 +17 3.8 -14 3.8 +14 13.0 +46 9.9 +11 9.9 +38 3.0 +20

by Categories 2010 2011 Jan-Sept Share% Growth % Share% Growth % Share% Growth % Travel Goods 46.0 -21 46.9 +12 46.7 +14 Handbags 54.0 -9 53.1 +8 53.3 +14 ^ 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 Source: HKTDC Research

may be released. The Chinese government is also increasingly concerned about the pollution caused to the environment in the process of leather tanning. It appears likely that more stringent regulations on environmental protection could be put in place in future. 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, increasingly popular 20-inch suitcase and carry-on luggage in different sizes are in demand. 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 iPad, Blackberry and mobile phones is increasing significantly. Besides the consumer market, many companies will order them as corporate gifts for their clients, creating a new market 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

“Due to closer economic ties with the rest of the world and rising affluence, more Chinese are planning to travel overseas for either business or leisure purposes, offering a huge market potential for luggage bags and other travel goods as well.”

systems that can be alternated for left-handed and righthanded people; products with weight-bearing, push-button retractable handles and four swivel wheels that allow bags to pivot 360 degrees; luggage with a shock-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 2013 57


company and industry - leather consumer goods industry

HK’s top market for leather goods revealed

The US remains the leading export destination for Hong Kong’s leather consumer goods.

I

n face of rising operation costs in Hong Kong, the majority of local manufacturers have shifted a significant part of production to the Chinese mainland, leaving only limited capacity in Hong Kong to meet small and quick orders. Some manufacturers have invested heavily in advanced automated machinery and operation systems to streamline the whole production process. Many Hong Kong companies are engaged in the trading of leather consumer goods. Some of them are appointed by foreign brands as their agents in the region, including the Chinese mainland. A number of Hong Kong’s leather consumer goods companies, such as Mirabell, Staccato and Belle, take strong initiatives in developing the mainland market. Performance of Hong Kong’s Exports of Leather Consumer Goods After registering an increase of 13% last year, Hong Kong’s exports of leather consumer goods fell slightly by 1% to HK$14.3 billion in the first four months of 2012. Re-exports,

58 HONG KONG BUSINESS ANNUAL 2013

accounting for almost all exports of leather consumer goods from Hong Kong, also fell by 1%, while domestic exports were up 3%. The US remains the leading export destination for Hong Kong’s leather consumer goods, accounting for 29% of the total during January-April 2012, followed by the EU and the Chinese mainland, with respective shares of 15% and 14%. Productwise, exports of leather footwear, representing for more than half of Hong Kong’s total exports of leather consumer goods, fell by 10% during the first four months of 2012, while sales of handbags, trunks and suitcases and other clothing accessories rose by 15% and 5%, respectively. Sales Channels The majority of leather goods manufacturers in Hong Kong are small and medium enterprises (SMEs) which predominantly produce on an OEM basis for leading brands in North America, Western Europe and Japan. An increasing number of manufacturers are involved in product design and development, engineering,

“Overseas buyers regard Hong Kong as an important sourcing centre for leather consumer goods.” modelling, tooling and quality control. However, many of them still prefer selling to overseas importers and distributors, who in turn market to wholesalers and retailers. With an aim to foster local footwear design talent and encourage more Hong Kong leather footwear suppliers to enhance the design components of their products, the Federation of Hong Kong Footwear, sponsored by Hong Kong Trade Development Council (HKTDC), organises the Hong Kong Footwear Design Competition every year. Industry Trends In pursuit of lower production costs, higher profit margins, expanding capacity and product range extension, leather consumer goods manufacturers in Hong Kong have shifted a significant part of their production facilities to the Chinese mainland. Leather industry is highly specialised and vertically integrated. Relocation may also provide the advantage of being more accessible to the raw materials and facilitating retail and distribution. In view of soaring production costs, manufacturers have further invested in advanced automated machinery and operation systems to streamline the whole


leather consumer goods industry - company and industry Lorem 2010 2011 Jan-Apr 2012 Value Growth % Value Growth % Value Growth% Domestic Exports 0.01 +17 0.010 +5 0.002 +3 Re-exports 43,382 +25 48.934 +13 14.299 -1 Of Chinese Mainland origin 35.785 +16 36.977 +3 10.015 -5 Total Exports 43.392 +25 48.944 +13 14.301 -1 2010 2011 by Markets Share% Growth% Share% Growth% US 38.4 +20 31.9 -6 EU (27) 19.9 +7 19.2 +9 Italy 4.0 -2 4.2 +19 Germany 4.0 +2 3.8 +7 France 1.7 +11 1.7 +9 Chinese Mainland 8.8 +70 12.5 +61 South Korea 6.5 +153 8.8 +51 Macau 3.4 +87 3.9 +29 Japan 6.1 +1 6.2 +15 Australia 2.9 +10 2.8 +8 Taiwan 2.1 +78 2.2 +18

Jan-Apr 2012 Share% Growth% 28.7 -5 15.4 -10 4.1 +6 3.0 -3 1.9 +34 14.3 +2 10.5 +5 7.0 +63 6.6 -9 3.4 +4 2.5 +7

2010 2011 Jan-Apr 2012 by Categories Share% Growth % Share% Growth % Share% Growth % Footwear 65.7 +20 59.4 +2 53.7 -10 Handbags, Trunks, Suitcases 24.5 +49 30.4 +40 36.7 +15 Apparel 2.6 +2 2.7 +19 2.1 -5 Gloves, Mittens, Mitts 2.1 +13 2.2 +19 1.9 * Other Clothing Accessories 5.1 +20 5.2 +15 5.6 +5 ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the full picture of the export business managed by Hong Kong companies. * Insignificant Source: HKTDC Research

production process. The mainland and Hong Kong agreed in October 2005 to further liberalise the mainland market for Hong Kong companies under the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III). Under CEPA III, the mainland agreed to give all products of Hong Kong origin, including leather consumer goods, tarifffree treatment starting from 1 January 2006. Overall speaking, trade measures for leather consumer goods are quite prohibitive. In many overseas markets, leather consumer goods are subject to high import tariffs. The EU’s anti-dumping duties on leather shoes expired on 1 April 2011. In Japan, footwear made wholly or partially from leather falls under the Tariff Quota (TQ)

System as established by the Customs Tariff Law. In general, the import duties for leather are 12- 16% (in-quota) and 30% (out-quota). For leather footwear, the applicable import duties are 17.3%, 21.6% or 24 %( in-quota) depending on the type of shoes, and 30% or 4,300 yen/pair whichever is higher (out-quota). Product Trends With many people becoming more willing to spend on stylish and luxurious handbags, leather vogue handbags are drawing more and more attention in the fashion world, and have been considered a wind vane reflecting the current trends of the season and forming the vogue mark in people’s wardrobe. Looking ahead, leather formal wear is forming a trend alongside with the rise of

“Hong Kong’s exports of leather consumer goods fell slightly by 1% in the first four months of 2012, after increasing 13% last year. Re-exports, accounting for nearly all exports of leather consumer goods from Hong Kong, also fell by 1%, while domestic exports saw growth of 3%.”

feminism. As leather consumer goods are increasingly viewed as fashion accessories, the trend, from smart over clean chic, neo sports up to romanticism, is expected to remain popular in the market. As an encouraging sign, the China Leather Industry Association (CLIA) announced that profits in the leather sector reached US$9.3 billion in 2011, showing a 29% soar in profits registered by largescale leather enterprises. Nowadays, however, the primary market requirement for any leather good is performance. This means improving the unique leather properties such as water vapour absorption and permeability, robustness and ductility. For footwear, its elegance and durability for upholstery leather, while softness and elegance for garments and leather goods. HONG KONG BUSINESS ANNUAL 2013 59


numbers | indicators Labour Force, Unemployment, and Underemployment Labour Force, Unemployment and Underemployment Period

Labour force (Thousands)

Labour force participation rate (%)

Male

Female

Total

Male

Female

Overall

2009

1944.5

1715.8

3 660.3

69.4

53.2

60.8

2010

1931.3

1700.0

3 631.3

68.5

51.9

59.6

2011

1942.7

1760.4

3 703.1

68.4

53.0

60.1

6/2011 - 8/2011

1952.4

1770.4

3 722.8

68.7

53.2

60.3

7/2011 - 9/2011

1950.6

1775.3

3 725.8

68.6

53.2

60.3

8/2011 - 10/2011

1947.7

1773.6

3 721.3

68.4

53.1

60.1

9/2011 - 11/2011

1944.9

1779.1

3 724.0

68.2

53.2

60.1

10/2011 - 12/2011

1945.7

1787.3

3 733.0

68.2

53.4

60.2

11/2011 - 1/2012

1955.9

1790.6

3 746.5

68.6

53.4

60.4

2/2011 - 2/2012

1964.7

1803.0

3 767.7

68.8

53.7

60.6

1/2012 - 3/2012

1970.5

1803.2

3 773.7

68.9

53.6

60.7

2/2012 - 4/2012

1965.9

1808.2

3 774.1

68.7

53.7

60.6

3/2012 - 5/2012

1969.3

1816.7

3 785.9

68.8

53.8

60.7

4/2012 - 6/2012

1970.8

1826.1

3 796.9

68.8

54.1

60.8

5/2012 - 7/2012

1978.6

1825.6

3 804.2

69.0

54.0

60.9

6/2012 - 8/2012

1979.3

1823.6

3 803.0

69.0

53.9

60.8

7/2012 - 9/2012

1974.6

1817.2

3 791.8

68.8

53.6

60.6

8/2012 - 10/2012

1975.1

1820.9

3 795.9

68.8

53.6

60.6

Unemployed (Thousand)

Unemployment rate(1) (Seasonally adjusted) %

Underemployed (Thousand)

Underemployment rate %

2009

192.6

5.3

83.8

2.3

2010

157.2

4.3

72.5

2.0

Period

2011

126.7

3.4

63.3

1.7

6/2011 - 8/2011

129.6

3.2

67.2

1.8

7/2011 - 9/2011

125.9

3.2

65.3

1.8

8/2011 - 10/2011

124.4

3.3

57.8

1.6

9/2011 - 11/2011

120.3

3.3

54.5

1.5

10/2011 - 12/2011

116.0

3.3

52.4

1.4

11/2011 - 1/2012

111.8

3.2

55.7

1.5

2/2011 - 2/2012

119.1

3.4

56.5

1.5

1/2012 - 3/2012

124.1

3.4

58.6

1.6

2/2012 - 4/2012

124.7

3.3

57.5

1.5

3/2012 - 5/2012

123.4

3.2

54.0

1.4

4/2012 - 6/2012

125.5

3.2

54.6

1.4

5/2012 - 7/2012

128.5

3.2

56.6

1.5

6/2012 - 8/2012

131.6

3.2

63.4

1.7

7/2012 - 9/2012

132.9

3.3

59.2

1.6

8/2012 - 10/2012

131.0

3.4

57.4

1.5

Note: â&#x20AC;&#x153;Unemployment rate (seasonally adjusted)â&#x20AC;? refers to the unemployment rate adjusted for seasonal variations using the X-12 ARIMA method. Seasonal adjustment is not applicable to annual average unemployment rates. Source: Census and Statistics Department, Hong Kong Special Administrative Region 60 HONG KONG BUSINESS ANNUAL 2013


numbers | indicators

Number of Establishments, Persons Engaged and Vacancies (Other than those in the Civil Service) by Industry Section No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Section B : Mining and quarrying 2009

3

83

4

87

0

2010

3

76

7

83

3

2011

2

65

6

71

****

6

2

63

6

69

****

9

2

65

6

71

****

12

2

65

6

71

****

3

2

67

6

73

****

6

2

76

7

83

****

2011

2012

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Section C : Manufacturing 2009

12 924

75 507

49 400

124 907

1 161

2010

12 441

70 794

46 796

117 590

1 567

2011

12 011

68 540

41 839

110 379

1 946

6

12 296

69 849

43 967

113 816

2 164

9

12 109

67 909

43 625

111 534

2 306

12

12 011

68 540

41 839

110 379

1 946

2011

2012

3

11 951

66 598

41 373

107 971

2 859

6

11 867

67 471

40 166

107 637

2 970

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Sections D & E : Electricity and gas supply, and waste management 2009

312

8 733

2 137

10 870

31

2010

324

8 741

2 334

11 075

60

2011 2011

2012

326

8 487

2 129

10 616

****

6

326

8 674

2 346

11 020

****

9

322

8 651

2 322

10 973

****

12

326

8 487

2 129

10 616

****

3

329

8 388

1 979

10 367

****

6

333

8 245

2 083

10 328

****

Source: Census and Statistics Department, Hong Kong Special Administrative Region

HONG KONG BUSINESS ANNUAL 2013 61


numbers | indicators Number of Establishments, Persons Engaged and Vacancies (Other than those in the Civil Service) by Industry Section No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Section F : Construction sites (manual workers only)(1) 2009

992

49 674

3 480

53 154

30

2010

1 101

51 040

4 385

55 425

68

2011

1 172

63 402

5 993

69 395

330

6

1 062

54 115

4 494

58 609

302

2011

2012

9

1 143

58 322

5 406

63 728

534

12

1 172

63 402

5 993

69 395

330

3

1 143

64 996

5 646

70 642

666

6

1 157

64 960

6 761

71 721

588

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Section G : Import/export, wholesale and retail trades(2) 2009

171 324

384 476

417 857

802 333

9 387

2010

178 243

395 871

417 359

813 230

11 423

2011 2011

2012

180 546

392 864

421 720

814 584

13 344

6

180 835

391 609

421 191

812 800

13 464

9

181 341

392 624

424 654

817 278

13 878

12

180 546

392 864

421 720

814 584

13 344

3

180 652

390 210

423 787

813 997

17 125

6

181 222

393 236

424 545

817 781

16 039

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Part of Industry Section G : Import/export trade and wholesale 2009

111 939

289 128

273 423

562 551

4 812

2010

116 530

297 069

267 812

564 881

6 487

2011

117 269

293 593

266 017

559 610

7 067

2011

2012

6

117 517

289 643

271 156

560 799

8 267

9

117 859

291 976

272 367

564 343

7 743

12

117 269

293 593

266 017

559 610

7 067

3

116 950

288 405

268 748

557 153

8 945

6

117 207

290 085

268 262

558 347

9 141

Note: (1) Establishments in construction sites refer to number of sites, while persons engaged and vacancies refer to manual workers only. (2) The industrial coverage is not complete. Figures for the individual industry sections and the total figures relate only to those selected industries covered in the Quarterly Survey of Employment and Vacancies (SEV) and the Quarterly Employment Survey of Construction Sites. (3) Starting from March 2009 round of the SEV, the survey coverage has been expanded to include more economic activities in some of the industries due to the change in industrial classification. Please refer to â&#x20AC;&#x153;Concepts and Methodsâ&#x20AC;? on page 13 for details. (4) Accommodation services sector covers hotels, guesthouses, boarding houses and other establishments providing short term accommodation. Source: Census and Statistics Department, Hong Kong Special Administrative Region 62 HONG KONG BUSINESS ANNUAL 2013


numbers | indicators Number of Establishments, Persons Engaged and Vacancies (Other than those in the Civil Service) by Industry Section No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Part of Industry Section G : Retail(2) 2009

59 385

95 348

144434

239782

4575

2010

61 713

98 802

149547

248349

4936

2011

63 277

99271

155703

254974

6277

6

63 318

101966

150035

252001

5197

2011

2012

9

63 482

100648

152287

252935

6135

12

63 277

99271

155703

254974

6277

3

63 702

101805

155039

256844

8180

6

64 015

103151

156283

259434

6898

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Section H : Transportation, storage, postal and courier services(2)(3) 2009

8805

105738

53559

159297

1457

2010

9484

107498

54046

161544

2086

2011 2011

2012

9769

108406

57068

165474

2507

6

9741

108270

54816

163775

3011

9

9744

108301

55474

165474

2431

12

9769

108406

57068

165637

2507

3

9709

108941

56696

166706

3197

6

9665

110306

56400

817 781

3408

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Section I : Accommodation(4) and food services 2009

14679

118220

128825

247045

4725

2010

15977

125403

129885

255288

7814

2011

16763

126336

139979

266315

8992

6

16801

126466

139629

266095

8119

9

16817

127827

138486

266313

7988

12

16763

126336

139979

266315

8992

3

16854

129207

139841

269048

11036

6

16929

130392

141886

272278

12266

2011

2012

Source: Census and Statistics Department, Hong Kong Special Administrative Region

HONG KONG BUSINESS ANNUAL 2013 63


numbers | indicators

Number of Establishments, Persons Engaged and Vacancies (Other than those in the Civil Service) by Industry Section No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Section J : Information and communications 2009

9026

57293

30554

87847

1427

2010

9958

58210

30684

88894

2084

2011

10756

61337

31931

93268

2222

2011

2012

6

10477

59004

32055

91059

2192

9

10617

59156

32507

91663

2240

12

10756

61337

31931

93268

2222

3

10973

61551

33637

95188

2475

6

11079

62604

33287

95891

2380

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Section K : Financing and insurance(2) 2009

17 574

88 111

97 503

185 614

2 900

2010

19 026

94 232

102 181

196 413

4 429

2011

20 610

100 660

106 664

207 324

4 168

6

19 655

97 190

105 645

202 835

4 866

9

20 039

100 501

106 134

206 635

4 755

12

12 20 610

100 660

106 664

207 324

4 168

2011

2012

3

20 690

100 644

109 307

209 951

4 559

6

20 854

101 284

105 709

206 993

4 386

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Section L : Real estate 2009

11 992

68 562

39 848

108 410

1 692

2010

12 942

70 131

42 411

112 542

2 603

2011 2011

2012

14 250

76 208

46 044

122 252

2 504

6

13 713

74 876

43 905

118 781

3 128

9

13 911

75 936

44 059

119 995

2 884

12

14 250

76 208

46 044

122 252

2 504

3

14 208

75 929

46 126

122 055

3 264

6

14 357

77 730

46 625

124 355

2 862

Source: Census and Statistics Department, Hong Kong Special Administrative Region

64 HONG KONG BUSINESS ANNUAL 2013


numbers | indicators

Number of Establishments, Persons Engaged and Vacancies (Other than those in the Civil Service) by Industry Section No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Sections M & N : Professional and business services(2)(3) 2009

34 420

148 360

153 992

302 352

4 037

2010

36 899

157 176

157 168

314 344

5 623

2011

39 157

163 455

165 338

328 793

6 582

6

38 155

160 328

160 384

320 712

6 571

9

38 758

163 683

162 204

325 887

6 674

12

39 157

163 455

165 338

328 793

6 582

3

39 393

164 616

165 566

330 182

8 359

6

39 907

163 888

169 416

333 304

9 359

2011

2012

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Industry Sections P - S : Social and personal services(2)(3) 2009

35 953

150 174

272 560

422 734

7 710

2010

39 018

153 779

279 033

432 812

10 377

2011

41 194

157 839

283 866

441 705

12 445

6

40 590

153 695

285 039

438 734

12 736

9

40 930

157 427

283 216

440 643

13 901

12

41 194

157 839

283 866

441 705

12 445

3

41 703

156 938

287 689

444 627

16 312

6

42 273

158 989

291 600

450 589

16 493

2011

2012

No. of establishments

As at end of Year

Month

No. of persons engaged Male

Female

No. of vacancies

Total

Total of industry sections above(1)(2)(3) 2009

318 004

1 254 931

1 249 719

2 504 650

34 557

2010

335 350

1 292 951

1 266 289

2 559 240

48 137

2011 2011

2012

346 556

1 327 599

1 302 577

2 630 176

55 146

6

343 653

1 304 139

1 293 477

2 597 616

56 645

9

345 733

1 320 402

1 298 093

2 618 495

57 688

12

346 556

1 327 599

1 302 577

2 630 176

55 146

3

347 617

1 328 085

1 311 653

2 639 738

69 966

6

349 645

1 339 181

1 318 485

2 657 666

70 841

Source: Census and Statistics Department, Hong Kong Special Administrative Region

HONG KONG BUSINESS ANNUAL 2013 65


numbers | indicators

Wage Indices by Industry Section and Broad Occupational Group September 1992 =100 Nominal wage index

Real wage index(1)

2011

2011

2011

2012

2012

2011

2011

2011

2012

2012

Jun

Sep

Dec

Mar

Jun

Jun

Sep

Dec

Mar

Jun

Craftsmen and operatives

154.3

154.2

155.3

158.7

159.3

103.4

110.6

102.6

103.4

103.4

Supervisory, technical, clerical and miscellaneous nonproduction workers

173.5

177.8

183.5

185.3

180.6

116.3

127.6

121.3

120.7

117.2

All selected occupations

164.3

166.5

170.0

172.6

170.5

110.1

119.5

112.4

112.5

110.6

-

-

-

-

-

-

-

-

-

-

Supervisory, technical, clerical and miscellaneous nonproduction workers

181.7

187.5

188.1

190.2

189.5

121.8

134.5

124.3

123.9

122.9

All selected occupations

181.7

187.5

188.1

190.2

189.5

121.8

134.5

124.3

123.9

122.9

Craftsmen and operatives

151.8

154.8

155.4

154.2

157.7

101.8

111.1

102.7

100.4

102.4

Supervisory, technical, clerical and miscellaneous nonproduction workers

164.5

167.7

168.0

167.9

168.8

110.2

120.3

111.0

109.4

109.6

All selected occupations

158.2

161.4

161.8

161.1

163.3

106.1

115.8

106.9

105.0

106.0

-

-

-

-

-

-

-

-

-

-

Supervisory, technical, clerical and miscellaneous non production workers

144.9

147.2

150.6

152.1

156.0

97.1

105.6

99.6

99.1

101.2

All selected occupations

144.9

147.2

150.6

152.1

156.0

97.1

105.6

99.6

99.1

101.2

-

-

-

-

-

-

-

-

-

-

Supervisory, technical, clerical and miscellaneous nonproduction workers

191.3

192.2

190.3

193.6

196.2

128.2

137.9

125.8

126.1

127.3

All selected occupations

191.3

192.2

190.3

193.6

196.2

128.2

137.9

125.8

126.1

127.3

Industry section/ Broad occupational group Manufacturing

Import/export, wholesale and retail trades Craftsmen and operatives(2)

