Hong Kong Business (October - December 2021)

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Issue No. 64

HK PREPARES TO GO BACK TO WORK Hong Kong’s Best Selling Business Magazine

0+0 ADDS UP FOR HK RETAILERS OFFICE RECOVERY EVEN AS VACANCIES RISE HK EXPAT EXODUS HITS LUXURY RENTALS ARCHITECTS EMBRACE HANGING GARDENS, TERRACES

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HONG KONG BUSINESS | Q4 2021

HONG KONG

FROM THE EDITOR

BUSINESS

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mbracing the ‘new normal’ requires keeping up with evolving market demands. Hong Kong Business will look at the innovative strategies by various sectors and industries to provide more convenient and near real-time services using digital solutions.

Our cover story from page 26 looks at the recovery of the office property market in Hong Kong despite high vacancy rates. Also, on page 28, we look at the huge decline in the luxury residential rental market in the last three months of 2020 as border closures became a hindrance for potential buyers. On page 30, we highlight the architecture industry in Hong Kong and how architects plan to remodel the region into a greener, future-ready city.

We also sat down with Currenxie founder and CEO Riccardo Capelvenere as he recounts how he turned a painful experience into a family business. Read the exclusive interview on page 16.

On page 34, Hong Kong Business recognises outstanding technology companies at the Technology Excellence Awards 2021. Also, check out the winners of the HKB National and International Business Awards 2021 on page 60. Lastly, HKB lauds top companies in China International Business Awards and Technology Excellence Awards 2021. See the list of awardees on page 68.

Read on and enjoy!

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HONG KONG BUSINESS | Q4 2021

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CONTENTS

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COVER STORY OFFICE PROPERTY MARKET TO RECOVER DESPITE HIGH VACANCY RATES

FIRST 06 Hong Kong, Shenzhen deepen ties for GBA

07 What do Hong Kong employees want from their organisations?

08 Government urged to aid Hong Kong convention and exhibition industry

10 Maintaining O+O presence key for Hong Kong retailers’ operations

BRIEFINGS 18 The ‘Stay Rules’ are here to stay 20 How firms are embracing the hybrid work

22 TASTE x FRESH crossover concept store offers offline+online shop ping option

24 Omnichannel is the way forward

14 COVER STORY 28 Decline in expats in Hong Kong weighs on luxury residential rental market

INTERVIEW CURRENXIE FOR A BETTER CROSSBORDER PAYMENT PLATFORM

FINANCIAL INSIGHTS GREEN FINANCE IN APAC SET FOR RAPID GROWTH

EVENT COVERAGE 34 Hong Kong Business recognises outstanding technology companies at Technology Excellence Awards 2021

60 The exceptional firms of the HKB

ANALYSIS 30 Architects to remodel Hong Kong into a future-ready city

32 Real estate investment in HK sees upwards trend for 2022

National and International Business Awards 2021

68 HKB lauds top companies in China International Business Awards and Technology Excellence Awards 2021

OPINION 72 Hong Kong can do more in fight against rising cybercrime in financial sector

74 Mind the gap: The risk of digital inequality

78 Events are evolving, but is your agency standing still?

80 The ‘technology’ shots that stores need to level up customer experience

for APAC retailers Published Bi-monthly on the Second week of the Month by Charlton Media Group Pte Ltd, 19th Floor, Yat Chau Building 2 HONG KONG BUSINESS | JANUARY Q4 2021 2019 262 Des Voeux Road Central

For the latest business news from Hong Kong visit the website

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HONG KONG BUSINESS | Q4 2021

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News from hongkongbusiness.hk Daily news from Hong Kong MOST READ

RESIDENTIAL PROPERTY

ECONOMY

Hong Kong GDP increases by 7.6% in Q2 2021

Hong Kong world’s freest economy: Fraser Institute

Hong Kong places third in Global Financial Centres Index

The Census and Statistics Department (C&SD) released the preliminary figures for the gross domestic product (GDP) by economic activity for the second quarter of 2021 on 20 September.

Hong Kong has gained the top rank in the Fraser Institute’s Economic Freedom of the World 2021 Annual Report, especially in the areas of assessment of international free trade and regulation.

The 30th Global Financial Centres Index (GFCI) Report by UK think tank Z/Yen and the China Development Institute showed Hong Kong rising to third place globally, one place from the March 2021 issue.

ECONOMY

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ECONOMY

FINANCIAL SERVICES MARKETS & INVESTING

ECONOMY

Hong Kong total retail sales to reach $360b in 2021: PwC

Nearly 80% of Hong Kong execs experience mental health issues

Total supply for Q3 land sale programme hits record high

Retailers are embracing new consumer behaviour in the age of “bricks and clicks.” PwC’s Global Consumer Insights Survey 2021 China Report shows that retail sales is likely to grow by $360b for the full year of 2021.

A total of 78% of Hong Kong executives have admitted to experiencing mental health symptoms over the past 12 months, the majority of whom cited anxiety. Top executives are planning to increase spending for medical insurance.

The Hong Kong government announced the land sale programme for the fiscal year’s third quarter, October to December 2021. Total private housing land supply would be able to provide about 7,110 flats.

HONG KONG BUSINESS | JANUARY 2019

FIRST BANKS’ CREDIT LOSSES TO REVERT TO PRECOVID LEVELS

HK economy to sharply rebound

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ong Kong banks’ credit losses are expected to normalize to their 2019 levels earlier than expected, S&P Global Ratings said in a report.

The rating agency had earlier projected that credit losses will return to pre-pandemic levels by the end of 2022, but this decline could come faster in light of the expected strong economic growth in the city.

“We expect the Hong Kong economy to sharply rebound supported by policy initiatives, strong economic growth in China, and pick-up in global trade,” the report also read.

“The banking sector’s credit losses should therefore decline faster than we anticipated over the next two years.”

Sharp rebound S&P forecasts that Hong Kong’s gross domestic product growth will improve to about 6.5% in 2021 and moderate to 2.5% in 2022.

This could be boosted by timely fiscal stimulus, an accommodative monetary policy, and an increasing vaccination coverage, which could also lead to a moderate increase in credit growth for the banking sector and property prices.

The increase in Hong Kong banks’ credit losses in 2020 was manageable in a global context, which S& P linked to the reasonably tight underwriting standards, and government support targeting corporates and households.

“We do not expect any significant asset quality problems from the unwinding of the relief measures,” the agency said.

“Hong Kong banks extended loans mainly to non-delinquent borrowers, and the majority of the loans have already returned to normal repayment schedules. We believe any risk from the extension of the relief measures also remains limited,” it added, noting the banking system in Hong Kong has relatively low risks.

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High-level Meeting and Hong Kong/Shenzhen Co-operation Meeting 2021

Hong Kong, Shenzhen deepen ties for GBA

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he Hong Kong Special Administrative Region (HKSAR) and Shenzhen governments held the “High-level Meeting and Hong Kong/Shenzhen Co-operation Meeting 2021” on 6 September in Shenzhen, China.

The two governments reviewed the achievements made since the last meeting and set out the goals for cooperation in the coming year. They also witnessed the signing of several co-operation agreements between the two places, such as the beginning of the implementation of the National 14th Five-Year Plan.

The HKSAR delegation was led

by Hong Kong Chief Executive Carrie Lam, while the Shenzhen delegation was led by the Communist Party of China Shenzhen Municipal Committee Secretary Wang Weizhong.

“Hong Kong will make the best use of the advantages of ‘one country, two systems’ capitalise on our business environment that is highly market-oriented, internationalised, and underpinned by the rule of law, and proactively serve as dual engines alongside Shenzhen to drive

Hong Kong will make the best use of the advantages of ‘one country, two systems’ to capitalise on business environment

development in the Greater Bay Area under the spirit of complementarity and mutual benefits,” Lam says.

For innovation and technology. the two governments have agreed on the joint development of the Shenzhen-Hong Kong Innovation and Technology Co-operation Zone, which is made up of the Hong KongShenzhen Innovation and Technology Park and the Shenzhen Innovation and Technology Zone, establishing “One Zone, Two Parks.”

With the support of the Central Government, Hong Kong and Shenzhen will continue to widen mutual access between the financial markets to contribute towards highquality Guangdong-Hong Kong-Macao Greater Bay Area (GBA) development and deepen financial market reforms of the country. They agreed to continuously explore a host of financial facilitation measures, including the scope of Shenzhen-Hong Kong Stock Connect. The establishment of aftersales service centres by the Hong Kong insurance industry in the Mainland cities of the GBA—facilitating the application of cross-boundary fintech and strengthening cooperation on green and sustainable finance—will also be focused on.

It was also agreed to increase the Qianhai Shenzhen-Hong Kong Modern Service Industry Co-operation Zone from 14.92 km2 to 120.56 km2.

The Hong Kong government will discuss with relevant central ministries to achieve further liberalization of trade in services of the Qianhai Plan through the Mainland and Hong Kong Closer Economic Partnership Arrangement.

The Qianhai Authority, Shenzhen Administration for Market Regulation, and the local taxation authority of Qianhai jointly launched the Qianhai e-Services Hong Kong-Macao Station.

A service platform in Hong Kong, it will provide an integrated online service for business registration and tax-related matters for free to the people of Hong Kong and Macao. The platform will further benefit the development of Hong Kong people and enterprises in Qianhai New District.

Other areas of improvement discussed between Hong Kong and Shenzhen include professional services, medicine, youth development,

FIRST Valuing worklife balance has been a notable trend across all markets over the years

‘Work-life balance’ is one of the most important employee value propositions

What do Hong Kong employees want from their organisations?

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mployees are now prioritising work-life balance during the pandemic compared to the period before the COVID-19 hits, according to Randstad.

Randstand said that whilst attractive salary and benefits still rank as the most important employee value propositions (EVP) factor that organisations can offer at 62%, the work-life balance came second at 60%.

For Hong Kong, 60% of the respondents ranked “work-life balance” as the top EVP factor in 2021 compared to 57% in 2020 pre-COVID, whilst in

Singapore, it rose to 74% from 62%, and in Malaysia, it increased to 59% from 48%.

Randstand noted that in the 2021 survey, respondents were free to choose as many EVY factors that were important to them among the list of 16, whereas in 2020, they were only allowed to choose five.

“Valuing work-life balance has been a notable trend across all three markets over the years, but there has been a significant spike since the pandemic began,” Randstand said in its “The Future of Work is Remote” study.

“One of the reasons for the increasing emphasis on work-life balance is the sudden shift from office to remote work,” it added.

Randstad noted that during the initial stages of the transition to remote work, employees struggle with “blurring boundaries between work and personal life, distractions from other members of their households, and lack of proper resources or infrastructure to maintain productivity.”

Work preferences There is also a shift in work preferences among employees, with 59% expecting flexible work hours to be the norm, 58% wanting more work from home opportunities, whilst 11% were happy to return to how things were before the pandemic, citing a 2020 study by Skillsoft.

Randstad also noted that employees have realised the perks of flexible work arrangements, as they are able to save more time and money on commuting, as well as spend more time with their loved ones and “gain more control over how and when they work.”

It noted that 16 Human Resource professionals it interviewed said the majority of their employees want to retain remote and flexible working setup as a standard offering.

“Employers are also changing their tune about remote or flexible work. HR professionals found that remote work has significantly improved productivity and reduced costs for their companies.

THE CHARTIST: HONG KONG TO SEE STRENGTHENED COMMITMENT TO HEALTHCARE

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ong Kong’s response to the COVID-19 pandemic has undoubtedly been remarkable, having a relatively low infection rate due to the obedience and selfdiscipline of citizens in following health protocols, together with systematic enforcement measures introduced by the Hong Kong government.

It has also been able to utilise its smart technologies and learned lessons from previous crises to have an efficient and successful response to the virus.

All of these happened despite the region being an international travel hub and its proximity to Wuhan, China, where the virus originated.

When the news of the pandemic first hit Hong Kong, its hospitals were forced to face the frontline and hastily confront issues such as mass testing, contact tracing, and amount of supplies, all whilst having to keep the public safe and informed.

Hong Kong projected expenditure by sector

What needs to be changed to better develop HK healthcare system in the next 10 years?

Source: Fitch Solutions

Source: KPMG Survey Analysis

HONG KONG BUSINESS | Q4 2021

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FIRST HKCEC IMPLEMENTS 5G, INTRODUCES FIRST 5G SECURITY

Government urged to aid Hong Kong convention and exhibition industry

HKCEC now boosts 100% 5G coverage

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he Hong Kong Convention and Exhibition Centre (HKCEC) has announced the completion of the installation of 5G infrastructure on 9 September 2021.

The HKCEC now boosts 100% 5G coverage spanning event spaces, restaurants, and backstage areas. It also can now accommodate a large number of facility users to access data-intensive applications and content. The move will empower exhibitors to integrate physical and online marketing and sales efforts such as more stable and better real-time live streaming of events, application of new technologies to enhance engagement with visitors, and the streaming of high-definition videos to visitors’ mobile devices.

Captain C A 5G-powered security robot named Captain C also made its debut at the event, a product of both 5G and artificial intelligence technologies. It is equipped with a 360-degree 4K high-definition surveillance camera, infrared detection camera, and a smoke and fire detecting system. Captain C can play very versatile roles, such as implementing crowd management or pandemic prevention measures via broadcast of social distancing reminders.

HKCEC Management Limited (HML) Managing Director Monica Lee-Müller said, “As an industry leader, HML is committed to using smart technology to offer better service to our customers and we are delighted to be one of the first organisations in Hong Kong to provide high-speed indoor 5G connectivity. Our new 5G smart robot also helps us flexibly allocate resources and provide event organisers and visitors with safer, more reliable services.”

HML kicked off the $128m (HK$1b) HKCEC Five-year Advancement Project in 2019 to upgrade and refurbish the HKCEC’s facilities and infrastructure over several stages.

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136 exhibitions and conferences have been cancelled or postponed since Feb. 2020

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he Hong Kong Exhibition & Convention Industry Association (HKECIA) has urged the government to lend aid to the convention and exhibition industry after presenting the results of its latest member survey “Impact of Covid-19 to Hong Kong Exhibition & Convention Industry 2021.”

HKECIA urged the authorities to repurpose the fund of the Convention and Exhibition Industry Subsidy Scheme (Subsidy Scheme) and to provide a roadmap of relaxing compulsory quarantine requirements for qualified business travellers and warned that 45% of industry players are at risk of shuttering in the next 12 months.

In its latest member survey, 136 exhibitions and conferences have been cancelled or postponed since February 2020 and these events are expected to draw over 99,000 exhibiting companies and over 4.8 million visitors. Meanwhile, 93% of respondents claim that the impact of COVID-19 on their business is severe or extremely severe.

All the respondents project a loss by the end of 2021, with 37% of event organisers and 29% of non-event organisers projecting a loss of over $50m in 2021.

Despite government subsidy, 55% of respondents said they did not benefit from the Subsidy Scheme as they were not able to run international

trade fairs or conferences whilst 66% of non-event organisers claim that the two rounds of the government’s Anti-Epidemic Fund in 2020 did not provide sufficient assistance as there was no direct funding for contractors, logistics, and service providers. The operating cost and warehouse rental are high and were not covered by the Anti-Epidemic Fund.

Urging for financial aid HKECIA is calling for the government’s immediate financial assistance from the local convention and exhibition industry players struggling to survive over the effects of COVID-19.

“The convention and exhibition industry, which contributed over $58b to Hong Kong’s economy in 2018, has been in deep water since February 2020 as no international event was able to be held in Hong Kong due to travel restrictions and preventive measures. Only small-scale consumer exhibitions resumed,” HKECIA Chairman Stuart Bailey said.

“The Subsidy Scheme, however, is only able to assist the convention and exhibition sector once it is practicable for events to resume, a point which trade fair organisers have yet to reach.

The We urge the government to repurpose convention the Subsidy Scheme and provide and exhibition immediate and additional financial assistance for event-related service industry has been in deep providers. Our industry also needs a roadmap to prepare for a strong water since February 2020 revival,” Bailey added.

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FIRST

HK retailers should continue their investment in digital channels and omnichannel strategies to stay relevant

Maintaining O+O presence key for Hong Kong retailers’ operations

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ith a market dependent on tourists, Hong Kong retailers have to maintain their presence both online and offline to capture more customers.

“It doesn’t matter where the tourists come to Hong Kong or not, they can still buy their products on the e-commerce basis. So Hong Kong retailers need to make their business model way a bit more of what we call O+O situation, offline-plus-online, not online or offline,” Michael Cheng, Asia Pacific, Mainland China, and Hong Kong Consumer Markets Leader of PwC, told Hong Kong Business.

Cheng cited the strategy employed

by Watson which uses technology to try on their cosmetic products virtually, amongst other operation changes.

Total retail sales in Hong Kong in July was estimated at HK$27.2b, a 2.9% increase from the same period last year, according to the Census and Statistics Department (C&SD). Online sales accounted for 7.5% of the total retail sales value during the month, estimated at HK$2.1b, which is a 29% year-on-year increase.

For the first seven months of 2021, the estimated online retail sales value rose by 50.6% compared to the same period last year, according to the C&SD. Cheng also noted that the Hong 10

HONG KONG BUSINESS | Q4 2021

Kong government issued a HK$5,000 electronic consumption voucher to the people who registered, which can be used for e-commerce and transportation spending.

The HK retail market E-commerce sales proportion is seen to continue to increase as Hong Kong is slow in doing so compared to other countries with a bigger proportion of e-commerce sales and on the back of government support, Cheng said. He added that the percentage of online retail sales may reach 10% in one or two years.

Total visitor arrivals in Hong Kong from Mainland China reached 6,304 in July, up 9.9% from 5,735 million in July 2020. Visitors from the Mainland during the first seven months of 2021 was at 30,567 which is a 98.9% decrease from 2.7 million in the same period last year, according to data from the Hong Kong Tourism Board. Overall visitor arrivals from January to July 2021 was at 42,415, 98.8% lower than the 3.5 million visitors during the same period in 2020.

Euromonitor International Senior Research Analyst Emily Leung said the Hong Kong retail market has declined by almost a quarter in 2020 compared to 2018, affected by both the political events and the pandemic.

Leung added that the key for

The key for retailers is having a good omnichannel strategy, and maintaining both online and offline stores

retailers is having a good omnichannel strategy, and maintaining both online and offline stores. A lot of retailers in Hong Kong opened their first online stores last year, citing drugstore brand, Mannings, as an example.

“E-commerce is going to be continually on the rise for the next couple of years to come. But in terms of the increase, it’s going to be less than the previous years before,” Leung said.

For online retailers to maintain their business, they should ensure having good logistics and opening up more digital payment capabilities, she said.

Vijay Bhupathiraju, a senior analyst at GlobalData, said that even if there is a shift to digital shopping especially with the younger population and is seen to continue to grow until 2025, store-based retailers will still continue to dominate the retail market in Hong Kong.

But despite this, Hong Kong retailers should continue their investment in various digital channels and omnichannel strategies to stay relevant.

“They should also focus more on social media engagements to stay connected with shoppers. Exploring ways to double use their existing store space for online fulfilments helps them maximize their utility,” Bhupathiraju said.

Physical stores Brick-and-mortar stores, however, still remain relevant, Cheng said. He noted that people in Hong Kong are now buying more in physical stores than online, following the lockdown in early 2021.

He added that Chinese shoppers are also looking for physical stores and not just e-commerce sales.

“It’s no longer they will only look for e-commerce they will also look for physical to make sure they are able to feel the goods, to test the goods, and also to understand a bit more of the goods in store,” he said.

PwC in September estimated retail sales in Hong Kong to increase by 10% to HK$360b in 2021, cutting its earlier forecast in February of 15% to HK$376b.

Cheng said that the estimate was readjusted because the reopening of the border between Hong Kong and Mainland China is unlikely to happen in the fourth quarter, resulting in businesses relying heavily on local consumers.

CO-PUBLISHED CORPORATE PROFILE

Tricor Group launches Digital Client Portal New Tricor digital platform sets standard for effortless client experience in Hong Kong. by giving them a secure, encrypted, globally accessible platform that’s available 24/7.”said Tricor’s Group Chief Digital Officer Adam Stuckert.

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apid digitisation against the backdrop of the global pandemic has forced businesses in Hong Kong to reimagine products, business lines, and operations.

Yet a recent survey of corporate boards published by Tricor Group and the Financial Times exposes a significant challenge: although the majority of directors believe that boards should be leading digital transformation, only 1 in 3 report that they have the necessary tools and solutions.

While new software solutions are entering the market at an unprecedented rate, digital solutions that address the lowest common denominator can only take companies so far. Generic software that handles everyday tasks fails to cater to the needs of organizations that are growing and expanding, especially in Asia’s diverse business environment.

This was exactly the challenge posed by clients to Tricor’s Group CEO and incoming Group Chief Digital Officer during COVID-19: can Tricor provide digital solutions that cater to a complex market, while retaining access to the subject matter expertise of Tricor’s professional staff? And can this be done across multiple jurisdictions and industries for listed companies, multinational companies (MNCs), small and medium-sized enterprises (SMEs) and startups?

Tricor’s Group CEO Lennard Yong recognises this challenge. “At Tricor, our mission is to provide the building blocks for and catalyse every stage of our clients’ business growth. To accomplish this in today’s shifting business landscape, we

must continuously zero in on changing client expectations and deliver innovative solutions that cater to a wide range of market demands.”

“The needs of a holding company that is expanding into new markets are substantially different from a startup preparing to file their first annual report – and Tricor must support both.” Yong continues, “To address this market challenge, Tricor has developed a Digital Client Portal to meet the unique requirements of our clients from a regulatory and compliance perspective.

The portal also acts as a centrally unified and readily accessible platform for our clients to use as they streamline their operations and expand their businesses across Asia Pacific.”

By working with partners in the technology industry and co-developing its solution with clients, Tricor identified three keys to unlock a new standard in digital corporate services: a focus on user experience, technology-powered compliance features, and world-class security.

Enhancing compliance with cuttingedge technology Tricor’s Digital Client Portal serves as a fast and cost-effective path to compliance, combining software algorithms with our institutional knowledge to verify each transaction against current regulations.

Warnings and alerts are issued when necessary and the smart platform updates data automatically, mitigating risks and offering peace of mind.

Seamless global business expansion with security and quality Efficiency improvements must be matched by a secure platform, so Tricor built their Digital Client Portal on world-class cloud services, providing a proven platform.

“Unlocking business resilience is our top priority,” said Stuckert. “We put our clients first as we designed this portal and are pleased that all of our clients are highly satisfied with the digitized service experience. We also worked with Asiabased software developer BlueMeg to adapt their class-leading cloud and security technologies. Our ongoing investment in this platform shows that we are committed to supporting our clients’ business growth in Hong Kong and beyond.”

Planned future releases will be enhanced to offer clients electronic signature integration, embedded KYC functionality as well as board governance capabilities.

An end-to-end digital experience The portal solves the most pressing challenges firms in Hong Kong face today in complex, multi-jurisdiction businesses by synthesizing a digital front-end with the institutional knowledge of Tricor’s staff.

“Clients are looking for improved business efficiency, lower regulatory risk, and better insight into their business. With our Digital Client Portal, we are empowering them to achieve those goals, allowing clients to manage their businesses across multiple countries and to interact with Tricor digitally

Tricor’s Digital Client Portal reaffirms our commitment to our clients’ growth in Hong Kong and beyond

Adam Stuckert, Tricor’s Group Chief Digital Officer

HONG KONG BUSINESS | Q4 2021

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FINTECH - FINANCIAL SERVICES

Datasite: At the cutting edge of M&A cloud tech innovation It earns two awards establishing its position as an industry leader in both Hong Kong and China.

Datasite delivered three new applications that help manage M&A more efficiently and effectively

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atasite has been recognised on multiple fronts for its ability to continue to innovate despite last year’s global pandemic. As a leading SaaS-based technology provider for global mergers and acquisitions (M&A) professionals, the company delivered three new applications that used advanced technologies—such as artificial intelligence (AI) and machine learning—to solve problems that have troubled dealmakers for years and help them close more deals efficiently and effectively.

AI speeds up deal preparation and due diligence The M&A due diligence process is one of, if not the most, labour-intensive processes.

Typical deals require the analysis of huge amounts of data in a relatively short period.

So, when time is money, tools that speed up the M&A process are critical.

AI-powered tools that help dealmakers automate tasks, reduce human error, and ensure greater regulatory compliance are gaining interest. Using statistical methods that allow a system to learn from data and then make decisions, AI and machine learning leverage an algorithm to sift through those large volumes of data and content.

Such a tool can then enable the upload of hundreds or thousands of files and their review by an AI engine, which reads the files and suggests categories, as well as appropriate folder locations, for the files. AI and machine learning streamline the process in a matter of minutes, not weeks, freeing up dealmakers to focus on higher-value activities.

One area of the due diligence process that 12

HONG KONG BUSINESS | Q4 2021

is already benefiting from AI is redacting or striking words, phrases, and images in documents. If nonrelevant personal information, phrases, and images can be easily hidden from within the data room, it can improve document accuracy and security,

DATASITE IS CONTINUOUSLY INNOVATING TO ADDRESS CUSTOMER NEEDS WITH APPLICATIONS THAT STREAMLINE THE PROCESS FOR MANAGING THE ENTIRE M&A LIFECYCLE AND WE’RE THRILLED TO SEE OUR EFFORTS REWARDED WITH THIS RECOGNITION. improving deal efficiency and regulatory compliance. If common words and phrases carrying personal, private information can be bulk-redacted using AI, as they can today, it is even better.

AI is also being used to help support easier cooperation amongst dealmakers across borders and languages. Whilst a majority of M&A documents are in English, emerging AIpowered tools may soon support more than one language.

In fact, research shows that AI will transform the M&A process by decreasing the time it takes to perform due diligence to less than a month in 2025 from three to six months in 2020.

Back-to-back industry recognition For the second consecutive year, Datasite has been named Fintech – Financial Services award winner at both the 2021 Hong Kong Technology Excellence Awards and China Technology Excellence Awards presented by the Hong Kong Business Magazine.

“It’s gratifying to see the hard work of Datasite’s engineers, designers and managers recognised,” said Thomas Fredell, the chief product officer for Datasite. “Our team is at the forefront of M&A cloud technology, delivering innovative services to our customers that improve and accelerate the deal management process to help ensure successful deal outcomes.”

“Datasite is continuously innovating to address customer needs with applications that streamline the process for managing the entire M&A lifecycle and we’re thrilled to see our efforts rewarded with this recognition.”

The judges agree. Buying or selling; restructuring or fund raising; acquiring or divesting: Datasite is the place to get dealmakers there faster. The best people and the best technology. This is the place where deals are made.

Datasite is at the forefront of M&A cloud technology to help ensure successful deal outcomes

HONG KONG BUSINESS | Q4 2021

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FINANCIAL INSIGHT: GREEN FINANCE

Green finance in APAC set for rapid growth But is it growing fast enough for the region to achieve climate goals?

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reen finance is proving to be a rapidly growing sector in 2021. Based on data from the Climate Bonds Initiative (CBI), 2021 green bond issuances might exceed that of last year, with $219.7b issued for the first half of 2021 compared to the US$290.1b issued in 2020. Bonds issued from the Asia-Pacific made up more than a quarter of the first half’s figures, at US$51.9b, just a few millions short from the US$53.2b issued for the entire year of 2020.

China issued approximately US$22b worth of green bonds in the first half of 2020, exceeding the combined issuances from South Korea (US$5.9b), Japan (US$5.5b), Singapore (US$5.2b), and India (US$4.6b). Separate from Mainland China’s, a total of US$3.2b worth of green bonds was also issued from Hong Kong SAR. Green finance strategies Hong Kong is taking its sustainable finance strategy seriously, with the Hong Kong Monetary Authority-led Green and Sustainable Finance Cross-Agency Steering Group focused on implementing five near-term action points to help the region achieve carbon neutrality before 2050.

Green finance forms a part of Singapore’s Green Plan 2030, as the Lion City aims to turn itself into the centre for environmentally sustainable finance in Asia. Approximately SG$19b projects from the public sector has been identified for green financing, including the Tuas Nexus integrated water and solid waste treatment facility.

Investment in sustainable financial instruments, including

Green finance is proving to be a rapidly growing sector in 2021

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Investment in sustainable financial instruments, including green bonds, is on the rise globally

green bonds, is on the rise globally. Standard Chartered, in its Sustainable Investing Review 2021, noted that 13% of emerging affluent, affluent, and high net worth investors have sustainable investments making up more than a quarter of their portfolio. An approximate 61% of these investors have placed funds in a sustainable investment solution.