Transportation

Accommodation (3) and food services Craftsmen and operatives(2)

Financing and insurance Craftsmen and operatives(2)

Source: Census and Statistics Department, Hong Kong Special Administrative Region

66 HONG KONG BUSINESS ANNUAL 2013


numbers | indicators

Wage Indices by Industry Section and Broad Occupational Group September 1992 =100 Nominal wage index

Real wage index(1)

2011

2011

2011

2012

2012

2011

2011

2011

2012

2012

Jun

Sep

Dec

Mar

Jun

Jun

Sep

Dec

Mar

Jun

-

-

-

-

-

-

-

-

-

-

Supervisory, technical, clerical and miscellaneous nonproduction workers

184.6

185.8

192.2

192.2

193.9

123.8

133.3

123.9

125.2

125.9

All selected occupations

183.6

184.5

191.3

191.3

193.4

123.1

132.4

123.3

124.6

125.5

-

-

-

-

-

-

-

-

-

-

Supervisory, technical, clerical and miscellaneous non-production workers

181.6

184.8

185.8

188.2

192.0

121.7

132.6

122.8

122.6

124.6

All selected occupations

181.6

184.8

185.8

188.2

192.0

121.7

132.6

122.8

122.6

124.6

Craftsmen and operatives

-

-

-

173.8

187.5

-

-

-

113.2

121.7

Supervisory, technical, clerical and miscellaneous non-production workers

209.9

221.6

226.9

226.3

230.9

140.7

159.0

149.9

147.4

149.9

All selected occupations

206.6

215.3

222.0

219.7

226.3

138.5

154.4

146.7

143.1

146.8

Craftsmen and operatives

159.7

161.6

162.9

163.0

166.5

107.1

116.0

107.7

106.2

108.0

Supervisory, technical, clerical and miscellaneous nonproduction workers

174.6

178.5

179.7

181.8

183.5

117.0

128.1

118.8

118.4

119.1

All selected occupations

173.4

177.2

178.3

180.3

182.1

116.2

127.1

117.9

117.5

118.2

Industry section/ Broad occupational group Real estate leasing and maintenance management Craftsmen and operatives

Professional and business services Craftsmen and operatives(2)

Personal services

All selected industry sections (4)

Note: (1) The Real Wage Indices are derived by deflating the Nominal Wage Indices by the 2009/10-based Consumer Price Index (A). (2) Data for “craftsmen and operatives” are not available for the survey period. (3)Accommodation services sector covers hotels, guesthouses, boarding houses and other establishments providing short term accommodation. (4)Figures for “All selected industry sections” refer to all industries covered by the wage enquiry of the Labour Earnings Survey, including electricity and gas supply; sewerage and waste management; and publishing. Source: Census and Statistics Department, Hong Kong Special Administrative Region

HONG KONG BUSINESS ANNUAL 2013 67


numbers | indicators Salary Indices for Middle-level Managerial and Professional Employees by Selected Industry Section Salary Index (A) (June 1995=100) Nominal Salary Index

Real Salary Index (1)

Selected industry section

2010

2011

2012

2010

2011

2012

Manufacturing, electricity and gas supply

117.5

121.1

124.9

105.0

102.7

102.1

Building and construction, and related trades

116.9

125.6

132.3

104.5

106.5

108.1

Import/export, wholesale and retail trades

129.8

137.7

144.5

116.0

116.8

118.1

Transportation, storage, communications and travel agencies

123.6

127.7

133.7

110.4

108.3

109.3

Financing and insurance

145.8

154.9

159.3

130.3

131.4

130.2

All selected industry sections

130.3

138.0

143.9

116.5

117.0

117.7

Salary Index (B) (June 1995=100) Nominal Salary Index

Real Salary Index (1)

Selected industry section

2010

2011

2012

2010

2011

2012

Manufacturing, electricity and gas supply

146.0

152.2

160.0

130.5

129.1

130.8

Building and construction, and related trades

161.8

177.4

190.9

144.6

150.5

156.1

Import/export, wholesale and retail trades

158.5

170.5

181.0

141.6

144.6

148.0

Transportation, storage, communications and travel agencies

171.5

178.8

188.4

153.2

151.7

154.1

Financing and insurance

181.7

196.6

205.8

162.3

166.8

168.2

All selected industry sections

165.7

178.1

188.5

148.0

151.1

154.2

Note: Figures refer to June of the year. As from 2011, both Real Salary Indices (A) and (B) are derived by deflating the corresponding Nominal Salary Indices by the 2009/10-based Consumer Price Index (C). To facilitate comparison, the Real Salary Indices prior to 2011 have been recompiled using the 2009/10-based Consumer Price Index (C). Source: Census and Statistics Department, Hong Kong Special Administrative Region

68 HONG KONG BUSINESS ANNUAL 2013


numbers | indicators

Consumer Price Indices and Year-on-year Rates of Change at Section Level for November 2012 Composite CPI

CPI(A)

Index for Nov 2012

% Change over Nov 2011

114.9

+4.2

115.6

Meals bought away from home

112.8

+4.6

Food, excluding meals bought away from home

118.5

CPI(B) Index for Nov 2012

% Change over Nov 2011

Index for Nov 2012

% Change over Nov 2011

+4.2

115.2

+4.4

113.5

+3.8

113.1

+4.7

113.1

+4.7

111.9

+4.4

+3.5

118.8

+3.6

119.2

+3.9

116.4

+2.7

118.5

+5.2

122.4

+6.3

117.2

+5.0

115.1

+4.2

Private housing rent

118.3

+5.0

117.9

+5.7

117.2

+5.0

115.7

+4.4

Public housing rent

117.0

+9.7

147.4

+9.7

147.8

+9.8

-

-

Electricity, gas and water

147.5

+4.6

89.4

+4.6

91.7

+4.3

95.0

+5.3

Alcoholic drinks and tobacco

91.3

+1.1

124.3

+1.3

121.7

+0.9

114.2

+0.6

Clothing and footwear

121.7

+2.0

117.1

+2.2

117.1

+2.1

120.7

+1.7

Durable goods

118.4

-1.4

91.1

-2.1

92.3

-1.4

93.5

-0.9

Miscellaneous goods

92.5

+2.1

106.9

+3.1

108.0

+2.3

107.1

+1.0

Transport

107.4

+2.2

106.5

+1.7

108.0

+2.1

111.1

+2.8

Miscellaneous services

108.6

+2.8

105.2

+1.9

107.7

+2.7

109.3

+3.5

Selected major groups Educational services

108.2

+3.8

107.7

+3.9

107.7

+3.7

109.0

+3.7

Information and communications services

94.6

-2.6

95.1

-2.3

94.3

-2.8

94.3

-2.8

Medical services

108.4

+2.3

107.9

+2.3

108.6

+2.4

108.6

+2.2

112.3

+3.7

113.7

+4.2

111.8

+3.6

111.3

+3.3

Section Food

Housing #

All items

% Index for Change Nov 2012 over Nov 2011

CPI(C)

* Denotes a figure within ±0.05%. - Not applicable.

Note: The CPI(A), CPI(B) and CPI(C) are compiled with reference to the average expenditure patterns for different groups of households as obtained from the Household Expenditure Survey. By aggregating the expenditure patterns of all households covered by the above three indices, a Composite CPI is also compiled. The expenditure ranges of the households covered in the 2009/10-based CPI series are as follows:

Approximate percentage of households covered %

Average monthly household expenditure range (at 2009/10 prices) $

Average monthly household expenditure range (adjusted to 2011 prices) $

CPI(A)

50

4,500 - 18,499

4,800 - 19,600

CPI(B)

30

18,500 - 32,499

19,600 - 34,400

CPI(C)

10

32,500 - 65,999

34,400 - 69,900

Composite CPI

90

4,500 - 65,999

4,800 - 69,900

Apart from “Private housing rent” and “Public housing rent”, the “Housing” section also includes “Management fees and other housing charges” and “Materials for house maintenance”.

Source: Census and Statistics Department, Hong Kong Special Administrative Region

HONG KONG BUSINESS ANNUAL 2013 69


70 HONG KONG BUSINESS ANNUAL 2013


High-Flyers 2013 Profiles of Hong Kong’s Outstanding Enterprises and Business Leaders

AIA Pension And Trustee Co. Ltd. 72 I Ageas Insurance Company (Asia) Limited 76 I Altruist 78 I AV Consultant (Int ’L) Ltd 80 Canadian International School 82 I Chartis Insurance Hong Kong Limited 84 I Clp Power Hong Kong Limited 86 Cosmo Hotel Hong Kong, Cosmo Hotel Mongkok 88 I Bao Gallery By Crystallize•Me Ltd 90 I Freywille 92 Fuji Xerox (Hong Kong) Ltd. 94 I Fujitsu 96 I Galaxy Macau 98 I Godiva 100 I Hästens 102 I Hong Kong Matchmakers 104 Hsbc Insurance 106 I M800 Limited 108 I Shama Management Ltd. 110 I Rhombus International Hotels Group 112 Standard Chartered Bank (Hong Kong ) Limited 114 I The Cityview 116 I The Mercer 118 I Thomas, Mayer & Associes 120 Ultra Active Technology Ltd 122 I Universal Audio & Video Centre 124 I Wharf T&T Limited 126 I Zchron Design 128

CONTRIBUTING WRITERS: Chris Cotrell, Kapila Bandara, Gloria Fung

HONG KONG BUSINESS ANNUAL 2013 71


ENTERPRISE AWARD

AIA PENSION AND TRUSTEE CO. LTD.

AIA MPF'S REVOLUTIONARY MPF SCHEMES STAND OUT IN HONG KONG

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ith the rapid ageing of populations particularly in Asia, the need for comprehensive pension and retirement schemes intensifies. According to the Hong Kong government, the population is on an ageing trend and the ratio of people over 65 years old is expected to rise from 13% in 2011 to 30% in 2041. This is where AIA Pension and Trustee's ("AIA MPF") products and services come in. With a vast experience in handling retirement schemes in Hong Kong, AIA MPF definitely has the breadth and depth of expertise to provide retirement products tailored to suit the needs of both corporations and individuals. With this unmatched success, AIA MPF has bagged the Hong Kong Business High Flyers Most Outstanding Enterprise Award for four years in a row. The MPF Scheme has been changing the landscape in Hong Kong with the implementation of the Employee Choice Arrangement (the

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"ECA") in November 2012. So what are AIA MPF's competitive advantages? How does AIA MPF leverage on its strenghts to embrace the challenges and the opportunities brought by the ECA and win the award? AIA’s MPF schemes According to Bonnie Tse, Chief Executive Officer of AIA MPF, the major competitive edge of their MPF schemes is their well-established multi-manager strategy. “Our platform includes 25 constituent funds managed by 5 renowned investment managers, and fund choices which cover a wide range of geographical locations and asset classes like lifestyle funds, dynamic asset allocation funds, equity funds, fixed income funds and funds investing in index-tracking funds, which may accommodate members’ varying investment appetites and risk tolerance levels,” says Tse. She cites one of their products, the Manager’s Choice Fund, that adopts dynamic asset


Bonnie Tse, Chief Executive Officer of AIA MPF

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AIA PENSION AND TRUSTEE CO. LTD. PHILOSOPHY

As a responsible market leader, AIA MPF strives to help customers realize their retirement dreams by providing retirement offerings with great value, choice and simplicity.

allocation strategy to invest in equities and bonds based on the economic and market outlook. The Fund may allocate from 10% to 90% of its assets in equities, with the balance invested in bonds. The allocation will change based on the investment manager’s view on the economic and market outlook. It may be suitable for members who have limited knowledge and time to switch funds on their own. Tse reckons that the implementation of the ECA gives employees greater autonomy in choosing MPF providers and schemes. However, she strongly recommends employees not to switch MPF providers just for the sake of change. Instead, Tse advises employees to first know themselves and assess their current risk tolerance level, investment needs and the retirement savings and investments they currently have, as well as the services, fees and fund performance etc. of their existing MPF provider. Employees also need to know other providers, get more information about their services, fees and fund performance, and then do the comparison. “If the products and services provided by their existing MPF provider meet their needs, then there is no urgency to switch. When comparing MPF providers, employees are reminded to adopt a holistic approach. It is not advisable to focus on management fees only. Rather, one should also consider factors like fund choices, fund performance, and the simplicity and flexibility of the MPF service platform,” notes Tse. Strategies for a growing market share To grow market share in this competitive market, AIA MPF plans to strictly implement its customer value proposition of Value, Choice and Simplicity. “By striving to provide MPF offerings with great value, choice and simplicity, we endeavour to ensure every cent of our customers’ contribution works toward their prosperous retirement future,” says Tse. AIA MPF knows the importance of value as it strives to maximise returns on every cent of customers' contributions. The company currently provides 7 low-fee MPF funds with management fees as low as 0.99% p.a. and in line with the launch of the ECA, AIA MPF has recently launched three ECA fee rebate offers, including an extra one-off HK$4,000 management fee rebate, first year up to 0.45% p.a. management fee rebate and perpetual 0.20% p.a. management fee rebate. The second facet is choice that enables customers to enjoy real freedom in fund selection and fund switching. Since the MPF funds cover different geographic locations and fund categories, customers have high flexibility to choose MPF funds that suit their risk appetites and the market conditions. Depending on market conditions, members can also switch their

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investment choices within as little as one day, without switching MPF schemes. Lastly, AIA MPF believes in the power of simplicity and helping customers manage their MPF investments with ease. For instance, the LifeEasy service launched in 2008 is an automatic asset rebalancing service which reallocates the investment proportion of equities and bonds in members’ MPF investments based on their age or desired number of saving years. And in May 2012, AIA MPF launched the staged withdrawal service that enables members to withdraw their MPF assets in stages when they reach the age of 65 in accordance with their desires and personal financial needs. AIA MPF's consistency in providing excellent products and services to its clients is proof that AIA MPF remains committed to its growth strategies. The company is also building future


MOST Outstanding Enterprise Photo (top): AIA MPF announced new ECA fee rebate offers for both existing and new members Photo (bottom left to right): The management team of AIA MPF; AIA MPF distributed candies to the public at various busy areas all over Hong Kong during 1-7 Nov 2012 to increase peoples’ awareness on the ECA

FAST FACTS • AIA MPF is a member of AIA Group Limited • AIA Group Limited is listed on the Main Board of The Stock Exchange of Hong Kong Limited under the stock code 1299 • AIA MPF is Hong Kong's 3rd largest MPF service provider in terms of asset under management as of 30 September 2012

success through investing in strategic projects. AIA MPF is also working on a multi-channel system through which customers can access its services by broadening its distribution. This will enable the company to generate long term value and deliver improved levels of service. HONG KONG BUSINESS ANNUAL 2013 75


AGEAS INSURANCE COMPANY (ASIA) LIMITED

PHILOSOPHY

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

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Quality, customised products and services earn Ageas Hong Kong High-Flyers Award

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geas Hong Kong has once again won the Hong Kong Business High-Flyers Award in the Life Insurance category. This is the sixth year that the company has been honoured with this prestigious award which has been recognizing the excellence of leading businesses since 2004. “We are delighted to receive this Award,” comments Stuart Fraser, CEO of Ageas Insurance Company (Asia) Limited (Ageas Hong Kong). “As a company that believes in meeting the constantly evolving challenges in the marketplace, we aim to satisfy our customers’ needs by providing them with comprehensive products and outstanding services.” One of Hong Kong’s largest life insurance companies, Ageas Hong Kong is a wholly owned subsidiary of Ageas, an international insurance company with a heritage spanning more than 180 years. Ageas ranks among Europe’s top 20 insurance companies, with 13,000 employees working throughout Europe and Asia. By combining its global strength with local flexibility, it offers the Hong Kong market a diversity of financial protection products and wealth management services. “The High-Flyers Award is one of a number of accolades we have received recently.” Fraser adds. “We were also named Best-in-Class in Training and Development (Insurance) and Outstanding Achiever

in Social Media Engagement (Insurance) in the Benchmark 2012 Wealth Management Awards.” Innovative and comprehensive one-stop financial planning solutions Ageas Hong Kong nurtures long-term customer relationships with a holistic approach to financial planning that is based on the three pillars of “Protection”, “Savings” and “Investment”. This allows customers to take good financial care of themselves at different stages of their lives. It also offers them a complete spectrum of innovative, diversified and competitive products. “In 2011, we were among the first companies authorised to provide Capital Investment Entrant Scheme (CIES) products for those wishing to apply for the right of abode in Hong Kong as investors. It successfully captures the business opportunities generated from the growing trend of investment immigration,” says Fraser. “The appreciation of the Renminbi (RMB) has created huge demand for RMB-denominated products. In response, we have launched the ‘Dynasty’ RMB Endowment Plan series, which secures a guaranteed return at policy maturity, and customers will also benefit from the RMB’s potential appreciation.” Launched in September, the revolutionary


Life Insurance Hong Kong

Kowloon

This page clock-wise: Ageas enhanced its brand awareness and signified its commitment to the city by becoming the first company to launch twin neon signs along Victoria Harbour; An overview of future financial needs is just a few clicks away with free and easy-to-use Ageas smartphone apps; The eyecatching and innovative “Calling Dayo, Calling DoDo” advertising campaign using QR code Opposite page: Ageas Hong Kong’s CEO Stuart Fraser regards its dedication to excellent service and responsiveness to market needs as key factors in its success

FAST FACTS • • •

Ageas Elite Choice Insurance Plan aims to enable customers to accumulate and protect their wealth in today’s prolonged low-interest-rate environment by allowing investors to choose their own currency mix and benefit from both annual crediting interest and currency appreciation opportunities. Ageas Hong Kong also cares for its customers’ well-being. “Our Advanced Care Protector was the first in the market to cover people against less severe critical illnesses and diabetes,” Fraser points out. Leader in IT development Meanwhile, Ageas Hong Kong leverages on IT advances to extend the reach of its marketing and promotion activities and build its business. For instance, it was the first insurance company to start using Google Apps, and its free, easy-to-use smartphone apps help users to get an instant and precise picture of the funds they will need at various stages in their lives. It has also scored several “firsts” in the Hong Kong insurance sector, in terms of integrating social media platforms with advertising campaigns. These include: • Using cutting-edge QR technology to allow customers to call stand-up comedian and Ageas spokesperson Dayo Wong and renowned movie and TV artiste DoDo Cheng and hear their smart financial tips. • Employing “U-tie” technology to enable people to scan its advertising on MTR billboards and receive details of the latest promotions. • Developing an iPad Financial Needs Analysis tool.

Its financial status is confirmed by global ratings agencies (A- (Excellent) by A. M. Best, A- by Fitch Ratings, and Baa1 by Moody’s). It has more than 2,700 professionally trained and highly skilled consultants. Seven percent of them are members of the elite Million Dollar Round Table for financial professionals. The company has been awarded the ”Caring Company” logo every year since the programme began in 2002.

Serving society Ageas Hong Kong actively gives back to the community too. “We are committed to our corporate responsibilities,” says Fraser. “To this end, we have been a presenting sponsor of Kitchee Escola, a school that has been providing free football training to aspiring young footballers, since 2008.” The company was also the major sponsor of a fundraising exhibition match between visiting English Premier League Team Arsenal and Hong Kong League winners Kitchee. This raised funds for the Kitchee Foundation’s project to build a youth football development centre in Hong Kong. Ageas Hong Kong has been out in full force at the Oxfam Trailwalker for the past eight years. Three of its teams trekked the arduous 100-km MacLehose Trail in 2012, and the company was the champion in the insurance category for the third year running. HONG KONG BUSINESS ANNUAL 2013 77


ALTRUIST

COMPANY PHILOSOPHY

Altruist’s company philosophy represents the highest service standards and underscores a commitment to continuously upgrade Financial Consultants’ education level and professionalism.