Investing in green bonds Market uncertainties and an increasing awareness on the inevitability of climate change are amongst the reasons that investors are keen on green bonds, said KPMG Partner and Head of Financial Services Anton Ruddenklau in an interview with Hong Kong Business.

“Investors effectively, are spending less and getting higher returns on green bonds, than they are on other bonds. And that’s also showing up in the level of oversubscription on bond issuance. So everyone wants bonds right now, they want certainty. They’re the most popular category of bond versions right now. So that bodes really well for your supply and demand and growth going forward,” Ruddenklau said.

Businesses are also keen on issuing green bonds for a number of reasons, KPMG Partner for Financial Services Advisory Leon Ong told Hong Kong Business.

“It’s a positive story for the company trying to do the green bond issuance. Also, by doing such a thing, you do tend to find like-minded investors and individuals out there.

You open up to a part of the population of investors that you might not have had before,” Ong said, adding that the

FINANCIAL INSIGHT: GREEN FINANCE positive marketing story is still secondary to the need for traditional companies to increase their exposure in greener products.

He cited Hong Kong and Singapore as growing markets for green finance, even as China continues to be the juggernaut for the Asia Pacific. “Hong Kong and Singapore, to a certain extent, are moving reasonably in lockstep here.

I think that Hong Kong’s proximity to China could play a role, particularly if they start to come out and start putting sustainability more at the forefront of their agenda,” Ong said.

The signs that green finance is growing in Asia-Pacific are all there, even if the EU continues to be the leader when it comes to issuances and regulation. But is it growing fast enough to meet climate goals?

Data is definitely coming out to be something that we see as a big problem in the sustainability contest

The devil’s in the details: data, definition, and disclosure Citing reports from the International Energy Agency and the Boston Consulting Group, Monetary Authority of Singapore (MAS) Managing Director Ravi Menon said that green finance needs to massively scale up.

“Green finance has not been able to reach the scale required. According to the International Energy Agency, global investments in energy projects needs to more than double from its current level by 2030 in order to meet netzero emission goals by 2050. According to a study by the Boston Consulting Group, the volume of climate financing will have to grow over the next three decades by roughly five to eight times the current amounts issued,” Menon said in a speech delivered 8 September 2021.

He then gave three issues that need to be solved in order to scale up investments: data, definition, and disclosure. On data, he cited the lack of sources for reliable and comparable from lenders and investors alike. Moreover, definitions of certain key terms may vary from economy to economy, system to system. Finally, he said that there is currently no one framework for climate-related reporting and disclosure standards for companies, adding that there is currently more than 200 frameworks, standards, and guidances on sustainability reporting and climate-related disclosures.

“Data is definitely coming out to be something that we see as a big problem,” Ong said, adding that people in the financial industry is used to having easy access to consistent data. For his part, Ruddenklau noted the lack of taxonomy for environmental, social, and governance (ESG) criteria in general: “These are all non-financial in nature, and in some respects, quite existential. The data is just not there.”

The future of green finance But there is some hope that can be seen from the governance side of ESG that could forge a path for the future of green finance. “I think the answer at the moment is for industries to come together, and start to work collectively on building a consortia and proper ecosystems, to pull together information that shouldn’t just be considered a regulatory issue, but an accounting issue,” he added.

KPMG expects green finance to see a significant growth in APAC in the coming years, expecting more issuances from Singapore, Hong Kong, Japan, Taiwan, and Indonesia.

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HONG KONG BUSINESS | Q4 2021

15

INTERVIEW

Currenxie for a better cross-border payment platform How these Goldman Sachs alumni turned a painful experience into a family business.

I

t was from a personal painful encounter with foreign exchange that ignited the first sparks in founder and chief executive officer Riccardo Capelvenere to start Currenxie, a Hong Kong-headquartered cross-border payments and business account services startup.

In an interview with Hong Kong Business, Riccardo recounted how his mother’s wine import business, now run by his sister, paid exorbitant sums over decades on crossborder transactions and FX when purchasing from suppliers in Italy and elsewhere. This became the sort of trigger that pushed Riccardo into a new business direction.

Banking on his experiences in quantitative and technologydriven trading, Riccardo, along with his wife Alison, founded Currenxie in 2014.

“Alison had the operational experience as a Chief Operating Officer and together we started building relationships with banking partners around the world, and acquiring payments licenses in different markets. At the same time we were developing our core technology, and by 2017 we had launched the Global Account,” Riccardo said.

And that very wine business? It became their first and longest standing client.

Laying the foundation Currenxie is a financial services company that helps modern businesses access global commerce, by providing them with a simple solution for making and managing their payments.

Essentially, it’s a modern take on the business current account, designed for today’s increasingly borderless world.

Currenxie offers its clients a single portal - the Global Account - that gives them their own virtual bank account details in every market they do business. They can receive and send fast, borderless bank payments, they have multicurrency digital wallets, and transact at very low costs.

“This is all handled on our cloud-based platform, which is an in-house core banking system for running our global network and accounts. We are fully vertically integrated, all of our technology has been developed internally,” Riccardo said.

But starting this business in 2014 wasn’t easy.

From day one, Currenxie had to painfully build its network.

Riccardo said he and his wife spent the first few years flying all over the world, sometimes spending weeks away from home.

Which was hard for them because they initially moved to Hong Kong back in 2013 to be closer with their family. They also drew on their experiences as former Goldman Sachs executives to create a solid business model.

“As we were one of the first fintech companies offering this kind of service in Hong Kong back in 2014, we had no benchmark. Communicating our value, and educating the 16

HONG KONG BUSINESS | Q4 2021

Currenxie’s founder and CEO, Riccardo Capelvenere

Educating the market about what we had to offer was a challenge

market about what we had to offer, was an initial challenge.

It still is, though there are other fintech companies now, and awareness is increasing. Our early clients all came through word of mouth, whereas now we have multiple channels,” Riccardo explained.

The groundwork that they did eventually paid off as they have built one of the largest virtual account networks in the B2B fintech space that spans more than 30 countries and over 18 currencies.

Recently, the company closed a Series A funding round, bagging close to US$10m ($77.89m) led by family office BF Belmont Limited Hong Kong.

Currenxie plans to use the fresh funds to build new products, acquire new licenses and authorisations as well as expand to new markets and invest in more talent. The company has raised around US$14m to date.

“We are currently seeking authorisation for our business in Ireland, which will support our European expansion. We are also looking closely at expanding in another key Asian market next year. We’re also launching some exciting new products very soon,” Riccardo added.

As of now, Riccardo isn’t worried about competition in the market, as the B2B payments market is predicted to exceed US$1.9t. He said the market can afford to support many industry players.

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HONG KONG BUSINESS | Q4 2021

17

LEGAL BRIEFING

The ‘Stay Rules’ are here to stay And what it means for authorized institutions and covered contracts.

Stay Rules ensure that resolution actions taken by a regulator of a distressed financial institution are not inhibited

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he Financial Institutions (Resolution) (Contractual Recognition of Suspension of Termination Rights— Banking Sector) Rules or Stay Rules went into operation last 27 August.

According to a report by Moody’s, under the Stay Rules, entities covered must ensure that covered contracts include a term or condition that the parties legally agree in an enforceable manner that they will be bound by any suspension of termination rights in relation to the contract imposed by Hong Kong Monetary Authority (HKMA) under section 90(2) of the Financial Institutions (Resolution) Ordinance (Cap. 628).

This also applies to newly entered covered contracts or existing covered contracts that are renewed or materially amended or modified.

In addition, HKMA and the Securities and Futures Commission (SFC) issued conclusions of a joint consultation on the annual update to the list of financial services providers

Stay Rules provide an initial implementation period for covered entities to comply with the requirement of ensuring that a suspension of termination rights provision is contained in covered contracts under the over-the-counter (OTC) derivatives clearing regime in Hong Kong.

After considering market feedback, HKMA and SFC proceeded with the proposed changes to the list as set out in the joint consultation paper. The list includes entities that belong to a group of companies appearing on the list of global systemically important banks (G-SIBs) or on the list of dealer groups that undertook the OTC Derivatives Supervisors Group to work collaboratively with central counterparties, infrastructure providers, and global supervisors to continue to make structural improvements to the global OTC derivatives markets (G15 dealers).

Giving a more clear explanation, the international law firm, Clifford Chance, published a report on the Stay Rules. It says that the purpose of the Stay Rules is to ensure that resolution actions taken by a regulator of a distressed financial institution are not inhibited.

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HONG KONG BUSINESS | Q4 2021

The Stay Rules apply to the following: • an authorized institution (AI) that is incorporated in Hong Kong; • an entity that is a holding company incorporated in Hong Kong of an AI incorporated in Hong Kong, but is not itself an AI (HK Holding Company); • a group company of an AI incorporated in Hong Kong, that is not itself; • an AI incorporated in Hong Kong or an HK holding company (Related Company).

Covered contracts The report explained that the Stay Rules define a “covered contract” in respect of a covered entity that is an AI incorporated in Hong Kong or an HK Holding Company, is a financial contract which (a) is entered into by the covered entity; (b) is governed by non-Hong Kong law; and (c) contains a termination right exercisable by a counterparty (other than an Excluded Counterparty).

“An additional criterion for a covered contract in relation a related company is that the contract contains obligation(s) of such entity that are guaranteed or otherwise supported by an AI incorporated in Hong Kong or an HK Holding Company, that is a member of the same group of companies as that related company,” the report explained.

The Stay Rules define a “financial contract” as one or any combination of: • A securities contract; • A commodities contract; • A derivatives contract; • A currency contract; • A contract of similar nature to a contract mentioned above or; • A master or other agreement in so far as it relates to any contract above.

However, it does not include a contract or combination of contracts for short-term interbank borrowing with an original maturity of three months or less.

Implementation Clifford Chance clarifies that the Stay Rules provide an initial implementation period for covered entities to comply with the requirement of ensuring that a suspension of termination rights provision is contained in covered contracts.

This allows HKMA to have better flexibility when needed.

“With the Stay Rules becoming effective on 27 August 2021, AIs should immediately consider how to systematically implement the requirements under the Stay Rules. This might require a detailed examination of the AI’s compliance systems to ensure that the requisite covered contracts are identified and the relevant contractual stay language prepared,” Clifford Chance advised.

HONG KONG BUSINESS | Q4 2021

19

HR BRIEFING

How firms are embracing the hybrid work

Nearly half of workers still prefer to stay at home whilst governments roll out their respective vaccine programs.

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he pandemic, as we know it, changed the way the world operates. Businesses, for one, were forced to shift in a hybrid setup where offices are manned by only a portion of their total capacity whilst the rest of the workforce work at home.

Even as governments attempt to control the COVID-19 outbreak to return to the pre-pandemic scenario, the hybrid work arrangement is likely here to stay. How, then, are firms readying up for the long run?

In a recent study, conducted by Kelly OCG, it was found that Singapore executives are falling behind its neighbours in the Asia-Pacific region in terms of providing support to their workers.

In Singapore, only 43% offered flexible work hours on top of the hybrid arrangements against 50% in APAC. In addition, 33% offered physical health support and only 36% in mental health support in Singapore, compared to APAC’s 43% and 46%, respectively.

Randstad Singapore noted that the shift towards the new setup from the traditional 9-6 work hour arrangement will likely be an uphill climb.

“The hybrid workplace will not be an easy transition,” Randstad Singapore Jaya Dass, Managing Director, Singapore & Malaysia, told Singapore Business Review.

“However, having been able to find work-life harmony from working from home these past months, many employers and employees have both agreed that hybrid work is the way forward.”

To achieve productivity in a hybrid model, employers must understand that work is what you do, and not where you do it A Randstad study found that 61% of Singaporeans still feel unsafe to return to the workplace whilst the vaccine program has yet to inoculate a large portion of the population.

In Singapore, 70% have plans to once again report to their offices for work after the pandemic, which is lower than 92% in Mainland China and 85% in Malaysia and Hong Kong.

In Hong Kong, Randstad reported that 71% of workers are being asked to work in the office, despite continuing threats of the pandemic.

Moreover, nearly half, or 48%, of Hong Kong respondents have expressed their preference to continue staying at home until others have been vaccinated.

Dass added the strategy should revolve around culture, physical work environment, and new technologies.

Of this, she said, the mindset shift would be the hardest to focus on, in terms of preparations.

“Many people are used to thinking that ‘more’ means ‘productivity,’” she said. “However, in doing so, companies may risk launching a product or solution that doesn’t meet the customers’ requirements.”

20

HONG KONG BUSINESS | Q4 2021

The hybrid work arrangement is likely here to stay

To attain this, she advised companies to strengthen their internal feedback and build a learning culture.

Moreover, companies should also utilise new technologies to engage workers and aid in driving their productivity even whilst working remotely.

This includes tools to help track progress and deadlines, and ultimately, ensure that collaboration amongst workers are retained.

“To achieve productivity in a hybrid model, employers must first understand that work is what you do, and not where you do it,” she said.

“There has to be first a mutual agreement between employers and employees on how productivity should be monitored and measured.”

Productivity, however, is only one of the key issues that companies need to keep an eye on under hybrid work as workers have raised a common issue on the toll the current working environment has taken on mental health.

Dass emphasised that ensuring measures that take account of workers’ well-being is critical. To begin, employers could work on earning the trust of their employees that could help in their openness.

“Managers would have to earn their employees’ trust by being more actively involved in their well-being,” she said. “Establishing a level of trust and bond is important in safeguarding the overall well-being of employees as it helps build communication.”

This could be accomplished through regular check-ins using surveys or virtual meetings.

For their part, the workers could also initiate talks with regards to their physical and mental health, particularly, on work-related matters that do not sit well with them.

“At the end of the day, a good manager will take employee’s feedback seriously and do what they can to improve well-being for their team,” she said.

“Employees who feel unheard and unappreciated will likely look for new employers after a while.

HONG KONG BUSINESS | Q4 2021

21

MARKETING BRIEFING

TASTE x FRESH crossover concept store offers offline+online shopping option PARKnSHOP and Uni-China Group’s supermarket brands partnered to open this concept store.

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ARKnSHOP Hong Kong, under A.S. Watson Group, and Uni-China Group collaborated to establish “TASTE x FRESH,” a retail crossover concept store of their brands, providing offline-plus-online (O+O) option to their customers for their shopping.