Pioneer Altruist lays out path to financial security and well-being

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t a time of lingering uncertainties in the global economy, individuals are acutely aware of the critical role of how financial planning will play in their lives in terms of their health, family, careers and personal interests. But on the path to financial security, individuals must navigate the proliferation of financial planning choices promoted by various providers: banks, insurance companies, financial institutions etc. The channels and choices are aplenty, but the true problem is: in an era of information overload, how can an average person manage and understand what will help fulfil his or her financial dreams? This is exactly where Altruist, an independent financial consultancy firm, comes in to fill the gap. Altruist was founded in 2001 by President Albert Lam, with the mission to deliver comprehensive solutions and to ensure the financial health and well being of its customers. Being the pioneer in the industry, all its professional consultants weigh their moral and ethical obligations in creating tailor-made financial solutions, aiming to provide impartial advice to thousands of men and women pursuing their life goals. Altruist adopts a wholesome approach through which it embraces its clients, colleagues, the industry in which it operates, as well as the community. In this way, Altruist lives up to its proposition, as its name suggests – a group of people working for the happiness and welfare of others. “What underpins the operations of Altruist are five

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principles – our philosophy, the mission of long-tem financial planning, our training and coaching that meet professional standards, the customer-centric service and most of all, the Altruistic spirit,” says Lam. “Altruist’s company philosophy represents the highest service standards and underscores a commitment to continuously upgrade the education levels and professionalism of Financial Consultants,” Lam further elaborates. As such, Altruist is committed to providing training and daily coaching which is second to none. “Investing in our people is our top priority. We place tremendous resources to provide the most comprehensive training curriculum to reinforce their belief, product knowledge, as well as sales skills, in order to meet the increasing challenges.” This means the customers will be advised by highly motivated professionals who fully understand the financial products and are capable of delivering high quality after-sales service. “Our professionals are well aware that there is no such thing as the best product, but a solution best suited the customer’s long-term needs. They combine the most ideal solution with excellent service, and tailor make the best advice to every individual. While every consultant undertakes to deliver this promise by adhering to the moral and ethical obligations, our clients’ interests are always well-protected,” Lam elaborates. What Altruist offers its customers are protection


FINANCIAL PLANNING This page clock-wise: Celebrating the Mid-Autumn Festival with the elderly at Caritas Elderly Centre – Lai Kok; Our trailwalker team has successfully challenged the 100km MacLehose Trail; An outing trip with the underprivileged kids from Open Door Ministries; Sponsoring the Otic Charity Concert; Sponsoring Auto Italia Ferrari Team in the Macau GT Cup. Opposite page: Mr. Albert Lam, President of Altruist

FAST FACTS

plans and savings plans for the long term. Lam points out, “Long-term protection, which is the fundamental step of a healthy financial plan, enables customers to manage risks so that their dependents do not suffer unexpectedly. Once protection is secured, customers could consider building up savings over a specified period so they can have adequate financial resources to draw on when they retire. It also provides a cushion against the inadequacies of the MPF. Protection complemented with savings is a security against most eventualities.” Guiding the customer through his or her personal or family objectives is the ultimate goal of Altruist’s well-informed Financial Consultants. They complete this relationship by delivering the best service. “Our action speaks for ourselves. Our associates are able to build up a strong relationship with the clients and achieve mutual trust and respect. It is also self-explanatory by our endless referrals from those satisfied customers,” Lam says with pride. At the industry level, Altruist helps to shape the evolution of financial planning, insurance and broker community, including regulatory aspects in Hong Kong. “Altruist is the founding member of The Institute of Financial Planners of Hong Kong Limited and Independent Financial Advisors Association Limited – where our Chief Operation Officer Glenn Turner, chairs the Association. He is also a general committee member of the Hong Kong Confederation of Insurance Brokers. In addition, we also obtained membership with industrial association like The Life Underwriters Association of Hong Kong and the General Agents & Managers Association of Hong

• • • • •

Founded in 2011 by Mr. Albert Lam First to obtain joint venture insurance agency license in Shenzhen & Ningbo Independence is the competitive advantage Delivers a total well-being solution to customers: WEALTH • HEALTH • WISDOM Recognised as a Caring Company since 2003

Kong. Not only our personnel are actively involved in the work of these associations, our executives are regularly invited as the guest speakers in various seminars and workshops, demonstrating our devotion to help driving the industry forward.” Altruist also maintains its community obligations through educational initiatives and programs driven by altruistic objectives. The company offers a scholarship at the Polytechnic University of Hong Kong and Kwantlen Polytechnic University in Canada. In addition, it has sponsored activities such as the Walk for Millions, Trailwalker, and supported the activities of organisations such as Breast Concern, Otic Foundation, Caritas, Open Door Ministries as well as Sunshine Action. For people seeking to build a financially secure future while ensuring the long-term well-being of themselves and their family, Altruist remains a trusted company. HONG KONG BUSINESS ANNUAL 2013 79


AV Consultant (Int’l) Ltd

PHILOSOPHY

To seamlessly convey feeling and emotion through high quality audio/video equipment and professional skill without affecting the interior design, and to simplify house operation (environment and audio visual) with ease and style.

AV Consultant creates ambiance for movie and music lovers to feel alive

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n the hands of an audio-visual specialist, private residences are transformed into places where AV equipment blends seamlessly into the interiors of the home, creating a lively atmosphere. Alan Lee, the founder of AV Consultant (Int'l) Ltd., says, “Audio and video is not just about the hardware, it is about feelings and emotions.’’ His showroom on Duddell Street, Central provides clues to what he can achieve in a home, combining the functionality of the AV equipment with aesthetics. In the showroom, on one wall, two large embedded speakers are cleverly concealed beneath an attractive print, as if they were part of the artistic décor in a living room. Alan explains: “I aim to provide a solution that creates feelings and emotions.’’ He adds that the objective is to convey feelings and emotions without the audience noticing the equipment. The AV equipment is adorned to match the colours of the interior, thus complementing the shades and the designs of the living room. What sounds good also needs to look good. By using his knowledge and experience, Alan also aims to make life easier for those who find it difficult to operate the equipment. His solution is to use touch panels (Smart Home/Automation System). These, he

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says, can make the life of the client enjoyable in that the spouse or even the children can fully appreciate the pleasure of the audio/video system, while it also simplifies the operation of other comforts in the house such as lighting, drapery and air-conditioning. “Our main focus is to provide solutions with out-of-theordinary AV and smart home products.’’ AV systems, can be complicated and difficult to use, but AV Consultant helps to simplify a client’s everyday operations, so systems can be used more often. “This definitely enhances a household’s lifestyle.’’ AV Consultant undertakes projects to deliver high-end home entertainment systems including karaoke, video library, audio library, smart home, and even the D-Box motion system, whose motions are synchronized with the actions on screen, providing a realistic, live-action experience to the viewer. AV Consultant is the first company in Hong Kong to introduce this wonderful technology. “We offer a broad range of products, including lighting, Smart-Home (home automation), sofas and IT systems,’’ Alan says, emphasising that AV Consultant is not only a high-end AV products vendor. Rather, it is also an integrator that takes care of the entire house system. “We are a service company instead of just an equipment provider.’’


Professional AV/Automation Consultant This page clock-wise: Entertainment Room - When Elegance meets Performance; Looks Like Nomal Speaker; Speaker with Style Opposite page: Alan Lee, the founder of AV Consultant (International) Ltd.,

FAST FACTS • • • •

AV Consultant has been in the business for more than 20 years and in that time Lee has built up a portfolio of commissions including home theatre projects for leading Canto-Pop singers/directors and commercial projects to create screening rooms, club houses, churches, and universities. Alan is billed as the most popular AV reviewer in China and Hong Kong. He writes weekly columns in AV magazines, the HMV newsletter and a few AV magazines published in mainland China. He is also the first person in Hong Kong, Taiwan and China to have received certification by the ISF (Imaging Science Foundation) and THX (a George Lucas company) in 1995. The ISF certification recognises video calibration, while THX governs installation and set up of a home theatre system from product selection to final calibration. Apart from being a well-known AV reviewer, Alan also had done radio and TV programs at RTHK as well as in various TV station including TVB. Currently, he is the chairman of the Asia HD Association and committee member/certified instructor of the CEDIA China. Lastly, Alan stresses that audio and video systems should be integrated seamlessly into the life of the people without affecting the interior design. Most important of all, systems must be reliable and simple to use.

• • • • •

1995 - Alan Lee, certified by THX of LucasFilm, first in Hong Kong, Taiwan and China 2002 - First "Full Digital Video" Home Theater Demo in Hong Kong 2004 - Designed and Lectured AV Seminars for Sony Customer, First Time in Asia Including Japan 2004 - Organised the first projector showcase featuring 16 brands in Hong Kong 2005 - Organised the first projector showcase in Shanghai, China 2007 - Founding member of the Asia HD Association 2009 - Chairman of the Asia HD Association 2010 - Guest speaker and calibrator for the AVATAR blu-ray launch in China 2011 - Committed member and certified instructor of CEDIA China

HONG KONG BUSINESS ANNUAL 2013 81


CANADIAN INTERNATIONAL SCHOOL

MISSION

To develop responsible global citizens and leaders through academic excellence.

Paving the road to academic success and beyond

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any parents believe that academic success alone ultimately sets exceptional students apart from good ones. However, educators at Canadian International School of Hong Kong believe that the foundation for building success starts at an early age and requires a careful balance of academics, extracurricular activities and community service. The Head of School at CDNIS, Dave McMaster, explains that facilitating this balance is key to helping students reach their post-graduate goals and ease them into university life. “Universities are always looking for students with top academic performance, but they also take into consideration the holistic review of applicants,” he states. Having worked with students at CDNIS for the past eleven years and having worked with three graduating classes under the International Baccalaureate (IB) curriculum, McMaster is proud to share the continuously rising achievements of each new graduating class. “The 2012 graduating class was exceptional and we believe the class of 2013 will perform even better. We have students going into a great variety of programmes all over the world,” he states. From business, liberal arts and professional studies such as law and medicine, to less traditional disciplines such as fine arts and film, McMaster says CDNIS’s diverse IB programme has given students the opportunity to explore their options and excel at whichever area their interest might be. 82 HONG KONG BUSINESS ANNUAL 2013

While the majority of students enroll in direct entry Medical and Law schools, as well as the more traditional Commerce, Engineering and Science programmes, this past year, more students than ever chose to attend universities renowned for their arts programmes, a trend McMaster notes as growing. This, he explains, has to do with the school’s guidance counsellors and teachers, who are keen to help students explore their interests and passions. In fact, Head of Guidance Bob Bate says students are encouraged to talk about their post-secondary plans with their family, teachers and friends early on. “We start conversations around careers and postsecondary transition in grade 10 and it is built off of our Careers 10 class. Students do a wide range of assessments and aptitude tests to help them better understand what options may be available to them that they have not yet considered,” says Bate. Ensuring students know as much as possible about the universities they are applying to, the school organizes campus tours during school breaks. “In addition, we host more than 300 universities on campus, 70 of which are part of an annual university fair,” Bate explains. “Students are encouraged to attend the university presentations to learn as much as possible about the various schools and the programmes they offer. Not only are CDNIS students very knowledgeable about the universities and programmes they are applying to,” Bate adds, “the students are also well prepared for the rigors of university life. In terms of work load and research skills, grade 12 students in the second year of the IB


International School This page clock-wise: CDNIS alumni Simon Chan (’10) and Gabrielle Munoz (’12) discuss her work which was on display as part of the 2012 IB Graduation Art Show; Students representing 41 different nationalities study at CDNIS; Flags representing CDNIS’ student nationalities are displayed in the school’s entrance; Head of Guidance, Bob Bate, meets with students regularly to discuss their post-secondary options Opposite page: Dave McMaster, Head of School at Canadian International School of Hong Kong

FAST FACTS • • • •

Diploma Programme are working at a similar level as a first year university student.” McMaster says students often apply to as many as eight universities in three countries with 100% of graduates going on to university. “Our students are academically successful and the majority will go to the schools of their choice. This past year alone, we had five students accepted at the Art Institute of Chicago, one of the world’s top art schools.” With impressive academic records, CDNIS students were offered an impressive amount of scholarships. “Our students were offered approximately HKD $16 million in scholarships to attend various schools around the world. One of our most outstanding students received a USD $140,000 full scholarship to the Art Institute of Chicago,” says McMaster. With a nurturing staff and a knowledgeable team

Canadian International School of Hong Kong was established in 1991 with 81 students A through-train IB World School, offering the Primary Years, Middle Years and Diploma Programme in addition to the Ontario Secondary School Diploma all on one campus Currently over 1,800 students of 41 nationalities and 250 staff CDNIS is committed to developing caring young people who possess a sense of social responsibility.

of counsellors dedicated to helping students excel beyond high school, McMaster says the sky is the limit for CDNIS graduates. “Our students understand they are very privileged in that they are given many opportunities and experiences. We try our hardest to ensure that these experiences and what they’ve learned here will help them not only in university but as successful global citizens.” HONG KONG BUSINESS ANNUAL 2013 83


Chartis Insurance Hong Kong LimiteD

MISSION

AIG is excited about the potential of tomorrow globally and in Hong Kong. AIG aims to be the best general insurance company in Hong Kong. Our mission starts with being “an Employer of choice in an Industry of choice”. This means not only working with our customers and our business partners but also our staff and industry stakeholders to ensure this vision becomes a reality.

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Chartis Insurance stands out in Hong Kong

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ith a client base of more than 120,000 individual customers and 11,000 corporate customers in Hong Kong, Chartis Hong Kong is one of the leading providers of general insurance in the city. Serving Hong Kong since 1931, Chartis Insurance Hong Kong stands out to its customers because of a combination of corporate longevity, financial strength, international experience and local knowledge. We have been serving Hong Kong customers locally for over 80 years, providing them with insurance cover through the decades,” says Marc Breuil, President and CEO of Chartis Insurance Hong Kong. Rated A by S&P with a stable outlook, the company has the financial strength and the international reach that comes with being part of AIG, one of the world’s largest insurance groups. Locally, Chartis is one of the best capitalized Hong Kong domiciled General Insurance Companies. This is particularly important in Hong Kong where the next few years will see the introduction of a new Independent Insurance Authority and a new RBC-based solvency regime. Mr Breuil, who is back to Hong Kong for the second time, believes that Chartis’ key strengths lies with its staff, their dedication and professionalism. “It is that blend of local and international talent and experience which enable us to continually adapt our insurance products to protect customers from a range of risks. Our customers vary from individual holiday-makers to multinational companies looking to manage exposure on balance sheets against the evolving risks they face.

Indeed, in 2011 Chartis was the second largest direct underwriter of General Insurance in Hong Kong (excluding inward reinsurance). The company has a very diverse portfolio with significant global scale, which is supported by its capital market strength. In the US, Chartis businesses recently rebranded to AIG. In line with this change, Chartis in Hong Kong will re-brand to AIG in the first quarter of 2013, marking a significant milestone for the company. Aligned with the rebrand to AIG is a new brand promise – ‘Bring on Tomorrow’. “Bring on Tomorrow underscores AIG’s tremendous tenacity and ambition – to solve problems, to innovate for the benefit of our clients, and to act as a powerful, global team,” said AIG President and Chief Executive Officer Robert H. Benmosche. “Now we look to tomorrow, and we’re excited about the potential we see there. We’re excited to get to work on seeing, building, and securing a better future – for our customers, for ourselves, and for communities around the world. I believe that the spirit of inventiveness and adaptability at the core of AIG will bring opportunities and open doors that will redefine what’s possible, helping our customers thrive and make the most of every day.” Chartis’ competitive advantage So what sets Chartis’ claims service apart from its competitors? “By the close of 2012 Chartis in Hong Kong will have reviewed 68,000 claims,” says Breuil. “What matters most to our customers is the ability to process these claims anywhere in the world on local


General Insurance This page clock-wise: Chartis Cup, an annual charity rugby event sponsored by Chartis, raised US$64,000 this year to renovate schools for needy children in areas damaged by the 2011 floods in Thailand Opposite page: Marc Breuil, President and CEO of Chartis Insurance Hong Kong Limited

FAST FACTS terms. Being part of AIG gives Chartis in Hong Kong the advantage of global reach, and provides access to 9,000 claims professionals in over 160 countries and jurisdictions. This is a unique set of capabilities which is critical for the insurance business,” he added. “Chartis also provides a customer-focused service. The claims team manages claims in a consistent and fair manner that is pro-active and transparent. For large and multinational customers, Chartis also offers a tailor-made claims service to meet our customers’ requirements; we call it - Claims Account Relationship Management.” “Our Claims Account Relationship Managers work with claims teams across all regions to ensure consistency and clarity of service. We work with brokers and customers to agree clear benchmarks and expectations, as well as marinating open channels of communication. We build tripartite working relationships between customers, brokers and the claims teams to deliver our claims service,” says Breuil. Keeping its focus Chartis is single minded in its focus on underwriting principles, discipline and standards, and not distracted by the competition. Breuil believes that insurers should focus on producing a sustainable business model to back products and meet potential customer claims. “That starts with underwriting discipline, with knowing risk and knowing how to price it properly. It takes years of experience to build up this kind of knowledge, and with a 80-year presence in Hong Kong Chartis has this knowlegde. Among the top insurers in the world, AIG has the most well-balanced portfolio in terms of geographies and distribution between the major lines of business,” he adds. Chartis’ dedication and excellence played a pivotal role in providing momentum to Hong Kong’s

insurance industry. Chartis has been a pioneer in offering innovative insurance solutions to businesses and consumers to address evolving insurance needs, with new insurance products introduced over the years, such as Environmental liabilities, Product contamination, Directors and Officers liability, Dragonshield, CyberEdge and many others. Breuil cites cyber threat as an emerging new risk which is threatening businesses and consumers in an increasingly interconnected world. “Providing dedicated insurance products is one of the key ways to manage new risks and address changing concerns. Hence Chartis developed CyberEdge, the most comprehensive cyber product available to commercial enterprises in Asia Pacific.”

General Insurance • Chartis Insurance Hong Kong Limited is a member of American International Group, Inc. (AIG) • Chartis in Hong Kong will be rebranded to AIG in the first quarter 2013. • The financial strength of Chartis Insurance Hong Kong Limited is vetted by global rating agencies: A (stable outlook) by S&P, A2 (stable outlook) by Moody’s. • AIG’s strategic vision is to be the most valued insurance company.

Chartis initiatives While ensuring world-class service, Chartis in Hong Kong also positions itself as an industry employer of choice. “Beyond the strength of our best-in-class insurance products and services, we also put forward our management values in ways our staff, customers and business partners can relate to,” says Breuil. “Transparency, fairness, integrity and professionalism are the key values Chartis adheres to as an employer to ensure we attract and retain the best talent in the industry. In 2013, we are introducing new maternity benefits for our staff that we believe will be a first in the Hong Kong general insurance industry. This is particularly relevant to the 60% of our staff who are female. Another program offered by Chartis is the Volunteer Time-Off (VTO) leave allowance where employees may provide a public service and make a difference in their communities by participating in charitable initiatives or volunteering to work for charities of their choice.” The “Giving Back” VTO program was established to support activities that enhance and serve communities. Employees can donate up to 16 hours each calendar year to an eligible charity. HONG KONG BUSINESS ANNUAL 2013 85


CLP Power Hong Kong Limited

PHILOSOPHY

Towards a sustainable future From our beginnings in Hong Kong over a century ago, CLP has become one of the leading power companies in the Asia-Pacific region. In a changing world, our mission is to produce and supply energy with minimal environmental impact to create value for shareholders, employees and the wider community

Environmental protection – a key pillar in CLP’s brand identity

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any firms talk about protecting the environment. However CLP has actually embedded the idea into its DNA. Environmental protection is one of the four key pillars supporting the organisation’s new “Energy for life” brand theme. Alongside other important characteristics such as customer excellence, community commitment and power expertise, minimizing the impact of its operations on the environment is a major priority for CLP. Environmental performance and initiatives “We value environmental protection and we are firmly committed to sustainability from the Board Room downwards." says CLP Power Managing Director, Mr Richard Lancaster. For example, in 1996 CLP became the first electricity supplier in Hong Kong to use natural gas to generate electricity. Natural gas is a clean-burning fuel that produces much lower levels of emissions than most of the other fossils fuels. Since 1996, CLP has increased its use as a clean energy alternative and improve Hong Kong’s environment. The Emissions Control Project at the coal-fired Castle Peak Power Station completed last year (2011) also further improves CLP’s already highstandard environmental performance. "Combining reduction initiatives and shifting to cleaner sources of energy, in the past two decades we have reduced the emissions generated by our power plants by 82% at a time when demand for electricity rose by 80%,” says Mr Lancaster. Environmental protection begins at home While the company has done much to reduce the

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environmental impact of its own operations, CLP recognised long ago that environmental protection begins at home with customers. CLP has launched a variety of initiatives including the recent “Save Now For A Better Future” energy saving competition and the advanced Eco Optimizer online energy assessment tool. Households taking part in the competition can use the online tool to understand their consumption habits and get tips that help them to save energy. “We actually launched Eco Optimizer before the competition, with the idea of helping two million residential customers to save energy. Since its launch in 2011, it has been embraced by more than 26,000 residential customers,” said Mr Lancaster. Supporting the business sector to save energy Hong Kong’s commercial sector is also a major energy consumer, and the local economy depends on the steady and reliable power that CLP provides. That is why CLP is energetically encouraging its business customers to manage their energy appetites carefully and, where possible, to reduce how much they use. According to Mr Lancaster, the GREEN PLUS Energy Billboard is a case in point. “The GREEN PLUS Energy Billboard is a benchmarking tool for business customers. The ultimate aim is to make it easier for customers from businesses, big and small, to compare their average monthly energy performance against their sister offices or peer industry as a whole, hence help them manage their electricity consumption and save operation cost,” he says. All customers have to do is input their premises’ floor area and energy usage information via their PC


Environmental Performance This page clock-wise: CLP’s expert technicians are committed to provide world-class electricity supply reliability; Mr. Richard Lancaster, Managing Director of CLP Power; The Junior Green Engineer Programme aims at nurturing a new generation of green pioneers Opposite page: The usage of natural gas has been increased as a clean energy alternative.

FAST FACTS

or laptop. They will receive an insightful quarterly report which offers a detailed overview of their energy usage levels. More importantly, they can see where they can cut consumption and make significant savings. The efforts are certainly gaining momentum. Some 2,700 companies across 14 different industry groups, are already taking advantage of CLP energy saving initiatives. The efficiency initiatives don't stop there. More than 1,000 organisations are participating in CLP’s GREEN PLUS Programme – a collaborative platform that helps business customers, non-profit organisations, schools and contractors to go green. Something for everyone Energy efficiency is not only for businesses interested in saving money, or domestic customers keen on cutting power bills. It's a must for everyone! That is why CLP is now developing a solution that will meet the needs of these camps. The Advanced Metering Infrastructure (AMI) which is designed to provide customers with timely energy consumption information using smart meters and related technology. AMI can send signals to customers if their energy usage approaches selected consumption levels. Detailed consumption data will be made available to customers via various channels such as a dedicated web portal and mobile apps for smart phones. “This is a key initiative that could help more people make better informed decisions on their electricity consumption and achieve a greener lifestyle. We plan

to roll out a pilot scheme during the first half of 2013,” Mr Lancaster reveals. Young at heart Protecting the environment is the key for a bright future. So, CLP is also spreading the green message to the children and aiming to cultivate a new green generation. That’s where the Electric Green Studio and Junior Green Engineer programme come in. The Electric Green Studio is a 10-ton electric truck that produces zero roadside emissions with the aim of encouraging children to adopt green measures in their daily lives through interactive activities, including a 3D movie entitled "Earth Hero". The Junior Green Engineer Programme is a more academic initiative. The first of its kind in Hong Kong, it brings together engineering, scientific and green education themes under the guidance of electricity experts to nurture a new generation of green pioneers.

• CLP Power Hong Kong Limited (“CLP Power”) is the Hong Kong utility subsidiary wholly owned by CLP Holdings Limited, a company listed on the Hong Kong Stock Exchange and one of the largest investor-owned power businesses in Asia. CLP Power operates a vertically integrated electricity supply business in Hong Kong, and provides a highly reliable supply of electricity and excellent customer services to 5.8 million people in its supply area • Today CLP Power is Hong Kong’s biggest power company, with almost 4,000 staff catering to the energy needs of more than 80 per cent of the population.

Facing the future with confidence Today CLP is Hong Kong's biggest power company. The organisation continues to uphold the values of caring for the environment, people and community. “The ‘Energy for life’ brand theme provides a clear, credible and comprehensive structure within which CLP can deliver on our promises, including one of the most challenging and important – minimising the environmental impact of energy generation and delivery,” says Mr Lancaster. HONG KONG BUSINESS ANNUAL 2013 87


Cosmo Hotel Hong Kong Cosmo Hotel Mongkok

PHILOSOPHY

The hotel industry is a people business. When you are serving people things become exciting, dynamic and different every day. To me, having a "Passion to Serve" is of top importance and this is also from this our service motto "Beyond thoughtful. Anytime. Everywhere" derived. I believe in "anticipate and act" instead of "wait and see". With this in mind we come up with thoughtful services that tug on every guest's heartstring. And of course I value the core of our Cosmo family. I treat all employees as one family. I strongly believe a caring company culture with development prospects is the key to a happy workforce.

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Home away from home- staying green amidst a buzzing city at Cosmo Hotels

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eing the pluralistic city that it is, Hong Kong attracts travellers with different agendas from around the world on an impressive scale. From business and corporate travellers to families and young adventurers, their budgets, needs and expectations are different. Yet, Anita Chan, General Manager of city hotels Cosmo Hotel Hong Kong and Cosmo Hotel Mongkok, observes, no matter the purpose of their travels to the city, be it business or leisure, guests are always looking for a convenient location and a green, environmentally-friendly experience. The fact that both hotels are located in the heart of the city- the Hong Kong branch being only moments away from important commercial hubs, and the Mongkok location being close to a mix of old and new Hong Kong, make the conventional check in / out time a topic to be challenged and revisited.  And to do this, both the Cosmo Hong Kong and Cosmo Mongkok work hard to create personalised experiences that tug on the heartstrings of each guest. From providing an extensive network of shuttle buses to a pioneering 24-hour check in check out service, Chan and her team is there to ensure guests get the most out of their visit. “Because we are a city hotel and there is so much happening in Hong Kong, guests can do a variety of activities around the clock.” When booking directly

through the hotel’s website, guests can enjoy a full 24-hour stay, service which gives them the chance to explore all aspects of sightseeing, entertainment and night life without having to work their schedule around their check out time. And to help guests trek the city, the hotel’s two locations together provide 6 shuttle routes to 22 popular hotspots around the city including the Hong Kong Convention and Exhibition Centre and major commercial buildings in Hong Kong for business travelers, as well as popular tourist must visit spots such as Ocean Park, Elements and IFC shopping malls. “This service caters to the needs of all sectors of travellers and it really connects them to the entire city,” says Chan. And with a passion for providing a greener experience for guests, Cosmo Hotel Hong Kong and Cosmo Hotel Mongkok are not only Green Globe certified hotel, but the two has scored impressive ratings of 83 per cent and 85 per cent respectively by fulfilling over 51% of 320 compliance indicators. The various green policies the hotels are adopting include an investment in LED lighting to conserve as much as 20 per cent of energy and as much as 14 per cent drop in linen laundry and subsequently a 16 per cent drop in water consumption as a result of effective reuse of linens and towels by guests. “We are also the first 100 per cent smoke-free four-


Green City Hotel This page clock-wise: Lobby at Cosmo Hotel Hong Kong; Superior Green Room in Cosmo Hotel Hong Kong; Cosmo Hotel Mongkok; Room Cosmorganic in Cosmo Hotel Mongkok Opposite page: Anita Chan, General Manager of Cosmopolitan Hotel Hong Kong, Cosmo Hotel Hong Kong and Cosmo Hotel Mongkok

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star hotel in Hong Kong and properties are using ecofriendly natural refrigerants for the air-conditioning system to make sure our ozone layer is free from harm,” Chan shares. On top of that, Breeze on fifth floor of Cosmo Hotel Hong Kong serves as an open patio and has an abundance of greenery. The certification not only recognizes the hotels’ dedication to environmental initiatives, but it highlights their work in facilitating social economic well-being among its staff and within the community through two main initiatives. The hotel also provides opportunities for hospitality students to intern at the two properties. "We are also keen to encourage more young people to join our industry and through letting students come work with us, it gives them a full picture of all the expertise and departments that it takes to run a hotel," says the hospitality veteran. Launched for the first time in 2012, the One Family Program extends internship opportunity to families of selected staff members into the hotel for an insider look at what the hospitality industry is all about. “Our industry requires that staff work long hours; we felt this program was a great way for families to understand and have more appreciation for what our staff do at work. It also gives them a chance to experience what it is like to work in various posts of the hotel,” says Chan. While focusing their efforts on a green travel experience, the hotels also ensure they invest the same enthusiasm to providing top-notch service. To provide a comfortable stay for guests, each room

features high quality Simmons mattresses fitted with 300 thread-count sheets, a pillow menu with 11 options, a four-choice water bar as well as an iPod dock. These amenities all aim to cater to and exceed the expectations of guests. With the evolving technology and the transparency of the Internet world, Chan capitalizes on them to interact with her guests. The hotels take notes from online travel reviews like Tripadvisor, “We understand guests’ expectation, feedbacks and we engage with them by even replying their comments. It’s all due to our "Passion to Serve." In fact, this was also being mentioned in one of the reviews on Tripadvisor where guest praised us for having the “passion to wanting to assist.” When booking directly through the hotel’s website, guests can be sure they are getting exactly what they see. In fact, Cosmo Hotel Mongkok’s website was recently recognized by Hospitality Sales & Marketing Association International with the Adrian Silver award. “Our website is a show flat of the hotel, the first stop where we see guests before they check in. All images are real photos and the site presents our hotel’s character vividly.  We don’t exaggerate and we offer exclusive promotions on there,” says Chan. Uniquely catering to the different needs of different guests, the Cosmo Hotels seek to continue to evolve with the traveling trends. “At the end of the day, visitors are looking for a comfortable place to rest their head. But as the dynamics and demographics of the traveller continues to evolve, we too have to provide dynamic services to satisfy all customers.”

• Dorsett Hospitality International, listed on the Hong Kong Stock Exchange (HKEx Stock Code: 0035), owns and manages 17 hotels globally, of which 8 are under development in China, Hong Kong, Singapore and United Kingdom. • Cosmo Hotels became Green Globe-certified in 2012. • Cosmo Hotels are awarded “Certificate of Excellence 2012” by Tripadvisor. • Cosmo Hotel Mongkok's brand website is named “Adrian Silver Award” by Hospitality Sales & Marketing Association International.

HONG KONG BUSINESS ANNUAL 2013 89


Bao Gallery by Crystallize•Me Ltd

PHILOSOPHY

Crystallize.Me believes in creating a unique and memorable experience for each and every one of their customers. This has been the key to their success and is evident in both the quality of their products and the premium service provided by all their members of staff. By offering customers the very best in luxury crystal products, Crystallize.Me has been a pioneer in showcasing the true artistic splendidness and originality of finely crafted crystal pieces in China and Hong Kong.

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Crystal clear - CrystallizE.Me provides light and sparkle to those with an eye for luxury accents

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ourcing unique and exclusive crystal lighting, decorative objects and bespoke accessories from around the world, Crystallize.Me brings the best of crystal works to Hong Kong and China. Setting the standard and educating discerning collectors and connoisseurs in Beijing, Shanghai, Chengdu and Hong Kong, Crystallize.Me continues to flourish as the go-to source for the sparkling products. Managing director of the company Raymond Chui and his team has been busy at work the past year to bring even more exciting crystal elements to the cities. “Along with winning major contracts including Shangri-La Shanghai and signing an exclusive contract with Spanish crystal chandelier leader, Iris Cristal, we were able to host our successful crystal glass art exhibitions in both Beijing and Shanghai,” he says. With a 40-year history in crystal, Crystallize.Me is leader in the industry - bringing top quality pieces from leading names around the world to local buyers. Chui observes the trends in crystal lighting, accessories and fashion. “There are two seemingly opposite trends that are developing in the crystal industry; one is the progress of technology in the production process and the other is a resurgence of

traditional craftsmanship.” These opposite trends appeal to distinctive sets of clients, those who strive for contemporary styling and those who seek the unique and the extraordinary. The advancement in technology has led to more finely cut crystals due to precision cutting machinery as well as the decrease in the use of materials containing lead. Machine-cut crystal, while resulting in modern pieces, lacks the emotions and passion of traditional. This, says Chui, is the reason why the market for hand-made pieces exists. “The growing use of machinery has increased the value of traditional craftsmanship as it becomes increasingly rare. Although the use of technology has come a long way in the crystal industry, it still cannot truly replicate the artistic quality, intimacy and unique personalization of hand-crafted crystal pieces." Leading the industry for 40 years, Crystallize.Me’s clients too have cultivated an extensive and in-depth knowledge about the value of crystal. “Many buyers are becoming savvier in identifying and appreciating the differences between high and low-quality crystal products.” Because of this informed appreciation for fine crystal works, customers are also fully aware of the value of fine pieces. “Instead of focusing solely on


Crystal Lighting & Home Deco Clockwise from top left: The Crystallize.Me booth at the 2012 International Hotel and Architectural Lighting Fair in Shanghai; In June 2012, Crystallize.Me participated in the Shanghai 'Women's Round Table Trust' Charity Event; Crystallize.Me's new CAT.i product; Chandelier design from IRIS Series Lighting, Crystallize. Me is an exclusive reseller for the Spanish crystal chandelier leader Opposite page: Mr. Raymond Chui Managing Director of Crystallize. Me

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price, customers now value the quality of original designs, superior craftsmanship, and the use of highquality materials. Hopefully, this trend will continue to motivate an improvement in overall quality and services in our industry.” Chui observes that crystal is nothing less than works of art. They become valuable collectibles that make great investment and beautiful style statements. Many high-quality crystal products are considered and treated as pieces of art. Overseas, many designers and artists collaborate with big name brands to produce crystal products that are unique in design and creation. Chui believes Crystallize.Me can facilitate this trend in Hong Kong and China. “Crystallize.Me has plans to bring this concept to the Chinese market as more people now appreciate crystal products for not only their practical use, but also their artistic quality. It is exactly for this reason that we have chosen to set up our showrooms as galleries rather than regular stores,” says Chui. Besides providing crystal pieces to clients, the company is also an expert on all services related to crystal. “Crystallize.Me has always provided our customers with services to help satisfy their needs. Along with services such as light installation, procurement and customization, Crystallize.Me has recently started

offering a beautifying service that not only provides a professional cleaning service for customers with luxury lighting but also helps upgrade existing light bulbs with our own beautifully designed and energy efficient CAT.i LED light bulbs.” Launching its own brand of light LED light bulbs, CAT.i, seems to be a natural move for the company as lighting is one of its major focuses. The right amount of lighting not only provides illumination, but it also sets the ambience and uplifts the mood of the space. “Our CAT.i LED light bulbs have been designed to not only be energy efficient and environmentally friendly, but also to improve and enhance the beauty of our customer’s lights and lighting fixtures,” said Chui. To maintain its reputation as the top crystal source, the company strives to continuously keep on the edge of trends to bring the best and latest to its customers. “The market is constantly changing and we are always interested in staying up-to-date on the latest trends and developments in the industry. At the same time, we strive to ensure that the philosophy behind the Crystallize.Me brand stays constant and that is the focus on providing our customers with a unique and memorable experience. Our plans for the future will continue to uphold this principle as we further develop the different brands, products and services provided under our group.”

• 2000 - Branched out in mainland China as “Crystallize Me”, the one and only high-end luxury crystal lighting brand • 2002 - Project for APEC VIP room, Shanghai Westin Hotel, and the Bund in Central Shanghai • 2004 - Expanded into the market in Beijing, became the lighting supplier for China World Hotel and the Beijing Shangri-La Hotel • 2005 - Created “JK Blue” crystal gift associated with COFCO Plaza; as well as the “world’s 100 most famous diamonds” replicas • 2006 - “JK Blue” fashion jewelry • 2009 - Combine lighting/ jewellery/gifts into the concept of Crystallize Me • 2010 - Applied the new concepts of our showroom into Bao Gallery • 2011 - On-going Bao Gallery Crystal Art Experience is associated with China’s top crystal artists from Qinhua University, Central Academy of Fine Arts, and Shanghai University • 2012 - Launched the CAT.i brand. Environmentally friendly LED light bulbs designed especially to visually enhance chandeliers and other luxury lights.

HONG KONG BUSINESS ANNUAL 2013 91


FreyWille

PHILOSOPHY

“I believe that art is important for a happy life. To see the good, the beautiful, in everything around us makes us more positive, interesting people. It connects us together. My wish is to bring happiness.” Dr. Friedrich Wille

Symphony of colours- mingling art into everyday life with Viennese enamel Jewelry

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or many women, it would not be an understatement to say that dressing well is as much a lifestyle choice as it is an art. And the details that go into an outfit are what make sophisticated dressers stand out from the crowd. And one of the best ways for a style maker to set his or herself apart is to accessorise with unique, one-ofa-kind items that will make them stand out from the masses. This is exactly the kind of person Viennese jeweller FREYWILLE has in mind when creating the brand’s art-inspired jewelry and accessories. With a passion for the extraordinary, the brand is noted for its exquisite artisanship and its traditional enamelling techniques. As FREYWILLE’s CEO Dr. Friedrich Wille explains, it is its passion for the arts and a love for refinement that inspire the brand to create its colourful collection of trinkets and gems. The brand was founded in 1951 and last year they have been celebrating their 60th anniversary, bringing reformation to the company that was founded on the principles of hand crafting wearable art in the finest enamel And over the years, the brand continues to perfect this distinctive style and strives to remain true to its identity. “FREYWILLE is a very special brand,” says Dr. Wille. “Of course we keep track of the jewelry 92 HONG KONG BUSINESS ANNUAL 2013

world, but to us it is more important to stay true to our philosophy and style, which is unique and artistically precious like no other luxury brand.” Its iconic appeal and artistry, says the CEO, is exactly why clients keep coming back for more of its wearable art pieces. “We use enamel as our canvas. FREYWILLE was born with the idea of creating wearable pieces of art. During our long history we developed important links to famous artist’s foundations, such as Gustav Klimt, Hundertwasser, Alphonse Mucha and Claude Monet who actively approached us and allowed us to create designs inspired by those great artist’s masterpieces.” These artistic collaborations are especially interesting because it allows these artists’ works to be showcased through a different and highly specialised medium- enamel. “We treat our production as an old craft. Since 1951, all our handmade jewelry pieces are produced in our artistic workshop in Vienna where each single piece underlies the controlling hands of our goldsmith and masters of enameling.” Tradition is a large part of the brand’s success, but it is its pioneering spirit that keeps it thriving. “Our academically trained design team is also composing their own artworks, images inspired by ancient cultures, important architecture but also abstract


Enamel Jewelry This page from top to bottom: 18k yellow gold and white gold diamond cufflinks, 18k solid gold Daisy ring, Gold-plated Waterdrop pendant,18k solid gold rings, Gold-plated fountain pen Opposite page: Dr. Friedrich Wille, CEO of FREYWILLE

FAST FACTS • • • • • • • • •

themes such as feelings of love passion and joy.” Described by Dr. Wille as ‘non-traditional’, the brand designs with women who wish to make a statement in mind. “Different collections appeal to a certain character, culture or age group. Some of our customers collect all pieces of one collection. Others mix and match our collections according to their style and mood.” And with the success of its women’s accessories, the brand also branched out to include pieces for men with its range of ties, pens, cufflinks and belts. This, says Dr. Wille, is an effort to offer more choices for the fashion-conscious male consumer. “Globally,

1950s : Folkloric designed enamel jewelry 1960s : Created a collection for Harrods, decorated with Swarovski crystal 1970s : Formed an association with YSL 1980s : Royal bangle, Egyptian collection 1990s : Diva bangle, “Hommage à Claude Monet”, Iris collection 2000-07 : Halfmoon pendant, “Hommage à Hundertwasser”, Spiral of Life collection 2008: Diva bangle, “Ode to Joy of Life,” Heavenly Joy collection 2011: Luna Piena pendant “Hommage à Gustav Klimt”, Hope collection 2012: “Floral Symphony” Collection, “The Spirit of Africa” Collection, 18k solid gold Daisy ring, Gold-plated Waterdrop pendant

men started to pay more attention to the details of their outfits.” Happily positioning itself as a niche jewelry brand, the CEO says they have no plans to venture beyond jewelry and accessories. And it is with good reason FREYWILLE remains focused and dedicated fully to its craft. “It takes a very long time to design a new product shape in enamel. We will never become a brand that expands on a huge set of products, as the very nature of enamel production is too elaborate for that. However, we keep our mind open. If an interesting idea comes to our mind, we are always willing to explore it.” HONG KONG BUSINESS ANNUAL 2013 93


FUJI XEROX (HONG KONG) LTD.

PHILOSOPHY

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

Efficiencies and Cost Reductions gained from Document Management Solutions

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r Herbert Hui, Managing Director of Fuji Xerox (Hong Kong) Ltd., proudly states: “Fuji Xerox Hong Kong provides document consultancy services and solutions to customers in every industry, through a full range of knowledge and document solutions. We work closely with customers to manage and improve their document-intensive business processes. We take an enterprise-wide view of documents throughout the lifecycle to identify where process efficiencies and cost savings can be made, and develop solutions that deliver sustainable business benefits throughout the enterprise.’’ When a 5-star hotel in Hong Kong sought to introduce mobile technology to enrich the experience that guests have when they check-in, they turned to Fuji Xerox Hong Kong. The luxury hotel was eager to implement a user-friendly, efficient system through mobility and electronic document management solution. Similarly, Fuji Xerox Hong Kong implemented the electronic document management solution (EDMS) to streamline and centralise the document process in a top steel company. In this case, Fuji Xerox Hong Kong delivered a total solution from EDMS, infrastructure, servers to backup solutions. These are just two of the multitude of projects that Fuji Xerox Hong Kong undertakes and they illustrate

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some of the expertise that the company brings to its customers, both large and small. In delivering the various solutions, Fuji Xerox draws on 50 years of experience and expertise in document management. A few months ago Fuji Xerox was also ranked by Gartner, Inc in the Leaders Quadrant of the 2012 Magic Quadrant for Managed Print Services (MPS) Worldwide. MPS is a service that helps a company gain control of processes and costs for document output so as to raise the productivity and reduce the cost. In implementing the service, it takes the Lean Six Sigma approach, ensuring consistency and providing a value-added service. One of the key areas in which Fuji Xerox Hong Kong excels is the Total Office Solution. This involves hardware, software and services. Hardware includes multi-function devices (MFD), printers, IT-related equipment (such as PCs, servers, switches, etc.). Software includes office automation solutions such as manageability solutions (print management), electronic document management solutions (EDMS), mobility solutions, production printing, and one-to-one marketing solutions. The services include “Service Plus” to MFD, project management and outsourcing services. Fuji Xerox Hong Kong offers office solutions for small and medium business as well as multinational


Total Office Solution This page: Fuji Xerox Hong Kong shared its document consultancy solutions and services in Solution Day 2012; The diagram shows the key benefits of Fuji Xerox’s Manageability Solution Opposite page: Mr. Herbert Hui, Managing Director of Fuji Xerox (Hong Kong) Ltd.