PARKnSHOP’s TASTE brand provides day-to-day necessities, whilst the retail brand, FRESH—under UniChina Group and mainly operated by Marae Limited— supplies fresh produce from local and global producers to “TASTE x FRESH,” which is located in Phase 1, Amoy Plaza, Kowloon Bay. “As FRESH’s modern wet market and business model are different from those of ordinary supermarkets, this crossover combines the advantages of the two brands, combining TASTE’s ‘more than food’ high-quality supermarket features with FRESH’s innovative and Hong Kong Style Fresh Mart, creating a new crossover concept store,” PARKnSHOP Managing Director Norman Yum told Retail Asia.

“The emergence of the ‘retail crossover concept’ in food retail is likely to become a more regular feature of supermarkets looking to diversify their customer experience in new and interesting ways, and so we’re happy to lead from

Straight offline retail is no longer sufficient to meet the needs of customers the front,” Yum said.

The crossover concept store, which has a total investment from two parties exceeding HK$30m, occupies 20,000 square feet. Yum said the store offers over 12,000 in a series of thematic zones which include the Japan zone, Korea zone, Asian Food zone, Health and Beauty zone, and 13 other fresh food zones.

According to FRESH CEO Henry Li, Uni-China Group has worked with PARKnSHOP for more than 20 years as its major fresh food supplier.

Li said FRESH is composed of different themed zones and also provides food and beverage items that allow customers

Photo from TASTE x FRESH

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HONG KONG BUSINESS | Q4 2021

to opt for a “made-to-order” service.

“FRESH also introduces over 100 types of local and globally-sourced seafood, a broad selection of fresh fruits and vegetables, local and Western meat, vegetarian section, Chinese Herbs section. FRESH also specially set up three gourmet food zones,” Li told Retail Asia.

Furthermore, TASTE and FRESH aim to meet the greater demand of their customers for fresh ingredients as there is a rise of health-conscious customers, according to Yum. TASTE x FRESH employs an offline-plus-online retail strategy in its operations, taking into consideration the “new normal” in the retail landscape due to the pandemic, wherein customers can place their order online through the “App in hand” and collect them at the store on the same day.

“The ‘new normal’ retail landscape gives a boost to the development of O+O strategy for us to engage with our target customers to enjoy the seamless O+O shopping experience. We believe that the key to the future of the retail industry lies in innovation and moving with the times,” Yum said.

“Straight offline retail is no longer sufficient to meet the needs of customers, and so food retailers are connecting with customers offline plus online for a seamless shopping experience,” he added.

Total retail sales in Hong Kong is estimated at $27.2b in July, according to the Census and Statistics Department, adding that online sales accounted for 7.5% or $2.1b during the month.

A.S. Watson Group has adopted offline-plus-online in the retail market through the PARKnSHOP eShop in 1998 and through the launching of its mobile app in 2014.

Yum said that PARKnSHOP has 265 stores in Hong Kong and Macau and they rolled out the “click and collect service” where stores serve as “hubs for e-picking and enabling fast delivery,” at 235 stores. They also expect orders and sales in the e-shop in 2021 to be up 80% compared to 2020, following a 50% increase in 2020 compared to 2019.

“The motivation behind driving and delivering this new O+O standard is clear, there is no cannibalisation in customers’ spending in physical stores. In fact, an O+O customer spends three times what an in-store-only customer shops with us. It’s about creating a bigger share of wallet and higher customer lifetime value,” he said.

The use of the O+O retail model uses big data analysis to allow the concept store to enter market opportunities and attract more customers, Yum said, adding that it is about “creating an integrated offline and online experience” through digital transformation.

FRESH’s Li said TASTE x FRESH also ventures into other modes of advertising by regularly holding O+O live streams and through the production of videos featuring their products.

HONG KONG BUSINESS | Q4 2021

23

INDUSTRY BRIEFING: E-COMMERCE

Omnichannel is the way forward for retailers in the Asia Pacific region As physical stores reopen, online spending may drop to 13.4% by end-2021 but never below pre-COVID levels. omnichannel was fast even before the pandemic, but the onset of COVID-19 meant retailers had to drive these changes quicker than ever before,” Yu said.

Consumers today are becoming smarter, seeking convenience without sacrificing quality

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ew business models had to rise to meet customer demands and keep businesses alive and going since the pandemic wreaked havoc in 2020. For industries, like retail, the seamless integration between online and offline channels worked like magic as they became the main drivers of the economy amidst a year of uncertainties.

The pandemic has been one of the biggest growth catalysts for omnichannel retail in the Asia Pacific region, with online sales accounting for US$994.9b in 2020 up by 28.1% from 2019, according to reports from GlobalData.

“The pandemic-induced lockdown has accelerated a move towards digital that was already underway. It is increasingly becoming clear that omnichannel retail will take the center-stage of retail development in the region over the next five years with online sales expected to grow by 98.3% during 2020 to 2025,” GlobalData Retail Analyst Ankita Roy said.

To give perspective, GlobalData reported that in 2020, online retail consisted of 12.3% of retail sales across the region compared to just 5.6% in 2015 and is further

Omnichannel retailing ultimately meets shoppers’ needs better, enabling them to buy anywhere at any time in any way they want expected to grow by 5.2 percentage points from 2020 to 2025 to reach 17.5%.

“These figures indicate that retailers were already embracing omnichannel strategies before the pandemic, however, COVID-19 has accelerated the strategy across the region as demand increased and more consumers were converted to the service,” Roy said.

Similarly, IGD Senior Business Analyst - Asia JiongJiong Yu mentioned that the omnichannel business model has been well-established in China since 2019 and was pioneered by retail giants Alibaba and JD.com.

“The pace of evolution in retail from multichannel to 24

HONG KONG BUSINESS | Q4 2021

What omnichannel retail looks like today Omnichannel retail is more than just the integration of online and offline retail channels, but about meeting the demands of consumers, whose lives have been disrupted with the recent changes, through these new channels.

This is because consumers today are becoming smarter, seeking more convenience without sacrificing quality— which is why retailers are now compelled to bring worthwhile experience for them across touchpoints to keep them interested. For Roy, retail is bound to parallel societal changes.

“Moving forward, brands and retailers need to treat the internet not just as complementary to the in-store experience, but rather as a key channel that expands their reach globally. And so, the online experience must be smart, personalised, and engaging,” Roy said.

The GlobalData analyst added that with continuous improvements in access to smartphones, the number of internet users in the Asia-Pacific region is expected to increase by 24% and broadband subscribers are likely to grow by 17.6% from 2020 to 2025.

Meanwhile, Yu described that the development of omnichannel strategies in the food and consumer goods sector varies by country.

In China, omnichannel is more mature with the focus shifting to rural areas for untapped growth. Whilst in South Korea, omnichannel is still relatively new, so retailers are making big investments in delivery services, logistics, and IT to meet shoppers’ demands. Retailers are also transforming their stores to be more compatible with online operations.

Yu also mentioned that there are many other countries in the region, such as the Philippines, Vietnam, Indonesia and India where online grocery penetration is low.

However, these markets are showing strong online growth due to changing shopping habits.

As omnichannel capabilities increase in the region, retailers are now investing to enhance these channels due to the surge of smart buyers.

“Omnichannel retailing ultimately meets shoppers’ needs better, enabling them to buy anywhere, at any time in any way they want. It will become an increasingly indispensable way for consumers to shop in Asia,” Yu said.

GlobalData’s Q1 2021 survey revealed that convenience (73%) and time-saving aspects (67%) are the two primary drivers of online shopping in the APAC region. Shoppers also relied on online channels to take advantage of lower

INDUSTRY BRIEFING: E-COMMERCE

Omnichannel will become the main retail model in the next few years

prices (48%) and variety and choices available (47%).

“COVID-19 pandemic has made online shopping more of a permanent lifestyle. Against this backdrop, the online channel is benefitting and is overcrowded with prospects... Investments in omnichannel capabilities will help retailers to cater to shoppers with a changed set of preferences,” Roy said.

Meanwhile, a huge aspect of omnichannel retail present today is collaborating with other industry players to ensure smooth operations. Since the pandemic fasttracked the need to meet consumer demands in a more efficient way, retailers have since teamed up with other marketers, suppliers, and third party logistics companies, amongst others—which, according to Yu, is essential in building trust, a solid foundation for omnichannel to thrive.

“Brands need to select the right companies to partner with, choosing those that share the same vision or with complementary capabilities. It’s important to take the long view, for example, discount platforms might generate short-term sales gain but may dilute brand identity longer term. Brands should be reviewing their strategies and market position in the post-COVID environment,” Yu said.

Roy also noted that some retailers are using technologies such as non-fungible tokens (NFT) to monetise value and exclusivity, by ensuring traceability through the supply chain and retail operations.

“The integration of NFTs in business will help retailers to maintain credibility and transparency for customers,” Roy said.

A huge opportunity for retailers The need to integrate online channels in businesses is not an easy task. A lot of time, effort, and resources must be put into being able to operate successfully in such an unfamiliar and challenging environment.

Roy mentioned that those struggling with omnichannel strategies must consider selling on marketplaces as it reduces their fixed costs of operating physical stores and also allows them to showcase their product range to a wider customer base.

“To turn the COVID-19 pandemic into an opportunity,

retailers must use technology to expand the geographical footprint of their services. Partnership with logistics and supply chain startups will enable retailers to offer cuttingedge logistics services such as delivery by drones and autonomous vehicles and robots,” Roy said.

Several physical store retailers have switched to online marketplace models to expand their reach and explore new business avenues.

“Consumers’ extended use of social media and greater internet penetration offers opportunities to retailers to use digital platforms as retail touchpoints to translate into sales and consumer loyalty. From new product launches to creating buzz around the product, social media is an excellent tool to attract consumers,” she added.

Meanwhile, Yu acknowledged the complexity and the challenges for the struggling retailers, including cost, capability, coordination, and cultural change. To address this, the first steps are to establish a future vision, recruit the right people, invest in data, and digitise the supply chain, Yu said.

The future of retail The analysts believed that omnichannel is here to stay and it will become the main retail model in the next few years, helped by advances in technology.

“As the economy continues to recover and countries reopen borders, omnichannel retail will develop even further, creating more opportunities for companies to collaborate and learn from each other,” Yue said.

Although stores reopen this year, GlobalData expected the yearly growth in online spending to drop back to 13.4%, but this is still $352.1b in more than consumers have spent since 2019.

“Value-seeking consumers in APAC present a huge opportunity for online retailers. Retailers with discount-based business models will leverage the rise in spending power of growing urban middle classes in the region,” she said.

“Retailers need to ensure they have fully embraced a change in mindset where channels are irrelevant, and stores are more about experience than selling. Data is also incredibly important and understanding it is the centrepiece that links all the elements together from analysing what customers need to inventory, marketing, promotions, sales forecasts and deliveries,” Yu concluded.

Value-seeking consumers present a huge opportunity for online retailers

HONG KONG BUSINESS | Q4 2021

25

COVER STORY

Hong Kong continued to experience rental declines for eight consecutive quarters

Office property market to recover despite high vacancy rates Analysts expect the property market to enter the last phase of its down-cycle.

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ong Kong’s office property market is in a state of recovery although vacancy is still high as corporate downsizing continues.

Because of this, overall net absorption remains in the negatives. According to JLL’s Hong Kong Property Market Monitor, the overall net absorption in July was -89,000 square feet.

Compared to figures last year, gross leasing volume has improved as tenants resumed making real estate decisions after postponing them last year due to the pandemic.

“However, most leasing transactions involved only relocation or upgrading, with limited expansion cases. Net absorption was still negative as many corporates opted to downsize in challenging times. Rents continued to fall but at moderate magnitude compared with 2020, Nelson Wong, head of research at 26

HONG KONG BUSINESS | Q4 2021

JLL in Greater China said.

In August, vacancy rate was at 9.6% with Kowloon East having the highest vacancy rates amongst Hong Kong’s regions at 13.1%.

Central’s vacancy rate rose to 7.7% at the end of August.

According to JLL, some tenants have opted to relocate to more cost-effective locations; however, demand for premium office spaces in the submarket remained healthy.

Rental declines continue Hong Kong continued to experience property rental declines for eight consecutive quarters.

In the first quarter of 2021, rental decline moderated to 3.5% compared to 5.1% in the fourth quarter of 2020.

Savills reported that Wanchai/ Causeway Bay registered the largest rental fall amongst all sub-markets at -4.3%, partly because of its exposure to co-working operators

Leasing volume has improved as tenants resumed making real estate decisions after postponing them last year due to the pandemic

and financial services firms.

The first quarter (Q1) also saw Hong Kong Island rents fall by -4.0% whilst Kowloon rents were relatively stable, registering a 2.8% fall. Rents in Tsim Sha Tsui, Kowloon East, and Kowloon West fell by 5.2%, 2.2%, and 1.4%, respectively. Meanwhile, Kowloon West rents have proved relatively resilient since the third quarter of 2019 because downsizing has been less common for corporates situated in the area, where rents are said to be relatively cheap.

When the second quarter (Q2) arrived, however, Grade A rents still fell but were lower than last quarter at 2.6%. PRC corporates remained active in the leasing market and has proven to be resilient over the quarter and is largely driven by the financial services industry.

The proportion of Central Grade A offices occupied by PRC firms

COVER STORY increased from 20.5% in July 2017 to 23.5% in June 2021 despite the challenging market conditions In Q2 2021, rents in Central, Wanchai/ Causeway Bay, and Island East fell by 2.8%, 3%, and 2.6%, respectively, whilst overall Hong Kong Island rents recorded their lowest rate of decline since Q1 2020, registering a fall of 2.8%.

Kowloon rents dipped slightly and remained relatively affordable to tenants, falling by 2.4% over the quarter. Rents in Tsim Sha Tsui, Kowloon East, and Kowloon West fell by 1.8%, 4.2%, and 2.9%, respectively.

“Whilst there is broad agreement in the business community that the worst times are behind us, questions linger over when the best times will return, and tenants remain cautious,” Savills said.

Rising trends and demand drivers In its Hong Kong Offices, H1 2021 report, Savills said that as vacancy continues to rise, landlords must compete more actively and aggressively to fill space and rents must inevitably fall which is exactly what they have done.

“Office rents are around 20% below peak levels of early 2019 and could slip further. When looking ahead, we face the obvious uncertainty of how long entry at borders will remain restricted and social distancing will be in place,” Savills said.

The report said that Mainland businesses are likely to become a major driver of office demand over the next few years and this could rapidly be unlocked by easier travel to the Special Administrative Region. Another demand driver it mentioned is the initial public offering market, which could well post a record year this year driving demand for financial, professional, and business services. Potentially tech businesses could also extend their reach from elsewhere in the Greater Bay Area into Hong Kong.