FAST FACTS • Xerox Corp and Fuji Xerox were placed by Gartner, Inc in the Leaders Quadrant of the 2012 Magic Quadrant for Managed Print Services Worldwide in October 2012. • Established in 1964 and known formerly as Rank Xerox (Hong Kong) Ltd, Fuji Xerox Hong Kong became part of Fuji Xerox Co., Ltd. in December 2000. • Recognised as Caring Company for 10 Consecutive Years from 20022012. 

companies. The company also implements industry specific applications, such as for architectural practices, construction and engineering companies, educational institutions, hotels and the retail sector. “These solutions aim to solve the customer’s problems in document related processes. Customers enjoy the efficiency gains, improved bottom line through consolidation, right-sizing and managed printing. Various solutions are evaluated differently on the potential gains and will also depend on a customer’s situation”, Hui explains. Whatever the solution implemented, Fuji Xerox Hong Kong pays special attention to sustainability to reduce the environmental impact. The company’s Sustainability Report 2012, earned a respectable B+ GRI grade from the Hong Kong Quality Assurance Agency among non-listed companies. The report

outlines strategies and activities taken to meet commitments to customers, employees and the community. Under the theme, Connecting to 360o of SustainabilityTM, the company takes a holistic approach to sustainability. As the use of mobile devices continues to grow at a rapid rate, Fuji Xerox Hong Kong is also keeping pace with the latest developments by providing Enterprise Mobility Solutions. This includes four core elements – mobile security, mobile printing, a mobile document management system and mobile form application using mobile devices, online or offline. “For businesses faced with cost pressure in a weak economic environment we help take advantage of innovations in business processes, technology and document management to change the way they do business”, Hui said. HONG KONG BUSINESS ANNUAL 2013 95


FUJITSU

PHILOSOPHY

‘Shaping tomorrow with you’

Demand grows in HK and Asia for I.T.-MANAGED Services

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he past twelve months have been tough for many organizations. Faced with a weak global economy and an increasingly competitive marketplace, enterprises across various sectors are leaning towards trimming expenditure on information technology as they strive to keep operating costs low and reduce capex. Amid this backdrop of challenges in the operating environment, demand for IT managed services has been steadily increasing, as enterprises realize the potential to increase productivity while minimizing risks and reducing costs. In Hong Kong alone, the predicted growth rate for these services through 2012 to 2013 is 8-9%, according to IDC. Increasing agility, lowering costs IT managed services is an area in which Fujitsu Hong Kong has extensive experience, ranging from managed data centers and migration services, to end user services and infrastructure support. Derek Yiu, General Manager, Solutions and Services Business at Fujitsu Hong Kong, points to many factors fuelling the march of IT managed services, such as customers’ desire for higher levels of service to sharpen their competitive edge, as well as enterprises’ need for improved site effectiveness. Underpinning this is the widespread drive to maximise cost savings by reducing total cost of ownership. Yiu explains that there has been a noticeable surge in interest for two particular areas of IT managed services – onsite and desktop managed services, and 96 HONG KONG BUSINESS ANNUAL 2013

data centre services. The traditional work environment can result in a tricky equation, namely the upfront and ongoing costs associated with laptop and PC installation and management, compounded by prevailing difficulties surrounding system downtime and support. As such, many organizations are deploying onsite and desktop managed services, specifically leveraging virtualized client infrastructure, to reduce costs, increase productivity and improve operational efficiency. The number of businesses requesting data centre services is also on the rise as many enterprises seek to embark on a journey into the cloud. Research firm IDC estimates that in Asia Pacific, the cloud market will swell from US$2.9 billion in 2011 to US$32 billion in 2020 at a 31% compound annual growth rate. Again, the potential for significant cost savings and efficiency gains are the key drivers. Industries as diverse as financial services, telecommunications, supply chain and Macau gaming are all clamoring for data centre and virtualization services given the benefits on offer, from huge scalability to greater control and tighter data security. Companies in these sectors are keen to find cloudbased IT managed services partners who can be the architect, developer and operator of private clouds. Driving value through effective, efficient and flexible IT services Yiu says this is an area in which Fujitsu excels. Fujitsu operates more than 100 data centres globally with worldwide service desks that support


Leading ICT Solutions and Service Provider This page: As a result of IT skills shortage, companies are looking to leverage Fujitsu’s expertise in IT managed services for a robust, yet easily manageable system. Opposite page: Derek Yiu, General Manager, Solutions and Services Business at Fujitsu Hong Kong

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over 30 languages. Fujitsu is responsible for the integration, enhancement and evolution of IT assets and business applications. Besides, Fujitsu wraps its leading infrastructure products and solutions with world-class data center and managed services to deliver greater value to enterprises across a multivendor environment, Yiu adds. Fujitsu remains vendor-neutral and implements solutions tailored to suit the specific needs of individual enterprises, offering greater scalability, flexibility, resilience and efficiency. “As Hong Kong serves as a key regional data centre and information hub, Fujitsu leverages global capabilities and best practices coupled with extensive local experience to support multinational companies to design and implement a world-class cloud platform,” Yiu says. Enterprises from finance, telecom and logistics will increasingly adopt private cloud technologies, including software-as-a-service and infrastructureas-a-service, to enhance customer experience and become more agile. One of the sectors which has benefited from Fujitsu’s expertise is Macau’s gaming industry. As Macau rapidly expands, companies are struggling to find the right candidate to support their IT needs. The IT skills shortage will also haunt companies in Hong Kong and Greater China. As a result, companies are looking to leverage Fujitsu’s expertise in IT managed services to provide them with a robust but easily manageable system, to ensure that the best available technologies are applied in the most appropriate way to enhance business performance. The path to successful IT transformation Yiu explains that the heavy cost burden is driving businesses to consolidate their IT systems through virtualization and the cloud to eliminate much of the space and power required, reduce costs and improve

IT service levels for business users. A recent study by Forrester has shown that businesses in Asia Pacific and Japan see cloud computing as an integral part of their strategy, with 68% of organizations saying that unless they opt for cloud initiatives, they could fall behind the competition. In 2013, Yiu says, Fujitsu expects an even greater focus on virtual applications and cloud spending, as enterprises understand the long-term benefits of the cloud. A virtual ecosystem will emerge as virtual appliances gain traction in IT operations, replacing a lot of the physical components. Research firm Gartner has forecast that the worldwide cloud services market will reach US$150.1 billion in 2013 and Fujitsu believes that spending on enterpriseclass cloud services will increase. Traditionally, most managed services platforms were designed with the management of remote servers located on a customer’s premises in mind, Yiu explains. But in the age of the cloud, those servers are rapidly being moved, either into a data centre owned by the solutions provider or another facility managed by the hosting provider. In either scenario, the need for users to manage their own servers remotely has been reduced. The only thing that really needs to be remotely managed is the network that provides access to those servers. The cloud provider is obliged to provide a dependable and seamless data centre operation and uphold enterprise level SLAs. This enables chief information officers to de-risk their IT and focus on higher-value work and innovation. Depending on individual business needs, enterprises can adopt IaaS, PaaS, SaaS or even the private cloud. Yiu says a trustworthy and reliable service provider should study and understand the client’s business needs, facilitate change management and customize the most suitable solutions to help the client achieve long-term business success.

• Fujitsu is the world’s third-largest IT services provider, with over 170,000 professionals, serving customers in more than 100 countries. As a leader in ICT solutions and services for 78 years, the group pursues strong innovation initiatives to create new value for customers with R&D investment at USD 2.9 billion. • Operating in Hong Kong for over 50 years, delivering real business value for customers across various industries by combining global expertise with local experience and facilities. The Hong Kong office also serves the Macau market, further extending the outreach of the company’s world-class services and solutions to the gaming and hospitality industries. • In 1997 and 1998 respectively, Fujitsu Hong Kong merged with ICL Hong Kong, a leading computer hardware and services company, and Amdahl, a well-known mainframe computer provider, further strengthening our capabilities in offering mission-critical solutions and services. • Fujitsu has established more than 100 data centres globally, exceeding 1 million square feet of raised floor space. Offices have been set up in principal business areas and the service desk centres support over 30 languages, enabling Fujitsu to provide a seamless service to customers worldwide. • Nominated as the Best Virtual Desktop Solution provider in e-brand Award held by e-zone and Business IT Excellence Award organized by PC Market. These awards recognise outstanding computer and digital products (or services) providers.

HONG KONG BUSINESS ANNUAL 2013 97


GALAXY MACAU

PHILOSOPHY

Their philosophy is “World Class Asian Heart.”

The Galaxy’s Brilliant ‘Seattleite’

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ane Tsai lights up like a shooting star when we talk about Seattle and Galaxy Macau. As the Vice President of Marketing Communications at Galaxy Macau, Tsai, a Seattle native (known as ‘Seattleites’), is beaming about her role with the company. She says, “There are very few chances in your life when you can launch a mega-brand. There are clearly pillars of the gaming industry, and that’s all very compelling. But we are launching a true global brand here, and I find that very exciting. I tell my family back home that the pace here is just so fast compared to the U.S.” One would expect to hear this from a focused and energetic executive like Tsai, who joined Galaxy Macau in 2010 during the pre-launch period and who has steadied the course ever since. Prior to becoming Galaxy Macau’s first ‘Seattleite,’ as it were, Tsai served as the CEO and business director for such companies as Inspirasian, with over 15 years of marketing acumen in the Asia-Pacific region. She has been a seasoned adviser for international firms such as Hotels.com and Expedia.com. She holds a degree in economics from Whitman College in Washington State. Speaking of Galaxy Macau’s success, Tsai says, “It does not happen overnight to open a resort of this scale. It needs the right investment, vision and great timing. In terms of timing, it had to be right for us. The gaming climate had to evolve to right level of diversification before we were ready to open. If we had opened any earlier than we did, it would have

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been premature. Once the central government and the Macau government became active in promoting diversification, we knew that our opening time was right.” She continues, “When you have a market that is this saturated for gaming and tourism, in this densely packed city, it really does take vision and a product to be unique. So to hear Francis Lui talk about his vision is inspiring. It shows a level of insight into this region that is really special for this Southeast Asian-inspired resort. Mr Lui’s vision to bring the very best in an Asian resort experience to Macau and nearer to our core customers from China was very astute. Going further, Tsai explains, “This vision extends to the service provided by our staff through our ‘World Class, Asian Heart’ Philosophy. There’s a global awareness that Asian hospitality is of the highest standard. So what then becomes a challenge for any country in a region that has such high standards, is how do you stand out? With our ‘World Class, Asian Heart’ service philosophy, we deliver five star hospitality from the heart with sincerity. That’s the differentiator which we reinforce in our training, with our relationships with vendors and our employees, everything is done with sincerity.” This might explain why the company won three awards this year from the Asia Hotel Awards in Shanghai. The StarWorld Macau (opened in 2006) won the “Annual Best Hotel Service” award, whilst Galaxy Macau took home the prize for “Best Integrated Resort of Asia”. Overall, Galaxy Entertainment Group founder and chairman Dr. Lui


Leading Integrated Resorts This page clock-wise: Aerial view of Galaxy Macau; Grand Cotai Suite bedroom, Banyan Tree Macau; Wavepool at Galaxy Macau; Macallan Whisky Bar & Lounge Opposite page: Jane Tsai, Vice President Marketing & Communications of Galaxy Macau

FAST FACTS • Galaxy Entertainment Group launched their StarWorld resort in 2006 and launched Galaxy Macau in May 2011. This year it won three cherished prizes from the Asia Hotel Awards in Shanghai. The company plans to open two new hotels under the Ritz Carlton and Marriott names with 1,300 rooms by 2015.

Chee Woo received the “Outstanding Achievement of the Year Award”, making it the first time a single hotel group has been awarded all three awards. A latest example of this high level of service and standards is their new UA Galaxy Cinema. Tsai says, “For the recent 100-year Titanic anniversary movie, we had the highest grossing volume in the region, meaning Hong Kong and South China. It was pretty cool. What’s more interesting is that the theatre showed that we are filling a need not just for guests but for the local community. Before then, we were challenged for choice with few local

cinemas. For first release films, people were hopping on a ferry over to Hong Kong. Now we have a ninescreen cineplex that can seat 1,000 people. In the Director’s Club, you get the full lazy-boy experience with your feet reclined, and a call button for service. We recently used the venues for public speaking events. Some incentive groups bring in whole teams to watch a movie. We’ve even had lectures from the University of Macau.” For the future, Tsai is excited to watch the property grow as Macau develops. An example of this growth will be the opening of the light-rail in the next few years. Tsai says, “The new light rail will have its first stop in Cotai right outside our east entrance. They’ve started on the construction, which is key, as the light rail will alleviate a lot of traffic congestion in Macau.” And towards 2015 Galaxy will also open up their sizable phase two landbank. In the meantime, Tsai adds, “It’s a rare opportunity to build a resort like this in terms of brand strategy, the messaging, the positioning of the company, everything.” You could say this Seattleite is certainly on the right orbit in this Galaxy. HONG KONG BUSINESS ANNUAL 2013 99


GODIVA

PHILOSOPHY

For nearly 85 years, Godiva has created the world’s most elegant, hand-crafted chocolate to please and delight customers, from royalty to workers, adults and children. Only the finest quality Belgian chocolate is used, along with high-quality ingredients for fillings and decorations. Godiva owns and operates all 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 whose goal is customer satisfaction and delight.

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chocolates that seduce the palate and captivate the eyes make for much more than just sweet treats

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ODIVA’s history began more than 85 years ago in Brussels, Belgium when master chocolatier Joseph Draps founded a chocolate company named in honor of the legendary Lady GODIVA. According to legend, in 1057, the people of Coventry were suffering from extremely heavy taxes imposed by their lord, Leofric the Dane. Leofric’s sympathetic wife, Lady GODIVA, was determined to convince him to reduce the taxes, while Leofric believed her shameless to plead for the unworthy serfs. Lady GODIVA responded by saying he would discover how honorable the serfs were and struck a deal: Lady GODIVA would ride unclothed through the streets of the city, “clad in naught but my long tresses,” and if the citizens of Coventry remained inside shuttered buildings and did not peek at her, their tax burden would be lifted. The following morning she made her famous ride and the citizens of Coventry graciously stayed inside to spare Lady GODIVA any feelings of shame. Leofric kept his word and reduced the grateful people’s taxes. Today, in Europe, Lady GODIVA is celebrated in countless works of art, including tapestries, paintings, sculptures and literature. Anyone who has seen a bitter and rustic cocoa in the raw will agree that it looks like nothing more than

an ordinary bean. But with imagination and incredible gastronomic talents of a cocoa confectioner, they turn from ordinary seeds into extraordinary morsels packed with excitement and surprise. With incredibly creative flavours, the modern-day luxury candy has become as much as a gourmet treat as it is a lifestyle essential. Coming in tantalizing shapes and beautifully packaged, each cocoa creation delights the taste buds and teases the senses. Walking pass the shop front of GODIVA, it is hard not to be captivated by its vast selection and colourful designs. Resisting one of GODIVA’s chocolate treats is nearly impossible. Shoppers may not know what exactly it is about the chocolatier’s creations that are so irresistible, but the brand’s Regional Connoisseur Master, Mr. Wong Yim Yin, knows the secret to the brand’s appeal. “To surprise and delight our clients, we are always creative with our chocolates. Each season, our team in Belgium and the US will design and create different flavours through their research from around the world. We want to put different cultural inspirations in our chocolates,” Wong explains. Products such as chocolate mooncakes are the perfect example of catering to the needs of a specific region. These special flavours are sampled


Premium Chocolatier This page clock-wise: Mr Chris Choi, Sales Operations Director; GODIVA 2013 Limited Edition Chinese New Year Collection Opposite page: GODIVA Flagship store located at IFC mall, Hong Kong

FAST FACTS

and critiqued by in-house master chocolatier Thierry Muret before they reach the palates of consumers. “Thierry Muret will decide if the flavours are appropriate for a specific occasion. Chocolate mooncakes are not just pieces of chocolate, they need to convey the sentiments of the Mid-Autumn Festival,” says the ambassador. Almost as important as flavour, packaging is also a big part of GODIVA’s delectable brand image. Colourful boxes and beautifully wrapped hampers and baskets will instantly remind shoppers of the joy that comes with each holiday. “We want our customers to be visually stimulated as well. Pieces of chocolate will be decorated to match the holiday mood.” But as the ambassador explains, the best way to understand what flavours will appeal to customers is to ask them. And to maintain a good relationship with chocolate lovers is an important aspect of GODIVA’s success. The brand’s Sales Operations Director, Mr Chris Choi, encourages the shop front staff to sample chocolates and to take note of customer feedback. “Every time we have a new product, we provide clear guidelines to our staff about each chocolate and we encourage customers to sample them,” says Choi. Through understanding the products, Choi believes the staff will be better able to cater to the specific tastes of each client. “Even with our most experienced sales representatives, we are constantly training and educating them with new knowledge

about chocolate. This helps refresh their knowledge as well as give them the opportunity to taste new chocolates,” he explains. When the brand brainstorms new ideas for seasonal and new flavours, headquarters often turn to local shop staff for ideas. “This is because they know best what our customers like and dislike. We often discuss this information and put them to use when developing new chocolates,” says Choi. The brand also changed the culture of holiday gift-giving in the city. While the Chinese culture is all about traditions, GODIVA has been able to change the mindset of gift giver; many now turn to chocolate treats for even the most traditional of Chinese holidays. Hampers filled with cocoa goodies like chocolates, cocoa drinks, biscuits and even chocolate dipped fruits make for impressive and delicious gifts for Chinese New Year, Mid Autumn Festival as well as western holidays like Christmas and Valentine’s Day. “We create a sense of joy through our chocolates. They are emotional creations that will add to the festive spirit of any holiday,” says Wong. Indeed, the exceptional creativity and cultural inspirations make GODIVA’s chocolate treats so irresistible. And with GODIVA committing to bring out the best creations each year, we have yet to experience more delectable and more exquisite flavors in the years to come.

• With exquisite taste, premium quality, seasonal packaging, exclusive boutiques and innovative products, GODIVA Chocolatier is dedicated to over 85 years of excellence and innovation in the Belgian tradition. • Recognized around the world as the leader in premium chocolates, we bring the most ultimate chocolate experience and emotional appeal of gifting to chocolate lovers worldwide. • GODIVA Chocolatier produces many different chocolate pieces that fall into different categories and are often mixed and matched to create a wide range of collections for personal, sharing, holiday and special occasion use.

HONG KONG BUSINESS ANNUAL 2013 101


HÄSTENS

PHILOSOPHY

I have the strong belief that quality sleep is important to people’s health, and I realise that when I introduce a best quality bed like Hästens to people in Hong Kong is bringing them a good health and a better life. I really have no doubt to take up this mission. Hästens has 160 years history manufacturing beds in Sweden; all beds are handmade with 100% natural material which means zero damage to the human body. Hästens’ commitment makes me and my team work harder to tell people why a quality deep sleep means so much to them.

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The value of deep sleep- a better morning and a better life

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nyone who’s been bed ridden from a cold or forced to stay away from sports because of a strained back will know that you cannot put a price on health. We don’t think about the pleasures we get from having the freedom to engage in activities we love or spending time with those important to us. All of these things will become impossible if our health fails us. Often we realise this when it is too late and are met with the harsh reality that even the greatest wealth in this world will not bring our health back. So what is the price of health? Maybe it’s spending big dollars on health foods or putting a personal trainer on payroll. But few of us take the time to consider the quality of the place we one third of our lives - our beds. Scientific studies has proven that deep sleep for six to eight hours each night will significantly improve not only your health, but help you tackle each day with a refreshed jolt of energy. And as Andrew Wong, executive director of luxury bedding brand Hästens Hong Kong explains, many people may not even realise they are not getting the full benefits of their nightly sleep. “When we achieve success at work, we often reward ourselves with an expensive car or a nice meal. But these are not things that will ultimately give us a good quality of life,” he explains. And with the prices of luxury real estate hitting new heights, people are looking for equally luxurious

accessories to go into their homes. But Hästens’ high-end beds are all about quality and comfort, and those who are investing in one of its wool and horsehair beds are getting more than just a name brand. “Each of our beds is hand made in Sweden out of all-natural materials. The wool offers insulation while the horsehair ensures proper ventilation and prevents excessive sweating.” Previously a name that is exclusively familiar in Europe, Hästens is bringing its quality bedroom essentials and its passion for quality rest to Asia in recent years. With a new showroom in Causeway Bay, the brand is capturing the attention of the healthy savvy bunch. “We are educating our customers about the importance of deep sleep. After they have an understanding about how our beds will help them sleep better, they will also understand that they are expensive for a reason,” says Wong. Wong and his team understands that their brand provides an extremely niche product and he couldn’t be happier about the small but targeted audience they are attracting. “We are comfortable to be a niche product because at our price range and quality, we have very few competitors. And even among other luxury brands, we are strongly confident that our products are of the highest quality.” And just exactly how do you convince someone to spend tens of thousands of dollars on a bed. “A lot of our customers come to us through recommendations


Luxurious Bedding This page clock-wise: Hästens Store Hong Kong at Lee Garden Hub; Hästens bed model 2000T II; Hästens bed model Vividus; (bottom): Jan Ryde with Michelle Reis celebrating Hästens HK Store Opening Opposite page: Andrew Wong, executive director of Hästens Hong Kong

FAST FACTS • Hästens ("Hast" is Swedish for horse) history is the backbone of the company. The brand was founded in 1852, is Sweden's oldest manufacturer of beds and began by primarily making saddles. • The saddle makers of Hästens initially manufactured beds only on demand, which then increased at a rate that making beds over time became the main business for the company. • In the late 1980's, Jan Ryde, the present owner took over the reins at Hästens and thus became the fifth generation to run the privately owned family company. • Hästens bed as the Purveyor to the Royal Court of Sweden, has a 25 years guaranteed against spring and frame breakage. • Today, Hästens has 234 stores all over the world, and Asia is one of the fast growing places for introducing good health from Hästens bed's quality deep sleep.

from friends and family. And when they are here, we invite them to try our beds. We have a room in our showroom reserved exclusively for our clients to rest and try a Hästens bed for themselves.” With support from the brand’s Swedish headquarters, Wong and his team helps to build Hong Kong as the Asian hub for Hästens beds. Following the new showroom in Causeway, the brand is looking to set to more locations around the city. Along with that, the growth for the brand is especially impressive in Mainland China. “We have new shops opening every month. In the past year alone, we’ve opened 10 showrooms in China. The demand for luxury goods in China is high and we fill a gap in the market for high-end bedding in the country.” A huge part of Wong’s job, besides helping customers find the right bed, is education. Hästens hope to share with shoppers the scientific research evidence on the importance of sleep and finding on the benefits of a great bed. “When you are comfortable in your sleep, you don’t move around at all. And when you are completely still, it is when you can really fall into a deep, rejuvenating sleep.” HONG KONG BUSINESS ANNUAL 2013 103


Hong Kong Matchmakers

PHILOSOPHY

• There is no relationship without repeat dates, there are no repeat dates if the first date did not go well, and if the first date didn’t go well, you bear 50% of the responsibility. So do try very, very hard to make your first date, & subsequent dates wonderful. • Instead of counting differences, learn to count similarities • Instead of counting faults, learn to count merits • Remember you are looking for a “husband” and not a “boyfriend” • Seek what you need and not what you want • Nobody is perfect, not even you

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“Finally here is someone who has put some class in the business of matchmaking –”

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erhaps it is not in our culture to openly admit our emotional needs, articulate our feelings and seek help… perhaps invincible people like ourselves cannot be vulnerable… or perhaps some charlatans have been giving the business a bad name … Whatever the reasons and for the longest time, the word “matchmaker” has always been associated with negative connotations in Hong Kong. Eyebrows would be raised by sheer mentioning of the word just as animated discussions would drop to whispers, even those who secretly yearn for services would deny it in public and feign disdain. Then amidst those who snicker and sneer, she came along and dares to make matchmaking respectable. Celebrity matchmaker Mei Ling Ng Liu is the founder and Managing Director of Hong Kong Matchmakers. Speaking five languages, Mei Ling has had an exciting career across three continents prior to matchmaking - she was a university lecturer, a senior corporate executive and  a successful entrepreneur. In 2007, she sold her business and in semi –retirement, decided she would champion the cause of Hong Kong women who for years, have been suffering the unfair disadvantages caused by gender imbalance. Mei Ling attended, and was  certified by the Matchmaking Institute of New York, the rest is history. After she published her book How To Find A

Husband (distributed by Bookazine), the immediate fan who rushed to include her in a documentary was Première Paris, the French TV show aired during prime time and won instant accolade . CNN & TVB Pearl followed, and finally TVB Jade included her in a 10 x episode reality show Brides Wannabe (initially named “How To Find A Husband”) which took Hong Kong by storm and made Mei Ling a star. The show smashed all rating records in Hong Kong, China, S.E. Asia and North America. The euphoria went on for months, albeit not everybody in the show was lucky, in fact many faced harsh and unfair criticism both from the public and from the media, a few even had to skip town. Somehow, Mei Ling was the only person who came out of all these unscathed. She is well loved and deeply respected by the general public for her refreshing candor and no-nonsense approach to relationships, and continues to command a huge following. Today, not only is Hong Kong Matchmakers the largest , the most prestigious and the most successful company in this business in Hong Kong, Mei Ling is also a reputable author, a radio show host, a popular columnist for the HK Economic Times’ ETNET and a frequent guest speaker at major events.  There are many dating services and matchmakers in Hong Kong before you, so what makes you different ? “ We don’t try to be everything to


Matchmaking Services Photos: Mei Ling Ng Liu, seen at her beautiful home; Mei Ling together with famous TVB comedian Yuen Siu Cheung who imitated her.

everybody, we focus on one small segment of the market only, give it all we’ve got, do it properly and do it well. ” replied Mei Ling. The Client Hong Kong Matchmakers specializes primarily in the market of mature professionals, entrepreneurs and senior executives in the higher income group. They only accept legally single university graduates who have passed their mandatory Background Check and personal interview with their Consultants. The Consultant To be a Consultant in Hong Kong Matchmakers, the minimum criteria include two university degrees, prior experience in senior executive level, tech savvy, a people person, good communication skills, strong in networking, 50 years old or above, and herself happily married for a minimum of ten years. Matching Asked about the men/women ratio in her database, Mei Ling said proudly they maintain a constant balance of 50/50 – not by luck, but by sheer hard work. For instance, when the balance began to tilt earlier this year, they posted a notice in their website www.hongkongmatchmakers.asia immediately, suspending all registrations from women, while remaining open to men. Apart from HK, their overseas offices are constantly promoting registrations from men from all over the world, very especially HK Chinese men who work and reside outside Hong Kong. Supporting Services The primary agenda is matching of course, but apart from which there is a dazzling, impressive menu of some 50 different kinds of supporting services available, the extent of coverage varies according to the level of the Plans. These include all things imaginable, from make up, hair styling, photography, personal trainer, image consultation, date coaching, counseling to wine appreciation, geography, history, specific sports, cooking, sex education…you name it. Assuming a lady would fall in love with a German

from Munich, not only will she learn in the shortest period of time that the Bavarian clock ticks anticlockwise, she will also learn key German phrases, how to eat white sausage with sweet mustard and wash it all down with a stone mug of Loewenbraeu… such is the extent of their service. Finally, a question that most of us have been itching to ask: why would a decent, successful, eligible bachelor come to you for help? The same reason why he goes to a headhunter, a real estate agent or a travel agent. He can certainly do everything himself, but agents are specialists, more efficient, saves him time and hassle. We do it full time, professionally and on purpose, sure beats him doing it part time, half heartedly, by chance. In Hong Kong, if you are a party animal, a young & sociable hunk, you could make a hundred friends a month, but not everybody is that gregarious or hunky for that matter. Frequent travels plus long working hours make things even more difficult. Where else would you go to meet an entire group of vetted, like minded potential candidates all wanting the same thing you do without ulterior motives? What advice would you give women seriously looking for husbands? I would say remember the four “A’s” – Age, Appearance, Aptitude and Attitude. AGE – 90% of Hong Kong men are hypersensitive to the numerical age of women. For ladies over 35, it certainly helps to maintain a young mind and a youthful, positive attitude towards life. APPEARANCE – Beauty may only be skin deep, but if he is not already attracted by the cover, he is not going to read the book. APTITUDE – Many “ educated & successful” women are only experts in one field, otherwise boring, ignorant & sometimes even stupid about everything else. Learn to be interested to be interesting. ATTITUDE – Ditch your princess attitude and foul temper or he’ll ditch you. If you are serious about finding a life partner, get off your high horses, stop fantasizing and learn how to give in order to get.

FAST FACTS The following findings have been calculated based on a combination of government statistics, 2010 census, the actual computer analysis of our huge database over the past 5 years and the laws of average: • Total population of HK = 7 million • Total tax payers in HK = 1.2 million • Male tax payers = 63% = 756,000 • Single male tax payers = 32%= 241,920 • Male tax payers above age 35 = 61% = 147,571.2 • Ditto earning above HK$500,000p.a. = 29% = 42,795.6 • Ditto ethnic Chinese = 92% = 39,371.9 • Ditto still without girlfriends = 46% = 18,111.1 • Ditto seriously wanting to get married = 50% = 9,055.5 • Ditto and non smokers = 78% = 7063.3 • With human decency & right core values = 35% =2,472.2 • With good communication skills = 25% = 618 • With compatibility & common interests = 40% = 247 • With reasonable appearance = 50% = 123.6 • Divided by 18 districts in HK = 6.87 • Possibility of chance encounter for the sociable = 25% = 1.7 So ladies, if you are sociable & seeking men with the above criteria, there should be 1.7 men in your district. More if you lower your requirements and less if you increase your demands.

HONG KONG BUSINESS ANNUAL 2013 105


HSBC Insurance

PHILOSOPHY

HSBC is committed to connecting our customers to opportunities that help protect and grow their wealth across every life stage and ambition. HSBC builds on the Group’s international and business connectivity as well as our global wealth capabilities to offer customers with simple, relevant and tailored solutions.

HSBC insurance products cater to customers’ wealth needs across various life stages

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aving for the golden years remains the principal goal of every one in five persons in Hong Kong. But many are not familiar with retirement products and are unable to save enough for their twilight years. “Those facing this predicament should start early planning of their retirement and savings needs to achieve their long-term financial goals,” Jim Costello, Director and Head of Wealth Insurance, HSBC Insurance said. To fulfill diverse individual wealth needs, HSBC lays out a variety of solutions including annuities, investment-linked insurance and other long-term investments. “The ageing population triggers worries for the majority of Hong Kong people who think they do not have enough time to save sufficiently for retirement. This may explain why there has been an increasing demand for life products, especially annuities.” Considering the growing demand for life insurance, HSBC Insurance grew its new life business by 20 percent compared with the first nine months of 2011, maintaining its leadership with a market share of 23.1 percent. As a market leader in life insurance business, HSBC offers a comprehensive range of insurance solutions to cater to different customer needs. “Our investment-linked products provide a platform for customers to make their own investment choice to capture the potential growth and our traditional

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products provide guaranteed returns, which are fit for more conservative customers. In view of ageing population, we also focus on developing post-retirement products, such as our EarlyIncome Annuity Plan, to help customers enjoy a more relaxing retirement life. Moreover, we also focus on developing RMB insurance business to meet customer demands for capturing the growth potential of RMB.” Through HSBC’s integrated bancassurance model, insurance products are manufactured and distributed through an extensive network, under the same brand and one roof. “This allows us to understand customer needs better and offer solutions that meet financial goals of customers. By offering one-stopshop financial services and maintaining long-standing relationships with our customers as their financial services partner, we are in a better position to anticipate their needs and offer solutions most appropriate for them to meet their financial goals.” HSBC Insurance aims to be the customers' trusted partner for the long-term as they protect, grow and create wealth across life stages. Advisers first understand the needs and financial goals of customers, the level of risk they are willing to take and their investment horizon. The focus is on helping customers with wealth needs such as protection for the family, education for their children, retirement, managing and growing wealth and legacy planning.


Wealth Insurance This page clock-wise: HSBC Centre; HSBC Main Building Opposite page: Jim Costello, Director and Head of Wealth Insurance, HSBC Insurance interacts with students at an HSBC Insurance sponsorred event; Jim Costello, Director and Head of Wealth Insurance, HSBC Insurance

FAST FACTS • HSBC Insurance (Asia-Pacific) Holdings Limited is a wholly owned subsidiary of The Hongkong and Shanghai Banking Corporation Limited, which is in turn owned by HSBC Holdings plc, the London-based holding company of the HSBC Group. • HSBC Insurance is part of HSBC's global Retail Banking and Wealth Management operations, providing a broad range of quality insurance products and services to retail customers. • HSBC Insurance is the largest administrator of retirement schemes in Hong Kong.

“Financial solutions, which are suggested based on these broad parameters, underline the fact that life insurance should be a key part of the overall wealth portfolio,” Costello stated. Last but not least, HSBC works to increase the awareness among customers for financial preparedness via educational tools and initiatives to

provide practical illustrations for retirement savings. Not long ago, the Bank launched a quiz that awarded a HK$1.28 million worth of retirement solutions, equivalent to two years’ worth of retirement savings, to the grand prize winner. All winners were also eligible for free financial planning sessions with an HSBC financial adviser. HONG KONG BUSINESS ANNUAL 2013 107


M800 LIMITED

PHILOSOPHY

As an international hub of business communications in Asia, M800 Limited collaborates to help partners and enterprise customers grow without limits.

M800 delivers global business opportunities through pioneering technologies

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illions of us barely give it a second thought, but hundreds of toll free numbers that we dial to access a diverse array of services ranging from checking exclusive offers at an international luxury hotel chain operating in China to seeking quick assistance and information through a call centre, are made possible by M800 Limited, an international hub of business communications. Global voice exchange, reverse charging services, China & international toll-free services and 800 global services, and text-based SMS exchange are four of M800 Limited’s principal services. A unit of the Ganges Group, a well-established investment arm that has been developing advanced communications environments for leading global corporations, M800 Limited, delivers innovative telecommunications and mobile commerce solutions over highly reliable and scalable global infrastructure. Since its founding in 2007, the company has grown rapidly and has also earned recognition from the telecom industry. Among the most recent was being honoured as the Intelligent Telecom Solution Provider by Mediazone Publishing’s flagship publication, ‘Hong Kong’s Most Valuable Companies.’ Also, Red Herring named M800

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Limited for the Top 100 Global and Top Asia 100 Award, which salutes leading private companies in Asia. China Unicom recognised M800 Limited as one of the best product service providers in the China Unicom Great Wall Awards. Chief Executive Steven Yap says the company is preparing for further growth as he shows us the vast floor space below his offices, acquired to house additional staff, specialising in different disciplines including apps developers and programmers. For research and development, the company is committing 25% of its annual earnings. His confidence in the future growth potential of the company is founded on the proliferation of connected devices, especially smart phones and tablets. For the millions who linger for hours thumbing their smart phones as they peek in and out of the social media universe. M800 Limited provides the infrastructure and  technologies to support the development of the mobile app, created for one of its partners. Some of its key features take into account the future needs of mobile users connected to the internet. For professionals such as bankers and securities or even bullion brokers, this app, could be of immense value, he says. More importantly, the app is also meant for


Intelligent Telecom Solutions Provider This page clock-wise: M800 Limited Tell the World. Grow Your Business campaign; Mr. Steven Yap Opposite page: Steven Yap, Chief Executive Officer of M800 Limited

FAST FACTS • Founded in 2007 by the Ganges Group • Builds international bridges of communication that span telecommunications, internet applications, and mobile e-commerce • Best Product Innovations Award presented by China Unicom • Honoured as the Top Asia 100 Award by Red Herring • Honoured as the Top Global 100 Award by Red Herring

businesses that market various apps to smart phone users, and for co-branded and hosted apps on the cloud. Mr Yap also points out that the app is an open platform that can be leveraged by third party developers to create voice applications of high definition. Mr Yap notes that one day, gaming, too, will be possible through the app, and that for enterprise customers, it “can facilitate encrypted messages.” This cross-platform mobile communications app that connects users through 3G as well as Wi-Fi networks, perfectly illustrates how M800 Limited is shaping its future and that of smart phone users. The company’s commitment is made possible by four key features: Location Based, Authentication, Identification, and Security. These strengths combined with outstanding telecommunications infrastructure and pioneering in-house technologies, allow M800 Limited to excel in data mining as well, so vital to corporations operating in any sector. Mr Yap also adds that for M800 Limited, the voice business remains important. The company serves voice customers through international partners and in mainland China through the country’s leading telcos. Its clients include corporations operating airlines and tourism ventures, banking and finance, conferencing and call centres, delivery and logistics. M800 Limited has been building hundreds of

session Border Controllers globally, as well as setting up SMS gateways, and switches. This gives the IP network boards secure carrier class, an advanced-level of functionality, flexibility and performance and which is enhanced by our real time monitoring system and intelligent routing system. As a global hub of business communications, Hong Kong-based M800 Limited will continue to remain relevant to enterprises, delivering groundbreaking telecommunications and mobile commerce solutions over a reliable international infrastructure. HONG KONG BUSINESS ANNUAL 2013 109


SHAMA MANAGEMENT LTD.

PHILOSOPHY

Shama’s philosophy is to offer serviced apartments that epitomize comfort, style and luxury. Guests experience a warm welcome from staff that personalise the living experience with their professional ethos. Shama is a fusion of boutique and function with modern décor, and an emphasis on clean, simple, contemporary furnishings with a seamless blend of comfort and technology.

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Shama serviced apartments fuse luxury lifestyle with a warm, personal touch

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uests who lay down their travel bags at Shama’s stylish serviced apartments, having inhaled the energy in the city for the first time, should not have to wonder about wandering in the neighbourhood to figure out the locality, or labour to find things they need most. They can find answers to their long list of inquiries within the walls of the apartments themselves. So the morning after the check-in search for a place to hit the treadmill should be considered done. Friday evening and the expat could be searching for an opportunity to socialise. The weekend is at hand and that is just the opportunity to sharpen up the backswing and improve clubhead speed in preparation for a round of golf. Parents are visiting and the guest needs to book an out-of-the-ordinary choice for dinner. For all this and then some, Shama is prepared to point guests in the right direction for services under its ‘no boundaries’ lifestyle proposition. The service also allows long-term tenants the privilege of access to private clubs such as the KEE Club where invitee-only occasions are a regular occurrence. Shama’s relationship with the KEE Club has endured a decade. Shama, which means tranquility in Sanskrit, stands out from the crowd with this personalised service, which complements the style and luxury the serviced

apartments promise. “We like to fast-track the social lives of our tenants,’’ says Elaine Young, who launched the first boutique serviced apartments with 20 units on Elgin Street in SoHo in 1996. She points out that activities arranged for tenants and those that are brought within their reach, foster a sense of belonging during their stay in Hong Kong. Young adds that insider knowledge of the neighbourhood, such as the chief executive’s favourite restaurant, shared with Shama’s tenants, make their life in Hong Kong a pleasure. “Most tenants are corporates. We know what they like,’’ says Young. Young, who admits being passionate about the hospitality sector, says she also loves interior design and takes great satisfaction in being able to source materials such as fabrics and fixtures. Locations of Shama properties are chosen after extensive research. The fact that properties are in the heart of a city’s prime commercial and/or residential district, allow residents numerous advantages – be it the convenient transport links, proximity to cultural and entertainment venues, or the easy access to essential amenities, such as grocery stores and laundry services. The Shama brand came into being in 2001. In 2002, the flagship Shama Causeway Bay with 110


Serviced Apartment This page clock-wise: Every Shama property is located in the heart of a city’s prime district; Shama Luxe at Xintiandi, the first Shama property in China; Shama brings tenants comfort, style and luxury. Opposite page: Elaine Young, Executive Director, ONYX Hospitality Group

FAST FACTS • In 1996 Elaine Young introduces the first boutique serviced apartments with 20 units on Elgin Street in the Soho district of Hong Kong (Property sold in 1997) • Shama brand established in 2001 • First property in China opens in 2007 under the new premier tier Shama Luxe • ONYX Hospitality Group acquires Shama in 2010 • Shama celebrates 10th Anniversary in 2011

individual apartments was established. In 2007, Shama made the leap into mainland China with the opening of the first property Shama Luxe, positioned at the premier level. Located in Xintiandi Shanghai, it provides 100 apartments. Two years ago, the luxury boutique serviced apartment portfolio Young built up with her partners, was acquired by ONYX Hospitality Group, a leading Asian hotel management company based in Thailand. The ONYX portfolio of four brands Saffron, Shama, Amari and OZO, continues to evolve with more assets being added in Hong Kong and beyond its shores, including as far as Sri Lanka and Qatar, where in-bound visitor numbers are rising at doubledigit rates. Shama’s footprint is growing in mainland China with management contract signed for a new development in Hangzhou in Zhejiang Province Shama HEDA Hangzhou is to open in 2013 providing 101 luxuriously appointed one and two bedroom units and it will mainly cater to business travellers. The property features a fully equipped business

centre and swimming pool. Other facilities include a children’s play area and tenants lounge.  Shama has now built up a portfolio of a dozen luxury boutique apartments in Hong Kong, Bangkok, Dalian and Shanghai. • BANGKOK Shama Sukhumvit Bangkok • DALIAN Shama Luxe Grand Central Dalian • HONG KONG Shama Causeway Bay Shama Central Shama Fortress Hill Shama Hollywood Shama Midlevels Shama Tsim Sha Tsui • SHANGHAI Shama Luxe at Xintiandi Shama Luxe Huashan Shama Century Park Shama Xujiahui • HANGZHOU Shama HEDA (opening soon in 2013) HONG KONG BUSINESS ANNUAL 2013 111


RHOMBUS INTERNATIONAL HOTELS GROUP

PHILOSOPHY

To be one of the premier hospitality services providers, operating properties in major international cities and key destinations within Asia and Europe. Rhombus’ portfolio consists of quality products which exceed the expectations and needs of its 3 key stakeholders: Owners/Investors, Guests and Employees. Rhombus cares and is committed to continuously delivering excellence combined with versatile services and products to its Owners/ Investors and Guests while providing vast opportunities to its Employees

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SERVING IT RIGHT WITH AN INTERNATIONAL PERSPECTIVE

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unning a successful hotel, according to Founder & CEO of Rhombus International Hotels Group Calvin Mak, is much more than satisfying your guests during their stays - a great deal of it has to do with scouting the right talent for the right task. As the Rhombus Group expands its operation into more destinations in the coming years, Mak thinks it is important to ensure the staff grow at the same pace as the group. Rhombus Group is slated to launch a handful of new properties in the coming months. These include two hotels in Causeway Bay Hong Kong , a 300-room hotel only five minutes away from London’s Heathrow Airport and a hotel in Xiamen, China. Mak describes the Rhombus Group as a professional hotelier, catering to all aspects of hospitality business but not only limited to operating a hotel. “Any project we touch turns into gold, we partner with investors to ensure the best return of their investment by providing them with an international team of highly professional staff who are ready to serve.” Hard work, according to Mak, is what the group’s reputation built on and it is this reputation that attracts investors to partner with Rhombus Group. “We have a great track record of 95% occupancy rate all year round in Hong Kong, even during the financial down turn in 2007 and 2008.” Mak says their good reputation has given them the freedom to choose which projects they associate themselves with. “We are not out there seeking to

secure contracts. Investors are coming to us, wanting to work with us and partner with our group.” Surfing market trends The Founder & CEO, who came to the city eight years ago from Vancouver and built up Hong Kong’s arm of the group, believes their ability to expand steadily at a fast pace is because they have a team of highly capable staff. They are able to gauge and plan their development strategy according to market trends. “The financial issues in Europe and North America along with the recent war in the Middle East and the territorial dispute between Japan and China are all global factors that posted challenges for us in the past couple of years, however our team reacted promptly and we are still able to have a very good return for all our owners and investors.” Mak says. His strategy for dealing with these global issues is to run all properties as an international hotel. What that means, he explains, is not to rely on a single targeted market of travellers and always look out for travel trends.“ US corporate travellers used to be the top segment for Hong Kong hotels. Now it’s the second or third, and we’ve seen slowing down in the last eight months in the number of Japanese travellers.” Offering its services to a diverse set of guests means Rhombus Group is able to take advantage of other segments that are on the rise to pick up on the slack. “Our mother country is providing us with a tourism


Leading Hospitality & Hotel Management This page clock-wise: Lobby of Hotel Panorama by Rhombus; Lobby of Hotel LKF by Rhombus; Guestroom of Hotel Pennington by Rhombus; Guestroom of Hotel de EDGE by Rhombus; Guestroom of Hotel Bonaparte by Rhombus; Swimming Pool of Rhombus Fantasia Chengdu Hotel; Awardwinning Spa Verta at Hotel Verta by Rhombus Opposite page: Calvin Mak, Founder & CEO of Rhombus International Hotels Group

FAST FACTS • Named ‘Leading Hotel Management’ by Hong Kong Business High-Flyers Awards 2011 • Named ‘Hong Kong’s Most Valuable Company 2011’ by Mediazone Group • Named ‘Most Progressive Hotel Group of the Year’ at the Asia Hotel Forum 2011 • One of the ‘Best Choice International Hotel Management Company for Investors’ at the 11th China Hotel Forum 2010-2011

push by allowing 14 provinces to travel outside of China to Hong Kong. This is one of the great benefits of being the gateway of China.” Strategic star ratings Another strategy that goes hand in hand with the expansion of the group is to strategically managing hotels with different ratings in one area. This can capitalise the traffic of travellers with different budgets and needs in a particular neighbourhood. “For instance, we have a three, four and five star hotel on Hong Kong Island. This strategy is nothing new but it’s certainly been on the raise in recent years. We are developing our new properties with this concept in mind.” But being able to spot all these trends has as much to do with market and industry knowledge as it does with surrounding himself with the right staff. Being the recipient of the Leading Management Award, Mak shares his thoughts on managing staff in an industry where providing top-notch service is a top priority. “The key to building a great team is all about care. Most of the times, staff do not know their own potential and it is the management’s job to tell and show them what they are capable of,” he says. To do this, Mak says it is crucial to select the right person for the right job. “Our industry requires individuals

who are ready to serve. If you’re shy and would rather hide behind a desk, this is not the job for you.” “Rhombus Group is keen to provide staff with career development opportunities to grow and to experience which money cannot buy “For instance, we always encourage our staff to try new dishes on the menu. How can we recommend a dish to our guests if we don’t even know how it tastes like,” Mak says. Mak always encourages the staff to see and experience more; he believes this is the key to building a great hotel that can serve international travellers. “The more we know about their cultures and behaviours, the better we can provide service that suits their needs.” HONG KONG BUSINESS ANNUAL 2013 113


Standard Chartered Bank (Hong Kong) Limited

PHILOSOPHY

In consumer banking, we are committed to become a customer-focused organization. Consumer banking in Hong Kong is a dynamic business which targets at both retail and SME segments, offering a wide range of banking products and services. Standard Chartered’s services are provided to different segments, from private banking, priority banking, preferred banking to small and medium sized businesses operating in Hong Kong. The products and services provided include bank accounts, credit cards, personal loans, mortgages, foreign exchange, deposits and wealth management products. Standard Chartered is a major market player in credit cards and is one of the leading card issuers in Hong Kong, focusing on differentiated customer propositions. The bank also maintains a solid market leading position in mortgages, focusing on product innovation, customer services and profitability.