Meanwhile, new trends have started to emerge such as the growing importance of amenities and flexibility in the office space.

According to JLL’s Wong, tenants have started to reconfigure their real estate requirements.

“Many tenants decide to upgrade

or reconfigure their real estate requirements in the wake of the pandemic. Flexibility and amenities are seen as more essential office features. Demand for flex space remains healthy and a number of business centre operators are expanding,” Wong commented.

New tech: a drag on office property?

Savills noted in its report that new technology is also an anchor that is likely to put a drag on the office property market.

The report that even before the pandemic, some executives have started the practice of working from home. Additionally, offices were being given a new sense of amenity and hot-desking was becoming more widely accepted.

Some were even experimenting with new communications apps.

“There is a well-worn cliché in real estate that ‘form follows function’ and with technology rapidly changing the way we work, accelerated by a pervasive virus, form has had to follow. Work from home (WFH) has become a mandated way of working in many countries and given roomier residential accommodation, lengthy, expensive, and sometimes unreliable commutes, may well become an established practice, at least for a few days a week for office workers,” Savills said.

However in Hong Kong, Savills noted that they may not see this level of adoption in the country as transport infrastructure is modern, efficient, and reasonably priced whilst residential is notoriously cramped.

“With a greater availability of offices over the next few years at more competitive rents, employers may find that they can afford lower worker densities and more genuine amenity, luring many of us back to mingle once again with colleagues,” Savills added.

Predictions The extremely limited supply in 2020 and 2021 has been more than offset by shrinking demand which resulted in several quarters of rental declines. Savills expect that demand will recover later in the year, however, substantial new

Savills Grade A Office Rental Indices By District, Q1 2010 to Q2 2021

Source: Savills Research & Consultancy

Many tenants upgrade or reconfigure their real estate requirements.

Flexibility and amenities are seen as more essential office features

supply in 2022 and 2023 should see property rents come under further downward pressure.

Meanwhile, JLL’s Wong observed that flexible working spaces have become more popular. Offices are now considered as the social hub for employees, who may look for options to work from home or at the office after the pandemic. Wong also expected some corporates may switch to “work-from-anywhere” mode with a mixture of head office, flex space, and WFH in the future.

For his prediction, Wong expects the office market to enter the last phase of the current down down cycle and to bottom out in the next 12 months.

“Rents are expected to grow moderately since 2022 due to the large amount of new supply coming to the market,” Wong said.

Grade A Office Supply, 2020 to 2023F

Source: Savills Research & Consultancy

HONG KONG BUSINESS | Q4 2021

27

COVER STORY

Decline in expats in Hong Kong weighs on luxury residential rental market However, the rise in existing local demand primarily softened the blow.

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he luxury residential rental market saw a huge decline in the last three months of 2020 as border closures became a hindrance for potential buyers, as well as capital inflow.

However, the second quarter (Q2) of 2021 saw the end of eight consecutive quarters of decline as luxury residential rents recorded an increase of 1.4%, which analysts say is a sign of rents bottoming out for the first half.

According to real estate services firm, JLL Hong Kong, the decline of expatriate arrivals in the country had a significant impact on the luxury residential rental market.

Expats have traditionally been the main source of leasing demand for luxury housing. But much like last year, there were limited arrivals in the first half of 2021 due to travel restrictions.

However, the luxury residential rental market was saved by local

demand.

“With few new expatriate arrivals, the luxury rental market continued to be primarily supported by existing demand. Viewing activities improved from very low levels previously as the pandemic was better contained,” Nelson Wong, head of research at JLL in Greater China said.

Higher demand for large units Wong said that as the work-fromhome arrangement becomes popular, it has probably prompted some tenants to upgrade their dwellings to accommodate certain work-related needs, resulting in higher demand for large size units.

“The market also recorded some eye-popping leasing transactions driven by demand from senior management of mainland Chinese corporates. Also, shrinkage in housing budgets for existing expatriates has prompted some to relocate from the Peak to the Mid-

Locals and expatriates are still the major demand drivers in the leasing market

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HONG KONG BUSINESS | Q4 2021

With few new expatriate arrivals, the luxury rental market continued to be primarily supported by existing demand

Levels or even further away to the New Territories, resulting in higher demand for high-end rental units in these districts,” Wong added.

Slow start In a report by real estate firm Savills, the luxury leasing market was quiet for the first quarter (Q1) as businesses were hampered by tight quarantine rules set by the government.

Savills said luxury apartment rents on Hong Kong Island, Kowloon, and the New Territories fell by 1.2%, 1.1%, and 1.7%, respectively, all recording lower rates of decline compared with the previous quarter.

Leasing activity has come to rely on local demand given that new arrivals have been scarce.

Q1 saw all districts in Hong Kong register smaller rates of rental decline compared to the previous quarter with Southside/Shouson Hill recording the largest decline with

COVER STORY Rental Performance of Major Submarkets

With the rising popularity of workfrom-home arrangements, tenants upgrade to larger units to accommodate work-related needs

Source: JLL

rents falling by 2% in Q1.

Savills said that reductions in housing allowances have driven tenants into lower-priced districts.

Rental performance As the second quarter arrived Savills said that they are seeing few Mainlanders in the leasing markets but PRC sales activity in areas, such as Mid-levels, Kennedy Town, Sheung Wan, and Kai Tak in the $8m to $20m budget range has been more marked.

“These buyers can be characterised as yuppie couples starting out in Hong Kong seeking 500- to 700-square-feet (sq ft) apartments.

Locals and expatriates are still the major demand drivers in the leasing market,” Savills said.

Meanwhile, Q2 2021 also saw mild rental increments in all districts in Hong Kong Island with Mid-Levels registering the largest rise (0.7%), followed by Pokfulam (0.5%) and The Peak (0.5%).

Savills observed that Hong Kong Island tenants traditionally come from finance-related industries, which are benefitting from the flourishing IPO market, which recorded fundraising of $184b over the first five months of 2021, representing a dramatic increase of 620% over the same period in 2020.

In Kowloon and the New Territories Tai Po/Shatin was particularly active as elevated supply levels have forced landlords to be more pragmatic. With less traffic than the increasingly congested Sai Kung/Clearwater Bay area and offering a 25-minute commute to Central, the appeal of the area

is obvious. A large apartment of 1,500-1,600 sq ft with a car park space can be let for less than $50k per month and townhouses can be had for $60k to $100k per month with a roof, small garden, car park, and (crucially) private access.

The accessibility of the district will be further improved after the opening of the cross-harbour section of the Shatin-Central Rail Link, which should open in either the second or third quarter of 2022.

Meanwhile, all submarkets in Kowloon and the New Territories recorded rental increases except Tai Po/Shatin, which was affected by the completion of new developments in Kau To Shan which lured new tenants from Tai Po. Discovery Bay saw the largest rental increment amongst the submarkets in Kowloon and the New Territories, followed by Sai Kung (+1.2%) and Ho Man Tin/ Kowloon Tong (+0.4%).

Townhouse rents registered a Capital valuesrebounded since 2021

Source: JLL

rental increase of 0.9% over the quarter, up from an increase of 0.2% in Q1 in 2021. Despite the rebound over the last two quarters, townhouse rents are still 12.8% below peak Q1 in 2019 levels. The typical budget for a house on The Peak is from $120k to $400k per month. Some super luxury houses may ask for $600k or above.

The recovery of the luxury residential market may also be attributed to several trends observed rising in Hong Kong.

According to JLL, with the rising popularity of work-fromhome arrangements, tenants were prompted to upgrade to larger units to accommodate work-related needs.

Meanwhile, shrinkage in housing budgets for existing expatriates has prompted some to relocate from the Peak to the Mid-Levels or even further away to the New Territories, resulting in higher demand for highend rental units in these districts.

Additionally, tenants took advantage of the rent decline of 16% between the third quarter (Q3) of 2019 and Q1 2021 to upgrade from medium- to large-sized units. This was reflected in the drop in vacancy rate according to the latest figure from the Rating and Valuation Department.

Predictions JLL has three predictions for the property market which has seen capital values rebounding for 2021.

The first is that together with sustained end-user demand and substantial liquidity, better-thanexpected economic recovery will further support the housing market.

Second, with the improving economic and virus trends, the leasing market is anticipated to improve gradually with the expectation of the border reopening before the end of 2021. More leasing enquiries are expected in Q3 2021 amidst the traditional home search season. Luxury rents are forecasted to rise by 5-10% by the end of 2021.

Last, the substantial liquidity and economic recovery will further stimulate investment sentiment.

“We expect transaction volume for luxury properties to stay high despite the ongoing border shutdown.

Luxury capital values are forecasted to rise by 5-10% in 2021,” Wong said.

HONG KONG BUSINESS | Q4 2021

29

ANALYSIS: ARCHITECTURE

Architects to remodel Hong Kong into a future-ready city Highly integrated design and infrastructure that will further link Hong Kong into the Greater Bay Area are expected in the next year.

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ustainability drives have long emerged in an attempt to mitigate the worsening climate crisis, a lesson learned in the hard way. In light of this, Hong Kong architects expect that the city will be remodeled to have a greener design.

On top of this, Hong Kongers will likely see infrastructure projects that will further integrate the city into the Guangdong-Hong Kong-Macau Greater Bay Area development.

“On the whole, the industry is going to lean towards sustainability, net carbon zero, biophilic architecture, wellbeing and urban resilience,” LWK + Partners told Hong Kong Business.

“Therefore, we expect architectural design to be increasingly integrated with public infrastructure and urban programmes, with emphasis on reconnecting with nature.”

The Hong Kong government will be working towards achieving carbon neutrality before 2050, which Chief Executive Carrie Lam said in her 2020 policy address following Chinese President Xi Jinping’s announcement to achieve carbon neutrality before 2060. The

The future of Hong Kong is green

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HONG KONG BUSINESS | Q4 2021

Architectural design will be increasingly integrated with public infrastructure and urban programmes, with an increased emphasis on reconnecting with nature

government will also be exploring ways to reduce carbon emissions, promote green transportation, and boost investments through green finance plans.

LWK + Partners, for its part, promotes designing zero energy buildings, which are structures that utilise renewable sources to generate the same amount of power it consumes. In a study, conducted

by Stephen Lau, LWK + PARTNERS Design Research Director, he noted that architecture is key in constructing zero energy buildings.

For one, the structures could feature outdoor terraces and hanging gardens as well as staircases instead of lift systems. The roofs may also be designed to provide more shading, and in effect, reduce energy demand.

Solar panels may also be installed to capture solar power.

Moreover, according to LWK + Partners, the industry will likely utilize building information modeling (BIM) to plan, design, and construct projects. BIM allows architects, engineers and developers amongst others to collaborate by creating digital models.

“BIM-based project management will continue to gain traction as a global trend with wider adoption across the industry.”

Remodelling commercial properties Aedas, meanwhile, expects commercial properties to be remodelled to adapt to the growing e-commerce trend and the reliance on both online and offline channels.

The firm also expects that Hong Kong will see infrastructure that will further integrate it into the Greater Bay Area.

“With traditional retail developers adapting to the new norms of onlineoffline and experiential retail trade, and more companies embracing the work-from-home or flexi-hour practice, we see more work coming from remodelling and adapting of retail, office and leisure spaces,” Aedas Chairman Keith Griffiths said.

Griffiths noted challenges Aedas faced emerged from the livework balance and the “blurring boundaries” in retailing, which has led to changes in how the industry designs residential, retail and office spaces. He added architects and designers should be “acutely aware of” these trends, which they must be prepared to respond to actively.

“The e-commerce boom will bring in new opportunities in logistics sector as well. We expect some major infrastructure, civic and public sector works from the government and developments that would facilitate Hong Kong’s integration with the mainland under the GuangdongHong Kong-Macau Greater Bay Area Initiative.”

The Greater Bay Area development opens opportunities for Hong Kong to strengthen its position as an international aviation hub and maritime centre and regional logistics hub.

In 2018, Aedas designed the Hong Kong West Kowloon Station that served as the “gateway” to the city and the Hong Kong-Zhuhai-Macao Bridge Hong Kong Port, which is another entry point to Hong Kong.

The construction industry is amongst the sectors hit the hardest by the crisis that limited mobility

ANALYSIS: ARCHITECTURE Architects continue to design and advocate highly connected, porous, resilient urban hubs that speaks to Hong Kong’s local communities

Hong Kong’s architecture and design in a crisis

of nearly everyone. Data from the Census and Statistics Department showed the construction output in the first quarter of 2020 dropped by 6.5% in nominal terms to $52.3b.

Architecture and design in a crisis “The building industry was used to relying on physical, in-person engagements with clients and partners. Border restrictions therefore pose as ignificant challenge to the building cycle,” LWK + Partners said.

“Site inspection has become difficult for monitoring progress, not to mention the supply chain disruptions and quarantine-induced manpower shortages which could often lead to delays in actual construction work.”

Hong Kong has close to 500,000 registered workers in the sector. This number dropped by 10% in April 2020.

In the last years, LWK + Partners operated using an increasingly agile model that allowed it to integrate vertically and horizontally.

Vertically, the firm’s experts in planning, design as well as operations, together with a Design Research Unit, were consulted on sustainable design, net zero and technology; whilst horizontally, LWK + Partners have a multidisciplinary team and interoffice collaborations across 12 studios in China, Southeast Asia, and Middle East and North Africa.

“Our global studio network ensures that local representatives are physically available for clients and projects, and helps balance the risk of lockdown across different regions

to maintain smooth operations,” the firm said.

“At the same time, we have made significant progress in digital transformation with building project designs and progresses welldocumented on BIM-based project management platforms to facilitate cross-border communications and sharing of records.”

The firm noted through the BIMbased project management all parties are well-informed about real-time progress. This also goes hand-inhand with its vast office network in giving clients and partners a high level of confidence.

Keeping the business running Amongst LWK + Partners’ projects in Hong Kong include the 19-storey luxury residential development 10 LaSalle, 22-storey “medi-hotellike” Ventria Residence and luxury residential and hotel development Harbour Glory.

Aedas, which operates 12 offices in Asia, Europe and North America, likewise hurdled the challenge of keeping business running according to the local conditions in its respective branches.

“We have adapted our work methods to suit each country’s requirements, from mass quarantine to social distancing,” Aedas Chairman Griffiths said.

“It has brought challenges in maintaining continuous operation of our offices, communication with external parties, and also to keep each building project on the programme schedule.”

Digitalised work methods In response to this, Aedas implemented a series of measures across its 12 offices, including the use of digitalised working methods and the Aedas Global Design Network.

With these, the firm was able to provide unobstructed service to its clients.

He added that its global presence allowed Aedas closely observe how the internet revolution evolved and accelerated during the crisis. This opened an opportunity for the firm to adapt its designs and provide a more flexible arrangements for functional spaces and create the work-liverecreate dynamic for our future communities.

“We continue to design and advocate highly-connected, porous, resilient urban hubs that speaks to our local communities,” Griffiths also said.

“We believe these new urban forms are proven viable solutions for highdensity cities and are particularly relevant for a post-pandemic world.”

Aedas was also behind the award-winning The Beacon hotel, the five-level concourse at the Hong Kong International Airport and the redevelopment of The Forum.

In addition, Griffiths noted the global economic recession served as a hurdle to the industry, but not as much in China, Aedas’ main market.

This is evident in the decline in the commercial and hospitality sectors, particularly private sectors.

The Beacon Hotel (Photo by Thebeaconhotel.com.hk)

HONG KONG BUSINESS | Q4 2021

31

ANALYSIS: REAL ESTATE

Hong Kong’s economic recovery led to a rise in property transactions in the first nine months of 2021

Real estate investment in HK sees upwards trend for 2022 Residential prices, as well as retail and office rents, will likely grow in 2022.

I

nvestment activity in Hong Kong’s real estate sector has picked up as seen in both the residential and commercial property market. Realtors in the city expect this trend to continue in the next year, provided current economic conditions persist.

The city’s economic recovery led to a rise in property transactions in the first nine months of the year with an estimated year-on-year increase of 27% to over 77,360 sales and purchase agreements (S&Ps). Of this, 57,956 were residential S&Ps, data from Cushman & Wakefield showed.

Commercial property investments, likewise, fared well in the first half of the year as volume climbed 62% YoY to US$4.3b, according to a report by Real Capital Analytics.

Knight Frank expects this trend to be sustained if the City manages to keep the outbreak under control.

“If there is no resurgence of local COVID-19 cases, it is expected that both the economy and employment conditions to be stabilised, which will support both leasing and sales transactions in different property market segments,” Martin Wong, Director, Head of Research & 32

HONG KONG BUSINESS | Q4 2021

If there is no resurgence of local COVID-19 cases, it is expected for the economy and employment conditions to be stabilised, which will support leasing and sales transactions in property markets

Consultancy, Greater China, Knight Frank, told Hong Kong Business.

Hong Kong’s real estate property market outlook Hong Kong’s economy expanded by 7.9% in the first quarter of the year, ending six consecutive quarters of contraction. This was driven by the fiscal stimulus granted by the government and strong external demand at the time. The city’s growth, however, slowed down as the second-quarter gross domestic product expanded by only 7.5%.

This was attributed to the persisting border control imposed to contain the continuing outbreak.

Hong Kong has also sustained the decline in its unemployment rate as it dropped for the sixth consecutive time to 4.7% between June to August 2021 after it peaked at 7.2% in February.

Moreover, Wong said, “The low-interest rate environment is another factor to encourage sales transactions and property price growth over a longer-term.”

In light of this, Wong said office rents in Hong Kong Island could increase by 1-3% and by 3-5% in

Kowloon. He also sees retail rents to go up by 0-5%; whilst residential home prices will increase by up to 5% in the next year.

The Grade-A office market in Hong Kong Island recorded its lowest vacancy rate in August since November 2020 as landlords have made adjustments to attract more tenants. The retail leasing market, meanwhile, saw signs of demand particularly across small to mediumsized shows with rents worth HK$150,000 or below.

Moreover, Housing prices in Hong Kong have so far risen by 4.3% in the year to July 2021, and at the rate of recovery of the city’s economy, Knight Frank projected that prices will see an increase of another 2% by year-end and by 8% for the full-year 2021. This will also be driven by the vaccination rate in mainland China and Hong Kong, as well as the possible reopening of borders.

In its Q2 Global House Price Index, Knight Frank reported the housing prices increased by an average of 9.2% across 55 countries and territories from the beginning of the year until June 2021. It was noted that the quarterly growth seen in Hong Kong showed the city is ahead of other economies in Asia, such as mainland China, South Korea and Singapore.

Residential sales growth JLL is likewise optimistic over the outlook of Hong Kong’s residential market as it forecast the capital value of both mass residential and luxury residential to grow between 0-5% in the second half of the year.

In its Mid-year report, JLL linked its projections to the growing housing demand, driven by low-interest rates and economic recovery.

Its second half forecasts are higher than the 3% growth recorded in the first half of the year. The JLL report said that the monthly residential sales over the same period also rose to an average of 6,689 from 4,562 on average in the first half of 2020.

Centaline Property Agency expects the Hong Kong residential market to continue its rebound and remain strong over the same period due to demand and improved purchasing power of Hong Kongers.

HONG KONG BUSINESS | Q4 2021

33

EVENT COVERAGE: TECHNOLOGY EXCELLENCE AWARDS

Hong Kong Business recognises outstanding technology companies at Technology Excellence Awards 2021

W

ith COVID-19 fast-tracking digital transformation across multiple industries, businesses must be flexible to use technological solutions and digitise their operations in order to bring their clients to a whole new level of convenience.

With this, the most outstanding technology companies and startups were recognised at the third HKB Technology Excellence Awards held digitally throughout the month of September.

The HKB Technology Excellence Awards honoured enterprises that have remarkably contributed to transforming industries through technology. Winning companies were also interviewed virtually to share their thoughts as they emerged victorious in the prestigious awards programme.

This year’s nominations were evaluated by an elite panel of judges consisting of Joanna Wong, Hong Kong Insurance Consulting Leader and Greater China Core Business Operations Chief Innovation Officer at Deloitte Asia Pacific; Gaurav Mehra, Partner - Business Transformation, Financial Services at EY; William Gee, Partner at PwC Mainland China and Hong Kong; Jason Yau, CPA, CITP, Regional Leader, Asia Pacific and Partner, Technology and Management Consulting at RSM Hong Kong; and Adele Yim, Partner, Head of Risk Advisory Services at Mazars in Hong Kong.

HKB Technology Excellence Awards 2021:

HSBC AI - Banking Digital - Banking

Atome Fintech - Payments Blue Insurance Hong Kong Fintech - Life Insurance

Jardine Schindler Group AI - Industrial Engineering Robotics - Industrial Engineering UV Technology - Industrial Engineering

Chinachem Group Property Technology - Smart City

LexisNexis Hong Kong Analytics - Legal

Datasite Fintech - Financial Services

livi bank Fintech - Banking

DYXnet by NEOLINK ICT - Technology

LTLabs Limited Software - Apparel

Eureka Nova Emerging Technology - Commercial Building Construction Property Technology - Real Estate Robotics - Real Estate

Midland Realty Augmented Reality and Virtual Reality - Real Estate Digital - Real Estate

Below is the list of the winning companies. Congratulations!

EventX Software - Technology

MTR Corporation Ltd AI - Real Estate ICT - Real Estate

Fidelity International Mobile - Financial Services

Pegasystems Digital - Technology

GienTech Technology (Hong Kong) Limited AI - IT Services Software - IT Services

QIMA Software - Business Services

GFT Cloud - Banking Cloud - Financial Services Gleneagles Hospital Hong Kong Online Services - Healthcare Global Sources E-Commerce - Business Services Hong Kong Productivity Council AI - Manufacturing Infrastructure Technology - Building Services and Facilities 34

HONG KONG BUSINESS | Q4 2021

SoftwareONE Enterprise Software - Real Estate Sunrise Diagnostic Centre Limited Biotechnology - Healthcare Technology Tianda Pharmaceuticals Limited Mobile - Healthcare Technology Tricor Services Limited Digital - Financial Services Yardi Property Technology - Technology

Blue Insurance Hong Kong

Chinachem Group

Datasite

DYXnet by NEOLINK

Eureka Nova

Fidelity International

Eureka Nova

GienTech Technology (Hong Kong) Limited

GFT HONG KONG BUSINESS | Q4 2021

35

EVENT COVERAGE: TECHNOLOGY EXCELLENCE AWARDS

Gleneagles Hospital Hong Kong

Global Sources

Hong Kong Productivity Council

Jardine Schindler Group

Atome

LTLabs Limited

LexisNexis Hong Kong 36

HONG KONG BUSINESS | Q4 2021

Pegasystems

livi bank

Sunrise Diagnostic Centre Limited

QIMA

Tianda Pharmaceuticals Limited

Yardi

HSBC

Tricor Services Limited

HSBC

Midland Realty HONG KONG BUSINESS | Q4 2021

37

AI - IT SERVICES SOFTWARE - IT SERVICES

GienTech’s end-to-end IT solutions fuel region’s biggest digital transformations The company won two accolades at the HKB Technology Excellence Awards 2021.

GienTech provides unparalleled support to digital services for clients in Hong Kong

C

reating a better digital world by bringing people and technology together may be a difficult task. But GienTech has taken on the challenge for the past 26 years.

Today, they are the leader in China’s financial services industry, with 38000+ employees worldwide, who are committed to delivering top -quality IT service and solutions to their clients in 28 different main cities with more than 69 IT service delivery centres.

GienTech has answered the call for help in digital transformation across industrial companies, ranging from insurance, entertainment, and telecoms, aiding them in their journey toward an excellent end-toend IT service and establishing their digital workforce in place.

At the core of GienTech’s expertise is the deployment of a digital workforce. Its solution assesses business automation initiatives, such as automated testing using DevOps and robotic process automation (RPA) and another RPA for a regional fixed telco network provider; cloud-based chatbots for regional exchange; advanced optical character recognition for regional insurance; and artificial intelligence (AI) conversational chatbots, providing top-notch IT solution to customers.

Furthermore, the company’s IT solution design is built to improve client intimacy with their customers, increasing customer satisfaction, engagements, and streamlined internal operations. An example of this is the 38

HONG KONG BUSINESS | Q4 2021

self-help service portal and mobile insurance claims app.

The competencies of GienTech make it possible to get the clients to create new business opportunities, improve their company’s customer satisfaction, increase workforce productivity, and ensure a high return on investment. Its proven IT service allows the companies to focus their energies on the core of the business, rather than following and building their own IT service.

All these prove that GienTech’s leading technologies and strong background provide unparalleled support to digital services for many of their Hong Kong-based clients in the last fifteen years. It has built solid client relationships, anchored on trust and confidence in the company’s expertise.

GienTech’s excellence not only opened the doors to achievements, but also aided their clients in getting one.

The achievements and services of GienTech translate into better client service and employee productivity, highlighting the

GIENTECH IS DETERMINED TO CREATE A BETTER DIGITAL WORLD TO BRING PEOPLE AND TECHNOLOGY TOGETHER benefits of digital transformation. This has increased brand awareness, efficiency gains, customer experience, and internal employee morale—the essential benefits, in this time

of the pandemic, which has dramatically impacted the digital transformation of the companies.

For GienTech’s dedication to creating a better relationship between people and technology and helping companies build a better service amidst the COVID-19 global crisis, it received an award at the HKB Technology Excellence Awards 2021 in AI - IT Services and Software - IT Services.

This goes to show that their business model and operation are indeed effective, with the help of innovative employees that are inspired to lead transformation in the world of technology.

Ultimately, GienTech aims to be unrivaled in innovations through ushering the digital age using excellent IT services. “GienTech is determined to create a better digital world to bring people and technology together. We are committed to continuous innovation in this digital age. Also, the company aims to help not only Chinese enterprises in establishing their businesses, but we are also excited to work with international companies. Today, digitalisation is indeed no longer a negotiable for companies,” said Andy Fung, general manager of GienTech Technology (Hong Kong) Limited and program executive of GienTech’s Intelligent Automation Practice (APAC).

Looking ahead, GienTech expects to continue to employ innovative employees to help them achieve their mission. The company plans to expand its footprint to the financial services industry in Hongkong and worldwide in the coming months.

GienTech’s IT solution design is built to improve client intimacy with their customers

HONG KONG BUSINESS | Q4 2021

39

AI - INDUSTRIAL ENGINEERING

Jardine Schindler pioneers solutions and technologies for the future-ready tech The group bagged three trophies in the Hong Kong Business Technology Excellence Awards. across the globe.

Jardine Schindler Group won three major awards in the recently concluded Hong Kong Jardine Schindler Group today Business Technology Excellence Awards.

In 1974 Jardine Matheson and The three technologies featured are BuilT-In Schindler Switzerland officially Facial Recognition (AI - Industrial Engineering signed an agreement establishing a Award), BuilT-In Robot Service Connection 50/50 joint venture named Jardine (Robotics - Industrial Engineering Award), and Schindler Ltd. Today, Jardine the Ultra UV Handrail Device (UV Technology Schindler has operations in Brunei, Industrial Engineering Award).

Cambodia, Hong Kong, Macau, The Schindler BuilT-In Facial Recognition Malaysia, Myanmar, Indonesia, the was developed in-house at the group’s Hong Philippines, Singapore, Thailand, Kong hub. This technology unlocks nextTaiwan, and Vietnam. generation access features and provides an The group employs over 5,800 avenue for buildings to provide seamless people in 44 office branches, with an building travel to its patrons. The tech can executive committee that represents be integrated at building entrance turnstiles, the diversity of the region. In the 47 elevator panels, and various access points. years of its history, Jardine Schindler By utilizing biometric artificial intelligence, has supported the sustainable growth the system can quickly identify and verify of Asia by providing solutions that are users by matching key facial features to the reliable and innovative, with numerous user registration database, even if they are key installations across the region. wearing face masks.

Equally as remarkable is the Schindler Innovation and technology at BuilT-In Robot Service Connection. Service Schindler robots help transform building dynamics, At its core, Jardine Schindler promises such as automating tasks and can provide that its products, services, and seamless experiences for end-users. actions will always be worthy of the As for the third featured tech, the Schindler The group brings solutions that improves the quality of urban life description—Trusted, Professional, Ultra UV Handrail Device has proved to be and Smart— which sum up the group’s useful to businesses, especially during the commitment to adding value to its pandemic. With an innovative and effective customers’ buildings and businesses UV-C light system, the device uses germicidal ur foundation through reliability, integrity, expertise, UV-C light to treat the handrails at a short Jardine Schindler Group is a joint experience, intelligence, and innovation. distance. This directly damages the genetic venture between Jardine Matheson Looking forward, the world’s urban materials of bacteria and viruses, preventing in Hong Kong and Schindler Group of population is set to increase by around their rapid spread. The automatic disinfection Switzerland, which bring together over 300 one billion by 2030. Investing in the future system operates on a 24/7 basis. years of experience in business management, becomes more important Jardine regional specialisation, and engineering than ever.