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Charting a course for growth Embarking on the Next Wave of Customer Journey

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tandard Chartered's performance was particularly strong this year, for multiple reasons. One was their improved online investment capabilities. Mr. Basker Rangachari, Chief Marketing Officer for Hong Kong and Northeast Asia at Standard Chartered Bank, explains that, "We are enabling our customers to live a digital lifestyle and do banking-onthe-go. Our Breeze family of apps puts money management at your fingertips. For example, with Breeze Trade, customers can track the latest stock prices, and capture lucrative investment opportunities anytime anywhere, with NO Minimum Brokerage, NO Trade Lodgment fees and NO Custodial Fees!" Q: What are the best features of this? A: "This unique App has many market-leading features: • Buy and sell Hong Kong stocks with just 3 clicks. • View major market indices, create a personalized list of favorite stocks, access real time market news • Scribble notes on trading ideas to share instantly with friends via SMS or email. • View stock holding and portfolio value at a glance. - Utilize advanced features such as Enhance Limit Order, Market Order, Stop Loss - Modify/cancel orders via Securities hotline and Online Banking. - Get FREE unlimited real time stock quotes without logging in.

- Receive free price alerts via email instantly when selected counters reach preset price level or move beyond the preset value." Q: How is your Online Unit Trusts platform progressing? A: "Our Online Unit Trusts trading platform enables Customers to place orders and manage their Unit Trusts online. It is a new channel for customers to self-manage their Unit Trusts investments, on top of having the ability to seek assistance via their Relationship Managers (RM). With this launch, we expect many customers will opt to trade online with unparalleled convenience, whilst engaging their RM’s for value added wealth management services. Using this platform, customers will be able to: • Search for funds in the Fund Super Mart • Subscribe for New / Existing funds • View Holdings, Order status and Transaction History • Switch or Redeem Funds • Exercise Cooling Off for recently purchased funds More research and automated advisory functionality will be added in future to enhance customer experience." Branding Excellence – Branch Façades and Branch TV network Building a strong portfolio also means branching out in unique ways. Q: Tell us more about your branding techniques: A: “To build brand awareness via our branch network,


Consumer Banking This page left to right: Breeze Family; Causeway Bay Branch Opposite page: Basker Rangachari, Chief Marketing Officer for Hong Kong and Northeast Asia at Standard Chartered

we invested over HK$100 million in 2011 to optimize and retrofit the bank’s branch network. We invested further to enhance our branch exterior infrastructure with dominant, uniquely-designed and branded branch façades at 10 strategically-located branches. Our strategic intent was to uplift our brand awareness in the branch neighborhood and digitize our customer engagement and communication channels." He continues, "We have strategically enhanced our branch façade infrastructure with a huge LED external TV at strategically located branches, including Causeway Bay, Canton Road, Central and Queen’s Road East. This Branch Façade project was subsequently extended to more branches and we now have over 150 in-branch digital LED TV screens, that enable us to provide relevant content and messages to our customers." Rewarding loyal customers with a long term commitment - Revolutionary Securities Trading Marketing Campaign Q: How does your new strategy benefit all parties? A: Standard Chartered Hong Kong Consumer Banking outperformed all major banks in Asia Pacific and Hong Kong by winning 3 coveted awards in The Asian Banker Excellence in Retail Financial Services International Award 2012, including Best Retail Bank in Asia Pacific, Best Retail Bank in Hong Kong, and Best Employee Engagement. To celebrate this record achievement and to thank our loyal customers, we launched a “Best-in-class” securities trading offer, providing up to 5 years of FREE buy stock trades* for customers. In addition to capturing mind share with our target customer segment, this marketing campaign helped deepen our customer relationships." He adds," This revolutionary campaign was widely recognized in the industry, and led us to win 10 awards at the recent Marketing Excellence Awards 2012 organized by Marketing Magazine. In addition to winning awards for “Excellence in Advertising”, “Excellence in Digital Marketing” and many others, we were named as the “Marketer of the Year” for 2012, outperforming many well brands across all industries."

Leadership Insights - Global Renminbi Index Q: What else is on the horizon? A: “Further to the launch of Standard Chartered Hong Kong SME Leading Business Index since July 2012, we launched the Standard Chartered Renminbi Globalisation Index (RGI) – the first industry benchmark that effectively tracks the progress of Renminbi-based business activity worldwide - in Nov 2012." Q: What does the Index offer? A: "The Index, released on a monthly basis, offers corporates and investors a quantifiable view of the latest trends, size and levels of offshore activity that are driving the adoption of Renminbi (RMB) as an international reserve currency. To complement the Index, Standard Chartered announced the results of its first quarterly Offshore Renminbi Corporate Survey, wherein companies across Asia and Europe shared their motivations and expressed a strong appetite for using RMB offshore in the next six months. Going forward, the survey will provide a qualitative indicator to forecast the direction of the market." "The Index covers three markets which dominate the offshore RMB business: Hong Kong, London, and Singapore. It measures business growth in four key areas: deposits (denoting store of wealth), Dim Sum bonds and Certificate of Deposits (as vehicles for capital raising), trade settlement and other international payments (unit of international commerce) and foreign exchange (unit of exchange). As RMB internationalises, there is capacity to include additional parameters and markets, aligning the Index with future development."

FAST FACTS • Standard Chartered Bank (Hong Kong) Limited (SCBHK) has played a key role in establishing Hong Kong as a global financial centre. • Listed in Hong Kong since 2002, Standard Chartered is headquartered in London. • Standard Chartered’s history in Hong Kong dates back to 1859. In 1862, Standard Chartered started to issue banknotes in Hong Kong and is acknowledged as the oldest noteissuing bank in Hong Kong. 

Footnote: (* Subject to terms and conditions. Customer must be a Priority Banking customer and deposit no less than HK$1,000,000 new funds; or sign up for the Salary BonusPack Basic Services and deposit a monthly amount of HK$80,000 or above via auto-payroll services to enjoy 5-year BUY Securities Brokerage Fee Waiver. Priority Banking or Preferred Banking customer, who signs up for the Salary BonusPack Basic Services and deposit a monthly salary amount of HK$20,000 or above via auto-payroll services, can enjoy 3-year BUY Securities Brokerage Fee Waiver. Promotional campaigns ends on 31 Dec 2012. Offer is applicable to buy securities transactions submitted over Online Banking and Breeze Trade only and is subject to relevant terms and conditions.) HONG KONG BUSINESS ANNUAL 2013 115


THE CITYVIEW

PHILOSOPHY

The Cityview strives to attain higher standards through genuine personal service and attention to detail, including environmental issues. After our conversion into a fourstar hotel in 2008, we have attracted travellers from all over the world, keeping the ‘international’ flavour of our former brand while upgrading the facilities. The high percentage of repeat customers and the number of prestigious awards indicates that the hotel is meeting its objectives satisfactorily. We also treasure our staff, offering continuing training and job monitoring to ensure that staff is working with a profession attitude and to the best of their ability.

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The business of being green

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he hospitality industry is known for making things happen and going to great lengths to please and serve. Naturally, running a hotel means wastage and magnified consumption. From leftover food at the restaurants to working the washing machines day and night to churn out clean towels and bed sheets, keeping a hotel in top-notch shape requires much more than just a dedicated staff. Hence, environmental consciousness isn’t what hotels are known for. However, this is not necessarily the case at all hotels. Take The Cityview - for the past years, the hotel has been serving business and leisure travellers from around the world, with many from South East Asian executives returning time and again over the years. Conveniently located just minutes from the Yau Ma Tei MTR station, the hotel not only takes into heart the services provided to guests, but is also working to ensure the guest experience is one that is environmentally friendly. The Cityview General Manager Alex Wu and his team dedicated the past year to building the hotel’s reputation and facilities to meet international environmental standards. The hotel has submitted itself to Australian environmental certification EarthCheck; recently earning the Bronze Certificate from the independent organization. Wu hopes his team can work towards achieving the Silver recognition in 2013. “We are the only independent hotel in Hong Kong to achieve this certification from EarthCheck. We are proud of this achievement because we want to be able to give back to the community,” says Wu.

Among the many ways the hotel gives back is with its compost program. A compost machine is installed into the hotel premises to process all leftover food items. The compost produces organic fertiliser which The Cityview freely gifts local farming and tree planting initiatives. While as a business decision, the initial cost of implementing a green approach might be high, the benefits reach far beyond that of monetary gains. “We feel that we can connect with travellers and companies with a shared passion for a greener environment,” says Wu. “And through our green movement, we’ve actually been able to attract more clients. There are many international corporations that also take environmental conservation very seriously. These companies will often look for hotels that share the same values; they choose to stay at a hotel that they know are being socially and environmentally responsible.” Aside from expanding its plans for an even greener property, the hotel is also experiencing some physical changes. These are also initiatives to create a more corporate image—a direction in which the hotel hopes to take in the coming years. The Cityview will be expanding its business appeal through creating an atmosphere that better suits the needs of business travellers. The Executive Wing will be expanded to include nine new rooms, each dedicated to comfort and conducting business. The entire Premier Wing, which will be home to the new executive suite, will be renovated to bring rooms a more modern and stylish appeal. This overhaul will breathe new life into the 156 rooms that first


BUSINESS HOTEL This page clock-wise: The Cityview’s City Cafe, Crystal Ballroom, Executive Room, and Premier Room Opposite page: Alex Wu,General Manager of The Cityview

FAST FACTS • Oct-12 Cordons Bleus 2012 GHM Recommendation Restaurant honoring The Cityview - City Café as Best Hotel Buffet Restaurant. • Oct-12 The environmental performance of The Cityview has been recognised by EarthCheck; the travel and tourism industry’s leading environmental management, benchmarking and certification company. By undertaking benchmarking with EarthCheck, The Cityview has joined other industry leaders who have demonstrated a willingness to take meaningful steps towards resolving some of the very real issues that face the planet. • Jul-12 The Balcony becomes the corporate member of “Commanderie Des Cordons Bleus De France”, a world-class cuisine and cultural organization that recruits and assesses outstanding chefs and gourmets • Jun-12 The Cityview earns 2012 TripAdvisor Certificate of Excellence • Jun-12 City Cafe received recognition of “2012 Most Popular QTS Merchant Award (Online Voting) - Restaurant”, organized by Quality Tourism Services Association

welcomed guests in the 80s. This will not only create a more comfortable atmosphere for travellers, but the renovation is a part of the hotel’s strategy to build its competitiveness among business hotels in the same category. “It’s important for us to expand on the business clientele. Compared to leisure travellers, these individuals tend to spend more time and money at the hotel, enjoying breakfast in the morning and booking conference rooms and ballrooms for meetings,” says Wu. Currently, Wu says 30 to 35% of guests fall under

the corporate category. The General Manager hopes that upon the completion of the renovations in 2014, business travellers will occupy half of the hotel’s rooms. Welcoming more executive guests mean hotel staff has to be increasingly sensitive towards the needs of different cultures. From language training to catering to the dietary needs of the international traveller, staff will be receiving full support from management. “We want to take into consideration the different skills our staff will need to acquire in order to effectively serve our guests,” says Wu. HONG KONG BUSINESS ANNUAL 2013 117


THE MERCER

PHILOSOPHY

The hotel business is all about passion and enthusiasm. These are even more vital for boutique hotels. You also need to be creative, flexible and able to multitask. Therefore it is always important to explore, to experience, to think out of the box. We also encourage our staff to participate and experience, to develop a positive attitude when facing challenges. We join Hopewell Bowling Charity League and Tree Planting Challenge of Friends of The Earth together to promote teamwork. “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.

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Boutique sleep in THE city’s charming neighbourhood

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nyone who’s tried to book a hotel room for a special occasion or just a mini getaway in the city can tell you that both demand and prices for top hotels in Hong Kong are high. As the city continues to be an important destination for regional and international business, executives and business travelers find themselves scrambling to fight over accommodations with the growing number of travellers. This has not only given rise to a blooming hotel industry, but it’s also created a new demand for extraordinary accommodations. The Mercer’s General Manager Rebecca Kwan, agrees that frequent and seasoned travellers expect not only top-notch service and environment that they have become accustomed to at five-star chain hotels, but they also are on the look out for that little extra something special. “That unique ‘wow factor’ is why travellers have become increasingly drawn to boutique hotels in the past five years,” says the hospitality veteran. Since welcoming guests from around the world a year ago, Mercer has become a welcomed and exceptional addition to the Sheung Wan neighbourhood. “There are so many choices out there for travellers and our neighbourhood offers a unique and hidden side of the city that repeat visitors to the city will find charming,” Kwan explains. “The neighbourhood has plenty to offer yet it is only moments away from the Macau Ferry Terminal and one MTR stop from Central; for business travellers

looking for a home away from home, our location offers the perfect balance of convenience and culture,” says Kwan. That unique wow factor also including the spacious room, comfortable beds in The Mercer, even with coffee machine, kitchenette and microwave in One Bedroom Suite. Guests can enjoy complimentary wifi, buffet breakfast, minibar and local calls with free coffee and tea throughout the day. They feel refresh, comfortable, relax and luxury, even wishes to stay longer. Also, on service side, we try to get more details about our guests before their arrival, such as the purpose of their stay and the company or kind of business they’re in. And during their stay, guests are encouraged to communicate directly with Kwan herself through the boutique hotel’s intranet, “Through what we know about them and my interaction with them, we can make better recommendations for restaurants, things to do and sights to see.” Taking into heart the guest experience has also helped the hotel build its customer service. “We proactively ask our guests for feedback and are keen to learn what they like and disliked about their stay with us.” But Kwan says the key to customer service is to not only listen to what guests have to say, but to make constructive changes based on their suggestions. “For instance, we thought our international mix of guests would enjoy a classic


Boutique Hotel This page clock-wise: Swimming pool at The Mercer; View of the hotel at night; One bedroom suite at The Mercer Opposite page: Rebecca Kwan, General Manager of The Mercer

FAST FACTS • Dorsett Hospitality International (HKEx Stock Code 2266) currently owns and manages 18 hotels in Mainland China, Hong Kong and Malaysia; with 7 more opening within the next 2 years in Mainland China, Hong Kong, Singapore and United Kingdom bringing the total room count to more than 7,000. • There are three brands under Dorsett Hospitality International including d.Collection featuring a series of boutique hotels, including The Mercer; Dorsett Hotels & Resorts comprising upscale Dorsett Grand and mid-scale Dorsett; and value-led Silka Hotels.

Continental breakfast. But in fact, many of them told us they prefer local flavours such as dim sum and we have since added more of these classic Cantonese items to our breakfast menu to cater to their needs.” She feels the boutique hotel model fits in perfectly with the old-meets-new, East-meets-West personality of the neighbourhood. “There are many hidden gems in the area, be it art galleries or restaurants.” Adding to the diverse dining scene of Sheung Wan, The Mercer introduces an all-new Japanese restaurant to its premises. But it’s not just any ordinary Japanese restaurant. Sushi Yoshitake is a Michelin 3 Star Restaurant in Japan and just awarded as Michelin 2 Star after its 2 months opening in Hong Kong. In keeping with the boutique hotel’s intimate and exclusive setting, only 14 diners can be served at the bar, where the chef dishes up catches of the day freshly flown in from various parts of Japan daily. Its mysterious Omekase menu, where the chef serves whatever he feels is the best he has to offer on the day, and the exclusivity and privacy the restaurant offers is already generating plenty of buzz among foodies in the city.” Being a boutique hotel in an obscure neighbourhood for travellers, Kwan felt the biggest challenge in the year since the opening is actually bringing guests into the neighbourhood. Few

businessmen and travellers are familiar with the area they may have hesitation about Mercer’s pricing, which is comparable to four to five star hotels in the city. “But our rooms are very spacious with everything just on your finger tips. Most rooms are over 500 sq ft are fitted with a kitchen, dining area, living room and a master suite. “Once they step into our hotel, they always end up liking the experience. Repeat visits and positive comments on the Web prove that all it takes is for them to experience our service, facilities and neighbourhood.” “We are very happy to be here at a time where this unique nighbourhood is on the rise and growing.” “Upcoming, we will add in more wow factors to the hotel. We planned to extend the cooperation with the neighbourhood to provide additional benefits for our guests, to enrich their stay, so they can fully immersed in the culture and the area.” Rebecca plans to implement her plan for The Mercer in 2013. HONG KONG BUSINESS ANNUAL 2013 119


THOMAS, MAYER & ASSOCIES

PHILOSOPHY

Our approach is to focus on making a valuable contribution to the progress of our client’s business. In today’s complex international environment, the most important is to determine client’s problematic and understand his global situation so that a proper strategy is adopted”.

THE FRENCH CONNECTION: BRINGING EUROPEAN VENTURES TO THE CITY’S DOORSTEPS

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ust as everyone else is scrambling to set up in China to get a piece of the country’s booming economy, French law firm Thomas, Mayer & Associés (“TMA”) finds itself comfortably taking advantage of the legal security and expertise Hong Kong offers to clients doing business in the region. Steadily growing its prescence in Hong Kong since 1995, the firm specializes in providing legal services to French and continental European entrepreneurs looking to explore the Asian market as well as assisting Asian clients hoping to set up in Europe. As Eric Mayer, partner at TMA explains, there’s simply no need to directly venture into China in order to tap into that market. “In fact, our competitive edge lies in the fact that we are based in Hong Kong where we make use of the unique legal, financial and economic advantages offered by the city as a platform where China linked investments can be structured, and in our connections with other firms and professionals in the city and in mainland China, which enables us to handle complex cross border legal issues in clients best interests in a hostile and complex environment” he says. Servicing mainly French clients or those with business links in France, TMA is one of the few, if not the only, firm in the whole of Asia with such a large team of French native lawyers. “All but one 120 HONG KONG BUSINESS ANNUAL 2013

of our Hong Kong based team of twelve lawyers are French,” he says. “Often, French firms in China will only have one or two French lawyers heading a Chinese team. Our advantage is that we have a very good understanding of the French business culture and that enables us to gain the complete trust of our clients.” And the clients that are trusting TMA for legal advice ranges from small exporters to leading French and European groups and manufacturers. “A lot of these clients understand that it is important to establish themselves in China. But legal agreements pertaining to the setting up of a business such as a wholly foreign owned enterprise and the actual completion of important investment deals are preferably and often done in Hong Kong because of the legal security and advantages that the city offers.” “We are very familiar with the legal community in Hong Kong and we have good relationships with different firms,” Mayer explains. If a client needs assistance in a field where other firms expertise might be more valuable and necessary in light of what is at stake, the firm always has the right connection to make things work. “We know how to assist best our clients and get when necessary the best help available out there and use our connections to their advantage.” Hong Kong will most often be the stepping stone


LAW FIRM This page: Eric-Jean Thomas and Eric Mayer celebrating the 15th anniversary of TMA in 2011 Opposite page: Partners Eric Mayer (left) and Eric-Jean Thomas

FAST FACTS

into the Chinese market. This is why Mayer simply does not see the need in setting up in China. “We are ‘the’ French firm in Hong Kong. There’s no need for us to compete with similar firms in China. To many, China is still seen as extremely pragmatic and it’ll be years before the new generation of lawyers who are not exposed so much to legal system of the common law can catch up to the international standards and global expertise of those in Hong Kong.” In fact, firms in China often enlist TMA and its team of lawyers when they need help structuring an investment which is linked to China, Asia, or Europe. “Implementing business plans and setting up foreign investment vehicles in mainland China does not prevent the investors from securing their investment deal in Hong Kong with all the benefits such an approach brings. This is why businesses like to secure their investment agreements with our help in Hong Kong : they do not want to involve Chinese officials and authority,” says Mayer as he explains that Hong Kong will unlikely be replaced for some time by China as a top international business hub because of the rule of law and flexibility of business environment it offers. Mayer attributes the firm’s success also to its group of loyal staff, on which client loyalty is partly built upon. “We have a very low staff turn over rate. Our expertise and what Hong Kong has to offer as a platform is one thing, but there is another factor helping TMA keeping and following up its clients : they are comfortable working with the same lawyer they are familiar with over the years and this is one of the reasons why they keep coming back to us;

• The firm celebrated it’s 15th anniversary in 2011 • The Paris office, which opened in September 2010, is a subsidiary of the firm’s head office based in Hong Kong • Practice areas: International business law, mergers and acquisitions, joint ventures, company and commercial law, international tax law, international arbitration, private international law, and immigration law.

they’ve benefited from being regularly advised by the same people and have therefore trusted us over the years and they continue to trust us.” Because of their French-centric culture, the firm is able to cultivate new clients that value their approach and culture which is both French and international. “Many times, in an acquisition deal in which we act for the vendor, the purchaser has their own team of lawyers, but after the acquisition is done, we often end up becoming their lawyers because they trust that we can do a good job following up on the development of the company,” explain Mayer. The firm’s reputation is something Mayer takes very seriously; and he’s not about to change client’s perception of the firm. “We don’t want to expand too quickly as it has been the case in the past 10 years; at present we can comfortably deal with all our clients on a personal level and that’s one of the reasons why they like working with us.” HONG KONG BUSINESS ANNUAL 2013 121


ULTRA ACTIVE TECHNOLOGY LTD

PHILOSOPHY

UAT continually seeks to provide customers with the best possible solutions comprising high performance products and services

From boardroom to seminar room, UAT integrates AV solutions

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n award-winning audiovisual and video conferencing solutions provider in Hong Kong with a 15-year track record, Ultra Active Technology Limited (UAT) is a highly sought-after name, wherever there are top-level conferences taking place across time zones, highprofile meetings, important lectures, presentations, and even informal occasions. Half of the top 20 banking and finance companies in Hong Kong, the world’s four leading sportswear companies, 80 percent of the large telecom companies listed in Hong Kong and all universities in Hong Kong, including the Chinese University of Hong Kong, the Hong Kong University of Science & Technology, the Open University of Hong Kong and the University of Hong Kong are among the more than 3,000 clients who have benefited from UAT’s expertise in video conferencing collaboration, deluxe boardroom design and audio visual integration, which form this internationally-accredited and wellrecognised company’s three principal businesses.

As for audio-visual integration, UAT excels in this field as it understands the brands (such as AMX, Extron, Mitsubishi, Polycom and Sharp), sound, lighting, cabling, matrix, network, signal, program and project management. In this sphere, UAT offers the expertise to address mission critical facilities. The company’s professional creative team has often demonstrated the ability to program controls, mix and match AV equipment, fine-tune sound and adjust the lighting to create the best possible environment. UAT has also built a reputation for designing deluxe boardrooms. Conference rooms of companies are used for activities ranging from internal uses such as worldwide conferences, board meetings and staff training, to external uses such as sales meetings, room rental and social gatherings. For companies that require AV solutions for such a diverse array of uses, UAT brings its expertise to integrate audio and video with a company’s business culture as well as furniture, lighting and interior design.

AV technology pioneers UAT’s presence in Hong Kong’s private and public sector institutions is hard to miss. The Polycom high definition video conferencing system, a quality product that is highly visible in conference rooms, was first introduced into the city by UAT, one of the system integrators in Hong Kong.

Preferred partner UAT’s customers belong to a range of sectors such as banking and finance, listed companies, hotels, the Hong Kong Government, the Judiciary, hospitals, as well as multinational corporations. It has become a preferred partner to numerous enterprises because it takes pride in delivering top-


Innovative AUDIOVISUAL Technology This page: UAT is a renowned company specialised in integration of audiovisual systems and video conferencing Opposite page: Tony Cheung,Chief Executive Officer of UAT

FAST FACTS of-the-line products and services. This commitment is represented in UAT’s philosophy of “Providing The Best.” One area in which UAT has demonstrated its capabilities is in providing conference rooms with advanced AV facilities, not only to corporations, but also to leading tertiary institutions that demand the best. UAT has designed and built multimedia seminar rooms, lecture theatres, conference rooms and moot courts for the Chinese University of Hong Kong, the Hong Kong University of Science & Technology, the Open University of Hong Kong and the University of Hong Kong. One of the biggest challenges UAT undertook was the new Centennial Campus of The University of Hong Kong, which required working on a demanding schedule to deliver a pleasant education environment. The new facilities delivered by UAT feature multipoint video conferencing system with content sharing feature; audio system with echo cancellation and feedback limiter control; ceiling and table microphones and speakers; high definition projector, interactive board, plasma, LCDs and visualizer presentation systems; recording and live streaming solution; and central control system with touch panels. To students, such a comprehensive solution paves way for efficient exchange of ideas, sharing of assignments, accessing program materials and attending online lectures more easily, while for academics and universities it represents efficient operations and delivery of teaching programs to talented students without being hindered by geographical boundaries. The new tools also allow for exceptional interaction and innovative experience. Highly in-demand There is also high demand from corporates and organization for UAT’s video wall solution to monitor, control and interact with their assets, activities or infrastructure. This high impact visual presentation

combines multiple LCD monitors with various layouts options. The interface is easy-to-use allowing the user to select different layouts and output signals including multipoint videoconference, Blu-ray video, HDTV, and wired and wireless PC content. Users can even spread one image across multiple monitors. To display text and images in sharp focus, UAT adopts an ultra-slim bezel. The lines between neighbouring monitors appear almost seamless. Interfaces are designed to offer different monitor configurations depending on its use. The solution is especially designed for corporate video conferencing displays, traffic and transportation management centres, power and utilities control rooms, surveillance and security common rooms and broadcast. While providing these solutions and others to thousands of customers, UAT has also continued to engage with the community for a decade and a half. One major undertaking was when UAT celebrated the 15th anniversary over two days in May. In those 48 hours, staff and volunteers of the UAT Association dedicated their time to 15 charitable events. During those two days, employees joined blood donations, gave away food and clothing, provided massages to the elderly, cared for the moderately handicapped and engaged in flag selling to raise funds for worthy causes. In a charity basketball contest, five colleges participated – CNEC Christian College, CNEC Lee I Yao Memorial Secondary School, Kwai Chung Methodist College, Ng Siu Mui Secondary School, and Ying Wa College. This rounded up the 15 activities marking 15 fruitful years.

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Celebrated 15th Anniversary in May 2012. Introduced the first Polycom highdefinition video conferencing experience to Hong Kong. More than 3,000 audio-visual projects delivered UAT is included in the Specialist List of Contractors to carry out audio and video electronics installation for the Hong Kong Government. UAT, an International InfoComm Member, trained a group of employees to be qualified as InfoComm Certified Technology Specialist, underlining its expertise in the audio-visual industry. UAT is accredited ISO 9001. UAT is also accredited ISO 14001 and OHSAS 18001 to recognize its international standard of product and service.

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UNIVERSAL AUDIO & VIDEO CENTRE

PHILOSOPHY

Going the ”little extra mile” to please our customers is our company’s motto. We pride ourselves in applying our expertise in selecting the right products for our clientele and offering a “through train” service from product advices, delivery, installation to repair services. Ensuring our customers their peace of mind is the key to our long term relationships with our clients.

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Pinpoint your gadget needs with the expert advice

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n the electronics world, much like all industries where trends are what dictate sales, innovations are the bread and butter of the retail sector. So when the latest novelties are just updates of older products, consumers are less eager to upgrade their existing collection of electronic products. This is exactly what Helen Yip Lee, Director of Universal AV Centre, observed in the past year. “The market is relatively quiet because as an industry that depends heavily on exciting and new product launches, there are simply not much ground-breaking innovations in the past year.” Consumers may find there are numerous new products, but these, as Mrs. Lee explains, are often just facelifts of products that have shook the market in the last few years. “Take the smart phone for example, there isn’t anything truly new coming out; it’s all just updates and upgrades of existing products that are already widely used by consumers.” As an industry driven by trends, this undoubtedly undermines consumers’ enthusiasm and is a major contributing factor in the rather quiet market last year. And as a retail store, there’s not much that can be done to influence or change these trends. Therefore, at times like this, it is more important than ever to curate the right stock and build a store with products that truly trigger the needs of customers. This is where a boutique retailer like Universal AV Centre, with three outlets at top luxury retail hot spots in the city, can thrive. Bigger is not always better when it comes to retailers, especially for customers looking for the latest innovations and top-notch

customer service. While there are plenty of good reasons to buy from large chain stores, smaller stores offer the care and attention to customer needs in a way that is simply not possible elsewhere. For over 20 years, Universal AV Centre has been the go-to destination for those with a big appetite for the latest electronic goods but little time to research their needs. “Large chain stores can carry every brand under the sun; but we offer a more refined selection for our customers, weaving out the products and brands we feel are not up to their standards and expectations,” Mrs. Lee explains. Because of the intimate setting of the shop, the staff is able to give their full attention to customers, often helping them refine their needs and choices. “Our customers are not consumers who can afford to spend a lot of time researching their needs. This is why they come to us. Our knowledgeable staff can always help them with informed recommendations and narrow down their options, making the buying experience a smooth and hassle-free one.” In fact, Universal AV Centre is so well noted for its customer service that a large chunk of its business comes from repeat visits and referrals. But a lot of times, making the right recommendation could mean not making the biggest possible sale. But both Mrs. Lee and her staff agree that building trusting relationships with clients, even if it means sacrificing an initial sale, is the only way to grow a business. “We have cultivated a culture where, because we don’t have the capacity to stock up a lot of one


AV Shop This page clock-wise: Products available at Universal Audio and Video Centre; Helen Yip Lee, Director of Universal Video and Audio Centre Opposite page: Universal Audio and Video CentreMiramar branch; Universal Audio and Video Centre- Pacific Place branch; Universal Audio and Video- Landmark branch

FAST FACTS • • • • •

product, are able to recommend products based on what the client needs, rather than what leftover stock we need to get rid of,” says Mrs. Lee. This unique culture is the result of years of service to customers and a dedicated team of staff who are in for the long run. “Our customers can easily find the same staff at our shop if they have questions or need help; at large chains, it is not always possible to find the same staff that service you the last time,” Mrs. Lee recalls one incident several years back where one of her clients bought a new TV system

Universal AV was founded in 1990 There are now 3 branches: Pacific Place in Admiralty, The Landmark in Central and Miramar Shopping Centre in Tsim Sha Tsui The company employs 30 staff and trains them to serve the customers from purchase through installation Clients come from all over the world Most of the best brands of televisions, smart phones, digital cameras, audio and video equipment and other electronic gadgets is available.

for his elderly mother. “Like many seniors, she found fiddling with technology a bit of a challenge. She kept calling us back week after week for a refresh on how to use the remote. In the end, we visited her home three times to teach her how to operate her TV.” All this, she notes, is free of charge. “We are of course happy that our clients keep returning. But what makes us truly proud is the trust they put in us. They know they can rely on us if they encounter problems and we are always happy and willing to help.” HONG KONG BUSINESS ANNUAL 2013 125


Wharf T&T Limited

PHILOSOPHY

Wharf T&T strictly focuses on enabling customers' businesses with proficient domain know-how and quality communications/ technology solutions. Backed by the state-of-the-art "Fibre-to-theDesk" (FTTD) ultra-high speed broadband network, Wharf T&T possesses strong system integration capabilities and a full suite of subscriptionbased Fibre Cloud solutions to cope with the evolving demand of ICT adoption in the business sector.

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Hong Kong’s leading ICT service provider serving business customers

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ince it was licensed in 1995, Wharf T&T is committed to providing quality service to its clients in Hong Kong and has become the first and only comprehensive ICT service provider in Hong Kong focusing on the business sector - from small and medium companies to large organizations. With this unwavering dedication to customer service, Wharf T&T has been named the Outstanding Enterprise for the Fixed Network and Broadband Telecommunications category in the HK Business High Flyers Awards 2012. Vincent Ma, Wharf T&T’s President, comments, “The award reaffirms our commitment to excellence in delivering high quality IT and Communications service targeting business enterprises in Hong Kong. Wharf T&T’s business model and market positioning is unique. We are the only telecommunications operator in Asia dedicated to serving the business sector with 100% business brand.” In January 2006, Wharf T&T integrated with COL, an IT services company with over 40 years of experience in Hong Kong. They offered a full range of IT infrastructure and application services to their customers. Since then, the company has emerged as a leading integrated ICT solution provider with the best-of-breed optical fibre network and system integration capabilities, enabling a full range of professional ICT solutions encompassing voice, data, conferencing, email messaging, web-building and

hosting, IT security, network solution and integration, application implementation, data centre, business continuity and disaster recovery services. According to Ma, the company’s mission is to enable customers' businesses. The company utilizes its strong system integration capabilities and a full suite of subscription-based Fibre Cloud solutions to cope with the evolving demand of ICT adoption in the business sector. Wharf T&T’s unique business model is not only well-received by SMEs, but also by large enterprises who entrust their mission-critical ICT projects to the company. Wharf T&T has gained customer mindshare and secured a wide and solid customer base of over 47,000 SMEs and large enterprises across industries. Most of the world’s 50 biggest banks classified by Global Finance (2011) and Hang Seng Index’s listed companies have already been added in its customer portfolio. “Wharf T&T currently manages seven data centres and disaster recovery sites spanning Hong Kong. Our capability to provide ultra-high speed Fibre-to-theDesk network infrastructure, coupled with advanced equipment and multiple sites option allows us to be the vendor-of-choice for data centres and business continuity management,” says Ma. Green and CSR initiatives The company strives to excel in its business while making it a point that it does not discount the need


Fixed Network and Broadband - Telecommunications This page clock-wise: Ocean Park Fun Day with HKCS Small Group Home; Wharf T&T's data centre; Leadership Development Programme; Rice Packing for the People’s Food Bank Opposite page: Vincent Ma, President, Wharf T&T Limited

FAST FACTS • Wharf T&T is a leading ICT service provider serving business customers in Hong Kong. • Licensed in 1995, Wharf T&T is a core member of the Wharf Group with over HK$6 billion invested in its own telecommunications network infrastructure in Hong Kong. • By 2013, Wharf T&T’s undisrupted ultra-high speed Fibre-to-the-Desk network will be able to serve over 95% of the business customers in Hong Kong.

for a commitment to environmental sustainability. Upon the establishment of CSR committee in 2010, Wharf T&T has put in place the Environmental Policy and Green Purchasing Policy to take necessary steps to reduce carbon emission. “Our data centre management services, business continuity & recovery services and tape vault services achieved ISO14001 Environmental Management certification. It is believed that we can play a part in promoting green ICT technology,” says Ma while adding that Wharf T&T is the first ICT service provider attaining LOOP - Gold Label. With all these efforts towards environmental sustainability, Wharf T&T believes that corporate social responsibility and business objectives can co-exist. “Our mission is to deliver business value by thinking innovatively and embracing long term sustainable effort to economic, social and environmental impacts in the communities where we do businesses,” adds Ma. In 2011, its parent company, the Wharf Holdings, launched a CSR programme named “Project WeCan” - a 360° school improvement programme with a funding of HK$150 million by the Group aiming to help 10 local secondary schools, benefiting 10,000 students in Hong Kong who possess great potential amid scarce opportunities. “Wharf T&T has been working closely with our

partnering school - CCC Kei Heep Secondary School to provide support for the schools as needed, including arranging interaction with the students, providing executive sharing and career talks etc. Over 30 activities have been arranged with the students of Kei Heep since 2011,” adds Ma. Plans for 2013 Ma also said that while the business strategy to focus on the business sector has made the company successfully transform into a leading ICT service provider, the company needs to evolve to create more value for their customers. He reveals that in 2013, Wharf T&T will introduce a fresh identity that captures the essence of their evolution by adding numerous magic IT wands to their existing emblem. This fresh identity is not only a logo of Wharf T&T, but also signifies over 2,000 talented and determined professionals who are more than ready to unlock more value for businesses. “The new logo represents a successful business transformation from a telecommunications company into a leading IT and Communications expert. The formal announcement will be made in March 2013 along with an advertising campaign,” says Ma. With Wharf T&T’s strong commitment to excellence, clients can surely look forward to more exciting products and services for 2013. HONG KONG BUSINESS ANNUAL 2013 127


Zchron Design

PHILOSOPHY

Our ‘design and build’ concept aims to provide onestop 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 sub-contractors.

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The Building Blocks to reliable and quality interior designs

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It’s hard to find an interior designer who can visualize your perfect home; it’s even harder to find someone whom you can trust to take full control of your project. Be it a residential or commercial space, it is important to create a personal identity and to convey an emotional connection through the interior design. For a home, it may be designing a space that brings you peace of mind at the end of a long work day; for a business, it is a matter of solidifying your brand identity and creating an image that echoes the products and services you provide. Whatever your needs may be, it is incredibly important to entrust this task to someone who can create the right mood and utilize a space to suit your needs. But giving this responsibility to an interior designer can be a difficult decision; especially when Hong Kong homeowners have had largely negative experiences with their designers and contractors. According to Nison Chan, managing director and founder of Zchron Design, repeat business for an interior designer is a rare thing in Hong Kong. “Most of the time, homeowners end up being unhappy with the results, it could be because the designs do not turn out the way the client envisioned, or the craftsmanship is questionable or simply because projects are rarely delivered on time,” he explains. With a focus dedicated specifically to luxury properties—apartments that are at least 2,000 square feet and houses at are at least 3,000 square feet—

Chan and his team pride themselves in delivering what they promise. “We create three-dimensional renderings that we follow strictly during the entire project. We are able to create homes that are at least 95 per cent identical to these renderings. There will be no surprises when the project is completed.” Previously under Krishom Design, Chan set up Zachron Design this past year as a subsidiary that caters exclusively to residential projects. This, he explains, allows the team to be more focused. “From contractors to sourcing, commercial and residential projects are very different. By setting up two different branches, we are able to separately target the needs of these two groups of clients.” But more importantly, this diversification grew out of a need to brand the company as a leading name in interior design. “There is a lack of branded interior design firms in Hong Kong. I feel this is what the market needs because clients want to turn to someone with a good reputation, someone they can rely on to do a good job, to deliver on time and to create designs that capture what they want. Through this branding, I want to represent ourselves as reliable designers that deliver top-quality designs and craftsmanship,” says Chan. The designer admits that it is all about working closely with clients to turn their dream homes into reality. Many clients, Chan says, want to give input into their designs. From furniture sourcing trips to Europe to brainstorming sessions, communication is


Interior Design This page clock-wise: Living area; Multi-function room; Master bathroom; Dining area Opposite page: Nison Chan, Chairman and Chief Designer of Zchron

FAST FACTS • 1994 -- Nison Chan starts Krishom Design Group to cater to clients in both the commercial and residential markets, providing design and project management to completion • 1994-2011 – 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 and others • 2006 – Started Zchron Design to cater strictly to the residential market

key to customer satisfaction. But often, a client’s visions are simply not viable. This is where the designer and his team should step in. “We have to guide each client and give them our professional opinion; when we know what they want is not going to be visually appealing or functional, it is our responsibility to tell them.” The vast experience of Chan and his team makes them a trusted authority on the subject, and gives them a defining edge that keeps clients coming back. And with ultra-luxury property and commercial projects such as Carlsberg, Dairy Farm and the Kuwait Consulate under his belt, it is easy to understand why Chan is the go-to source for quality designs. “We are very proud to say that a lot of clients come to us by word-of-mouth referral,” he says. “We truly value their business because it means they believe in our ability to create great designs and service.” HONG KONG BUSINESS ANNUAL 2013 129


Index STATISTICAL TABLES AND CHARTS

Following an alphabetical listing of the statistical tables and the pages where they appear

Labour force, unemployment, and underemployment

60

Number of Establishments, Persons Engaged and Vacancies (Other than those in the Civil Service) by Industry Section

61

Wage Indices by Industry Section and Broad Occupational Group

66

Salary Indices for Middle-level Managerial and Professional Employees by Selected Industry Section

69

Consumer Price Indices and Year-on-year Rates of Change at Section Level for November 2012

70

HONG KONG’S HIGH FLYERS Outstanding Enterprises 2012

72 AIA Pension And Trustee Co. Ltd.

102 Hästens

76 Ageas Insurance Company (Asia) Limited

104 Hong Kong Matchmakers

78 ALTRUIST

106 HSBC Insurance

80 AV Consultant (Int ’l) Ltd

108 M800 LIMITED

82 Canadian International School

110 Shama Management Ltd.

84 Chartis Insurance Hong Kong Limited

112 Rhombus International Hotels Group

86 CLP Power Hong Kong Limited

114 Standard Chartered Bank (Hong Kong ) Limited

88 Cosmo Hotel Hong Kong Cosmo Hotel Mongkok

116 The Cityview

90 Bao Gallery by Crystallize•Me Ltd

118 The Mercer

92 FreyWille

120 Thomas, Mayer & Associes

94 Fuji Xerox (Hong Kong) Ltd.

122 Ultra Active Technology Ltd

96 Fujitsu

124 Universal Audio & Video Centre

98 Galaxy Macau

126 Wharf T&T Limited

100 Godiva

128 Zchron Design

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Hong Kong Business