Schindler have excellence.

There will be big been pioneering Jardine Matheson, having been founded in JARDINE SCHINDLER challenges in making vertical China in 1832, is a diversified Asian-based PROMISES THAT ITS sure that there is a transportation group with unsurpassed experience in the PRODUCTS, SERVICES, AND since Schindler better quality of urban region. The conglomerate comprises a broad life. Jardine Schindler was founded ACTIONS WILL ALWAYS portfolio of market-leading businesses; is working hard to in 1874. The and is active in the fields of motor vehicles, BE WORTHY OF THE anticipate the unique group does this property, retail, engineering and construction, DESCRIPTION—TRUSTED, needs of all those living by elevating on transport services, luxury hotels, and many PROFESSIONAL, AND SMART a strong culture in its community of fastmore. growing cities. The group and a legacy of Schindler was founded in 1874 in Lucerne, believes that its technical innovation, and Switzerland, and is one of the world’s leading innovations will play a big role in helping continuously driving forward new solutions providers of elevators, escalators, and people lead a safe, pleasant, and comfortable and technologies that keep the world moving, moving walks, as well as maintenance and life in these constantly expanding cities. whilst helping to improve the quality of life in modernisation services, with coverage of As a testament to its culture of innovation, cities. almost every type of building requirement

O

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ONLINE SERVICES - HEALTHCARE

Gleneagles Hospital Hong Kong recognised at HKB Technology Excellence Awards 2021 The hospital aspires to help shape the city’s private health care through innovation, transparency, advanced healthcare solutions, medical technologies and high-quality services.

Gleneagles Hospital Hong Kong

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multi-specialty private hospital, Gleneagles Hospital Hong Kong (Gleneagles), provides cutting-edge medical technologies and a comprehensive range of clinical services spanning more than 35 specialties and subspecialties.

Gleneagles is a joint venture between IHH Healthcare and NWS Holdings Limited, with the University of Hong Kong (HKU) as its exclusive clinical partner. Its unique privateacademic partnership brings to patients the best of both worlds, marrying quality services and comfort with strong clinical governance that safeguards the highest professional standards, patient care, and good practices.

As Hong Kong’s top-notch private teaching hospital, Gleneagles also contributes to the training and development of healthcare professionals and the advancement of medical and clinical research.

Gleneagles aspires to help shape the city’s private health care through innovation, transparency, and high-quality services.

The hospital is committed to bringing price transparency in private hospitals through pioneering all-inclusive, fixed-price medical packages. Package prices cover all relevant charges, including doctor’s fee, anaesthetist’s fee, procedures, operating theatre, nursing care, medication, equipment, consumables, implants, meals, two-bedded room charges, as well as the costs related to complications, such as intensive care and re-operation.

Through this, Gleneagles aims to enhance people’s confidence in using private health care in the hope of helping alleviate the burden on public hospitals in the long run.

Being part of IHH Healthcare—a global healthcare group, which operates 80 hospitals wide-wide—Gleneagles is able to leverage IHH’s international experience and network to 42

HONG KONG BUSINESS | Q4 2021

extracorporeal membrane oxygenation or ECMO, which provides support to the heart and lungs in critical conditions.

The COVID-19 pandemic has been a catalyst for a faster adoption of technological advancement in the delivery of healthcare.

Gleneagles has started virtual consultation service since 2020 to give patients an additional option of receiving care from home, making attending consultation, and receiving appropriate medical care worry-free, particularly amidst the pandemic. Strategic partnerships have also been developed with bring in new systems, innovative technologies, different industries to launch innovative and best practices for its patients. To name a healthcare solutions. One of which is the few, it is the first private hospital in the city to hypertension care programme that combines adopt an automated drug dispensing system face-to-face and video consultations with in all wards and run a 24-hour fully-automated remote blood pressure monitoring through track system in its clinical laboratory for the use of a smart device to record blood conducting a wide spectrum of tests. pressure readings and transmit health data to Its collaboration with HKU has allowed doctors. Combining health technologies with Gleneagles to put in place strong clinical teleconsultation helps enhance patients’ selfgovernance, which ensures quality care, awareness of their health conditions, whilst patient safety, and clinical efficiency. empowering them to play a more active role in This unique partnership has also brought the management of their health. Auto charting innovative and the latest treatment solutions, of the readings provides insights into patients’ including some of the highly-specialised adherence and response to treatments, surgeries managed by the hospital’s Centres helping doctors advise the most appropriate of Excellence. For instance, Gleneagles is the follow-ups or intervention. first private hospital in Hong Kong to perform As part of its effort minimally invasive, to enhance patient non-fusion scoliosis engagement and surgery by anterior GLENEAGLES ASPIRES TO vertebral body CONTINUE BEING A PIONEER experience, Gleneagles has launched the tethering, which is IN BRINGING TO PATIENTS “My Gleneagles revolutionary in Hong THE LATEST AND MOST SmartHealth” app Kong and Asia. The ADVANCED HEALTHCARE that offers a range hospital’s continuous pursuit of excellence SOLUTIONS AND MEDICAL of self-managed online services, and advancement TECHNOLOGIES including outpatient has fostered its appointment making, active adoption waiting time preview, of the latest and viewing of health records and laboratory test the most advanced medical technologies. results, bills settlement, hospital location One of the latest advancements include navigation, etc. More new services on the app the Joint Replacement Centre embarking are in the pipeline. on robotic arm-assisted joint replacement Embracing a culture of innovation, surgeries, which have contributed to enhanced Gleneagles aspires to continue being a surgical precision, faster patient recovery, pioneer in bringing to patients the latest and improved clinical outcomes. Its 24-hr and most advanced healthcare solutions Outpatient and Emergency Department and and medical technologies, as well as making Critical Care Unit, both supported by HKU, are quality care accessible and seamless to more also equipped with advanced cardiovascular patients through digital innovations. life support capabilities including the

HONG KONG BUSINESS | Q4 2021

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of one country, two systems by engaging hundreds of elite mainland testing professionals to ramp up the testing capacity in Hong Kong and implement the city-wide community testing programme

brought benefit to local community as testing cost lowered from thousands to hundreds of HKD

of speedy testing by

job opportunities and

providing on-job training to cultivate new blood for the industry

setting up 16 Air Laboratories within 12 hours

of recognized quality

standards including the External Quality Assessment Program of Public Health Laboratory Services Branch and infection control regulations

of COVID-19 testing capacity of Hong Kong from thousands to 300,000 per day in private sector

the awareness of the society on the importance of preventive screening

HONG KONG BUSINESS | Q4 2021

45

FINTECH - PAYMENTS

Atome reinvents customer-merchant shopping experience with BNPL

It provides an intuitive platform with its contactless, transparent, and flexible payment option that allows Hong Kong shoppers to split bills into three equal, zero-interest deferred payments.

Atome Billboard

T

he current situation has fueled digital disruptions in the way today’s consumers shop and pay. A new generation of digital-savvy and mobile-first consumers has emerged, craving for smarter and contactless access and more secure and flexible ways to enjoy shopping online or in-store.

Atome, the leading Buy Now, Pay Later (BNPL) solutions provider, has partnered with online and offline businesses to offer them flexible payment options. With Atome’s BNPL solutions, customers can split their purchase into three zero-interest payments and even postpone these payments to after three months, enjoying no interest and servicing fees when they pay on time.

According to Atome, its users are usually aged 26 to 45, who are digital and smartphone savvy and are active in social media. These users value flexibility and convenience, want to try smart shopping, and are constantly on the lookout for ways to maximise their spending.

Customers, who wish to avail Atome’s BNPL service, need to merely scan a QR code at a partner merchant using Atome’s mobile app or by choosing Atome during the checkout process. Not only do they enjoy this benefit, but also receive access to greater transparency, convenience, and affordability with their purchases, unlike when using traditional payment methods.

On the merchant side, Atome provides an intuitive platform that attracts a growing number of customers who prefer contactless and transparent payment options amidst the pandemic. Atome’s partner businesses have 46

HONG KONG BUSINESS | Q4 2021

For redefining the shopping experience of customers and strengthening the online platform of their partner brand, the company received an award at the HKB Technology Excellence Awards 2021 under the category Fintech - Payments. This proves that the company is indeed reshaping the experience of offline and online shopping, not only for the customers, but also for merchants, especially during the COVID-19 crisis.

Atome envisions to continuously lead the BNPL industry with its technology and growing partnership with retailers from across markets. “Atome will persist to innovate our services to improve the customer and merchant experience especially in this time of the pandemic. We aim to grown their online sales and have observed provide a service that will exemplify our higher conversions, as a result of fewer cart brand pillars which are: Aspiration, Access, abandonments and bigger basket sizes. and Advice. We will show our commitment to Atome also provides in-house analytics to the helping not only the customers but also the retailers to assist them in understanding the merchants in answering spending behaviour of the demands of the their consumers and ever-changing times ATOME PROVIDES AN minimising default risks.

Unlike other providers INTUITIVE PLATFORM THAT because we believe in shoppers and third-party payment ATTRACTS A GROWING empowering to afford products and platforms that payout NUMBER OF CUSTOMERS services over time,” said after weeks or a month, Atoms pays its partner WHO PREFER CONTACTLESS the company.

In the future, Atome AND TRANSPARENT merchants within three plans to focus on working days.

PAYMENT OPTIONS AMIDST growing merchant With BNPL on the THE PANDEMIC partnerships across key rise, more competitors categories to be able are expected to enter to drive value for Hong the market. However, Atome is confident Kong. Whilst the customer satisfaction rating about their position in the industry because of the Atome app is 4.7 on the Apple store, of the advantages they offer. Atome’s only 0.3 points less to perfection, Atome will regional coverage is one of these advantages. still keep on building and improving the Atome Merchants are choosing Atome to help experience by using customer feedback to them scale their business across markets ensure an excellent and consistent customer and reduce their go-to-market complexity. experience. The firm also expressed its In addition, the company offers top-tier excitement as they work on more features to technology on robust risk management and reward customers who have good payment credit profiling that can minimise transaction habits. rejections. All these are possible because they Currently, Atome has partnered with over invest heavily in studying the local market and 5,000 online and offline retailers across key employing experts in the field. product categories in nine countries, including In just six months, Atome has built a topSingapore, Indonesia, Hong Kong, Thailand, notch merchant network that enabled them Taiwan, Vietnam, Malaysia, and mainland to partner with over 300 retail brands across China; and with distinguished brands such as markets. The company also grew its order Pandora, Bonjour, SHEIN, Xiaomi, L’OCCITANE, volume 190 times from September 2020 to and Sasa.

March 2020.

HONG KONG BUSINESS | Q4 2021

47

AUGMENTED REALITY AND VIRTUAL REALITY - REAL ESTATE DIGITAL - REAL ESTATE

Midland Realty leads digital transformation in the real estate industry

Its successful digital initiatives propelled the company to become the leading online property platform. do not prefer buyers to visit their properties, especially during the pandemic. With VR technology, they can film their properties and let potential buyers or renters view the flats online. All of these help strengthen the transaction procedure and make the process more efficient. Our data shows that the deployment of VR can increase the conversion rate by more than 50%.

More tools with AI technology and big data Providing personalised experience is also our main goal. Apart from VR technology, we also introduced “AI Decoration” and “AI Talk” services. Customers can view the properties in different styles of decoration with just one click on our online platform. With “AI talk”, customers will be guided through the properties by a virtual agent. With big data, we also launched a new section called “District Encyclopedia” to consolidate all the transactions, demographics, and society data of each district and display them in a user-friendly way.

In the future, our digital platform will certainly become more important to our business. Under the Age of Big Data, we are going to use AI technology to further utilise the data we have, such as property data and web analytics data to create new tools like “Property Recommendation” to help our customers. We are also developing the whole ecosystem about the property investment cycle into our platforms.

Our goal is to provide a one-stop solution including pre-sales and post-sales service to our customers so they can enjoy the best service via the whole customer journey.

I

n the last few years, digital transformation the proportion of home buyers that started has been adopted by most of the their purchase journey on our digital platforms commercial industries, including the real has increased to more than 50% already. estate industry. Real estate proved to be a more complicated industry over time as Online traffic doubled during COVID-19 it requires both online and offline services COVID-19 has significantly sped up the to play indispensable roles in the overall trend of digital transformation of both customer journey. agents and customers. Back in the days A decade ago, most of the potential home when Hong Kong suffered the most from the buyers and owners walked into branches pandemic in mid-2020, our digital platforms of real estate played an important agencies directly role in sustaining our OUR GOAL IS TO PROVIDE to start the business. We launched journey. However, our revamped app in A ONE-STOP SOLUTION in the past five INCLUDING PRE-SALES AND early 2020 to digitalise to six years, POST-SALES SERVICE TO OUR more processes in the more customers customer journey. For CUSTOMERS SO THEY CAN changed their instance, users can ENJOY THE BEST SERVICE behaviour and search for properties VIA THE WHOLE CUSTOMER in a more precise way decided to start their customer and view the properties JOURNEY journey via from more perspectives online channels including VR and first. Our digital platforms became a crucial KOL videos introducing the flats. Also, element for doing business. According to our homeowners can list their properties for survey, even before the COVID-19 pandemic, sale entirely through our online platform. In 2020, the number of visits to our online platform doubled compared to 2019.

Undoubtedly, VR is the key technology to bring changes to us and our customers. It significantly saves time for customers and agents as the former can view all the targeted properties first and then screen out more desired ones for on-site visits. In addition, some homeowners Midland Realty KOL Campaign New App Features 48

HONG KONG BUSINESS | Q4 2021

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HONG KONG BUSINESS | Q4 2021

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Please note: The MPF Conservative Fund under the Fidelity Retirement Master Trust does not guarantee the repayment of capital. The purchase of a Unit in the MPF Conservative Fund is not the same as placing funds on deposit with a bank or deposit-taking company.

Fidelity SaveEasy Funds are not savings deposits and involve investment risks and this product may not be suitable for everyone. Investors should also consider factors other than age and review their own investment objectives.

You should consider your own risk tolerance level and financial circumstances before making any investment choices or invest according to the Default Investment Strategy. When, in your selection of funds or the Default Investment Strategy, you are in doubt as to whether a certain fund or the Default Investment Strategy is suitable for you (including whether it is consistent with your investment objectives), you should seek financial and/or professional advice and make investment choices most suitable for you taking into account your circumstances.

In the event that you do not make any investment choices, please be reminded that your contribution made and/or benefits transferred into the Master Trust will unless otherwise provided in the MPF Scheme Brochure be invested in accordance with the Default Investment Strategy which may not necessarily be suitable for you.

You should not invest based on this material alone and should read the MPF Scheme Brochure for Fidelity Retirement Master Trust (including potential risks involved) for further information.

Investment involves risks. You may suffer significant loss of your investments. Past performance is not indicative of future performance.

Innovations for a prosperous future Fidelity MPF’s commitment towards digitisation and retirement planning education has empowered our clients with a streamlined means for taking charge of their investments, increasing their retirement reserves, and achieving wealth creation.

Fidelity has won many awards and accolades that are a fitting testament of our overall industry recognition.

Fidelity Retirement Master Trust (Fidelity MPF Scheme) Focus on technological innovation

Prioritising investor education

地 天 新 康 健， 館 大 天

3 consecutive years MPF Ratings’ Best Use of Technology1

5 consecutive years MPF Ratings’ Best Communication and Education2

Outstanding investment capabilities

9 consecutive years MPF Ratings’ Gold Rated Scheme3 3 consecutive years Morningstar Awards Hong Kong’s Best MPF Scheme Award D MPF L E Scheme I F H Awardin T L A E2020 H 4A , L L A M D T Finalist in 2021 and 2019 and Best

館大天上雲 duolC no llaMDT

!界國無療診醫中驗體,載下即立

Fidelity.com.hk/awards

The above awards are for reference only. It is not indicative of the actual performance of the constituent funds.

1

Fidelity has won Best Use of Technology Award from MPF Ratings 3 times during the period of 2019 to 2021 - the award(s) only represent MPF Ratings’ assessment standard (for details, please visit: www.mpfratings.com.hk/awards-methodology). The results are based on the assessment across the various use of technology criteria of an MPF scheme as of 31/12/2018, 31/12/2019, and 31/12/2020.

2

Fidelity has won Best Communication and Education Award from MPF Ratings 5 times during the period of 2017 to 2021 - the award(s) only represent MPF Ratings’ assessment standard (for details, please visit: https://mpfratings.com.hk/awards-methodology). The results are based on the assessment across the various communication and education criteria of an MPF scheme as of 31/12/2016, 31/12/2017, 31/12/2018, 31/12/2019 and 31/12/2020.

3

Fidelity has won Gold Rated Scheme from MPF Ratings 9 times during the period of 2013 to 2021- the rating(s) only represent MPF Ratings’ assessment standard (for details, please visit: https://mpfratings.com.hk/ratings-methodology). The results are based on the investment choices and performance, fees and charges and qualitative )灣鑼 銅 ( 館31/12/2016, 大 天 31/12/2017, 31/12/2018, 31/12/2019 and 31/12/2020. assessment of an MPF scheme as of 31/12/2012, 31/12/2013, 31/12/2014, 31/12/2015,

科專色特

科全醫中

Fidelity has won Best MPF Scheme Award 3 times during the period of 2019 to 2021- Morningstar Awards 2019, 2020 and 2021 ©. Morningstar, Inc. All Rights Reserved. 室樓 樓 樓Scheme 樓樓心心 心 中 -隆 恒號 - -in-2019 街 街and 新德 百and 灣鑼 銅MPF Scheme Award in 2020. The award only represents Awarded to Fidelity Retirement Master Trust for Best MPF - Finalist Hong Kong 2021 Best Morningstar's Best MPF Scheme Award Methodology, Hong Kong published in Jan 2019, Jan 2020 and Jan 2021. The award is a combination of quantitative, qualitative and fee assessment of an MPF scheme. For details, please visit: https://www.morningstar.com/content/dam/marketing/emea/global/awards/2021/awards_methodology /Hong_Kong_Fund_Awards_MPD_Methodology_2021.pdf

MPF-AWARD-JUNE2021-ResizeHKBSEP2021

4

拿推灸針

Investment involves risks. Past performance is not indicative of future performance. Please refer to the MPF Scheme Brochure for Fidelity Retirement Master Trust for further information including the risk factors. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. FIL Limited and its subsidiaries 咀沙 尖information ( 館 大about 天 its products and services. Any person considering an investment should are commonly referred to as Fidelity or Fidelity International. Fidelity) only gives seek independent advice on the suitability or otherwise of the particular investment. The third party mark appearing in this material is the property of the respective owner and not by Fidelity. This material is issued by FIL Investment Management )口 出PP站 鐵 港 咀 沙(Hong 尖 ( 室Kong) 樓 樓 樓Limited. 樓場場廣安永咀沙尖 HONG KONG BUSINESS | Q4 2021

55

One account to manage it all for Listed Issuers

A streamlined view of all the services and solutions in one place can empower listed issuers to efficiently manage their obligations.

Tricor’s award-winning issuer portal is a one stop portal for listed issuers to login, view, analyse and download shareholder reports while accessing in-depth ownership data of peers. Issuers can stay informed with thought leadership and regulatory changes, all on one fully secure online platform.

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HONG KONG BUSINESS | Q4 2021

59

EVENT COVERAGE: HONG KONG BUSINESS AWARDS

The exceptional firms of the HKB National and International Business Awards 2021

A

s part of the Greater Bay Area, the Fragrant Harbour continues to be one of the strategic gateways to Mainland China. Hong Kong also remains to be an attractive place to do business for those looking to expand across Asia; still being one of the top regional financial and logistics hubs in the region.

In an effort to recognise companies that have made significant contributions to the regional economy, Hong Kong Business magazine acknowledged the most exceptional firms in the International Business Awards (IBA), and National Business Awards (NBA) held virtually throughout the month of September.

The seventh installment of IBA honoured the most remarkable foreign companies that have contributed significantly to Hong Kong’s resilient economy. Meanwhile, on its fifth edition, the NBA hailed the

finest homegrown businesses.

The awards were handed to the winners through digital award presentations. Winning companies were also interviewed to share their thoughts on winning in the most prestigious awards for companies in Hong Kong.

The panel of judges for this year’s awards include Edward Au, Managing Partner, Southern Region, Deloitte China; Eugene Liu, Managing Partner, RSM Hong Kong; Andy Wong, IPO Leader and PRC-HK Business Coordination Partner, SHINEWING (HK) CPA Limited; Charbon Lo, Partner, Crowe (HK) CPA Limited; and Ivan Chan, Partner, Mazars in Hong Kong.

Congratulations to the winners!

HKB International Business Awards 2021 Animoca Brands Media & Entertainment Baxter Healthcare Ltd. Healthcare Technology Convatec Hong Kong Limited Health Products & Services Royale International Logistics

Baxter Healthcare Ltd.

HKB National Business Awards 2021 Babi Ltd. Electronics CN Logistics International Holdings Limited Logistics Heng An Standard Life (Asia) Limited Life Insurance Hong Kong Digital Asset EX Limited Financial Technology

Baxter Healthcare Ltd.

Odyssey Capital Group Financial Services Ovolo Hotels Hospitality & Leisure Peak Reinsurance Company Limited Reinsurance Prenetics Group Healthcare Technology Quantifeed Wealth Technology Convatec Hong Kong Limited 60

HONG KONG BUSINESS | Q4 2021

CN Logistics International Holdings Limited

Peak Reinsurance Company Limited

Heng An Standard Life (Asia) Limited

Animoca Brands

Prenetics Group

Animoca Brands HONG KONG BUSINESS | Q4 2021

61

LIFE INSURANCE

Heng An Standard Life Asia unveils pioneering online investment choices platform

The new Investment Choices Centre covers more than 200 investment choices from top asset managers.

ICC is more than just an online platform.

It also includes dedicated support for the professional independent financial advisers (IFAs), who help ensure that customers have the information they need as they navigate through their investment journey.

The ICC offers professional support to

HASL ASIA CONSTANTLY REVIEWS THE PERFORMANCE OF THE INVESTMENT CHOICES TO OFFER THE BEST IN DIFFERENT ASSET CLASSES

Olivia Liu, Chief Executive of HASL Asia

M

any would-be investors are daunted by the complexity of the market.

Because spending time to study the various investment choices is a luxury for some, they end up putting off crucial investment decisions.

To help customers make smarter investment moves, Heng An Standard Life Asia Limited (HASL Asia) has launched the Investment Choices Centre (ICC), a one-stop online platform offering comprehensive and convenient investment choice search and analysis. The ICC covers more than 200 investment choices that are linked to the underlying funds managed by worldrenowned investment managers.

Interactive and comprehensive comparison of investment choices Powered by Morningstar Asia Limited, the 62

HONG KONG BUSINESS | Q4 2021

customers in six areas. First, it provides Morningstar’s reference benchmarks to give customers a reference for investment choices filtering. The platform also provides clear disclosure of risk measures, giving customers clarity about the nature of investment choices. Customers also receive holistic information about their investments as the platform clearly illustrates the cumulative and annual performance of underlying funds.

Most importantly, customers are able to receive daily performance data updates on their portfolios. The platform also offers interactive investment choice performance charts and comparison illustrations for analysing investment choices. Lastly, ICC is designed for easy operation: search criteria are found under an all-in-one screen, allowing users to easily screen investment choices that meet their needs.

“HASL Asia is dedicated to offering more to customers as the company benefits from our expertise in investment-linked insurance. We continuously provide various investment tools and services for both customers and IFAs to build customer trust and enhance customer financial resiliency,” said Olivia Liu, chief executive of HASL Asia.

Holistic support To further facilitate the IFAs in serving customers, HASL Asia has developed its own model portfolios strategised by the company’s newly-established investment function. These model portfolios adopt a top-down asset

allocation approach to provide references for the IFAs amidst the current market situation at three different risk levels – low, medium, and high, respectively. Furthermore, the model portfolios give higher priority to investment choices with distinctive theme features and good performance. As part of its holistic service, HASL Asia organises fortnightly investment webinars for its IFAs. Through these efforts, HASL Asia ensures financial resiliency for all its customers.

“The new Investment Choices Centre aims to provide customers with more convenient information services to empower them on their investment journey, which echoes our brand proposition ‘Get more from life’. We will continue to expand our investmentlinked insurance business and traditional life business to provide a wider suite of wealthfocused propositions for customers,” Liu further noted.

New dividend-paying investment choices to further enhance its offerings HASL Asia is committed to empowering the IFAs and customers on the investment journey. The rationalisation of its investment choices platform is conducted from time to time. In the near future, HASL Asia will be adding dividend-paying investment choices to its platform, offering customers the flexibility to enjoy regular income from the selected distribution class investment choices. Environmental, social, and governance factors and other thematic investment choices will also be brought to the platform at a later stage.

HASL Asia aims to ensure customers financial resiliency

Get

more from life Upholding the brand proposition “Get more from life”, Heng An Standard Life (Asia) is committed to offering more to customer as the company benefits from combined expertise in both investment-linked insurance and traditional life insurance to develop a wider suite of wealth-focused propositions.

More helpful

More opportunities

We support each other and our customers, ready and willing to help

We have more products, more choices and more potential, giving you the chance to grow

More easy We make selecting, buying and managing insurance hassle free

More certain

More synergy We combine western and eastern heritage to provide the strategic intelligence for better decision-making

We make prudent decisions to help secure more stable futures

Find out more Call us on +852 2169 0300 Heng An Standard Life (Asia) Limited (662679) is registered in Hong Kong at 12/F., Lincoln House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong. Authorised by the Insurance Authority of Hong Kong to write Class A, Class C and Class I long term business in Hong Kong. © 2021 Heng An Standard Life (Asia) Limited, reproduced under licence. All rights reserved.

HONG KONG BUSINESS | Q4 2021 63 hengansl.com.hk

HEALTHCARE TECHNOLOGY

Baxter Healthcare’s transformative product innovation revamps the healthcare ecosystem The solutions were developed to extend aid to Hong Kong healthcare providers.

H

ong Kong healthcare professionals (HCPs) have been facing mounting challenges with staff shortages, rising healthcare demands, and increasing complexity in treatments1. The burden of the COVID-19 pandemic has exacerbated the situation and resulted in a healthcare system in need of innovative solutions. Baxter Healthcare, a worldwide innovator with a leading portfolio of healthcare products, identified the most pressing HCPs’ needs2: 1. Simplify Treatment Operation; 2. Improve Treatment Safety; and 3. Enhance Accuracy.

Driven by market research insights, Baxter Healthcare has strived to develop innovative technologies and approaches to address unmet clinical needs to improve healthcare globally. Working alongside HCPs, Baxter Healthcare took a transformative approach to bring three innovative products to the market, the PrisMax Acute Care System, the Evo IQ Infusion Platform, and the Starling Fluid Management Monitoring System—all focusing on simplicity, safety, and accuracy.

The initial launch of these products in Hong Kong has yielded positive testimonials from a spectrum of HCPs, solidifying Baxter Healthcare’s commitment to improve patient outcomes and help HCPs resolve the many challenges in healthcare.

PrisMax Acute Care System

“We appreciate the PrisMax system as it simplifies delivery of CRRT and enables our team to handle the effluent and minimise infection risk, especially for patients isolated during COVID-19.” Intensive care ward manager, Public Hospital.

Evo IQ Infusion Platform improves treatment safety for patients The Evo IQ Infusion Platform endeavours to establish a new standard of care for medication administration, ultimately enhancing patient safety. The design of the platform was informed by 9 Global Human Factors usability studies and incorporated over 225 hours of clinical feedback from adult, paediatric, PrisMax Acute Care System simplifies and neonatal critical treatment operation care specialists and for HCPs anaesthesiologists4.

The PrisMax system BAXTER HEALTHCARE The Evo IQ Infusion builds upon the IS DEDICATED TO USING proven legacy of DATA-DRIVEN INSIGHTS TO Platform incorporates the exclusive webthe PRISMAFLEX EMPOWER HCPS IN MAKING based Dose IQ safety system to help address the ever- OPTIMAL CLINICAL DECISIONS software that helps to reduce harmful infusion changing challenges programming errors, as under critical care key dosing safety limits are set within the drug settings. It is designed to simplify delivery library. The dynamic Evo IQ Infusion Platform of continuous renal replacement therapy has been intelligently engineered to adapt to (CRRT), a blood purification therapy used for new technologies, now and in the future. patients experiencing acute kidney injury. An “Our nurses love the Dose IQ drug library, advanced user interface seamlessly guides particularly when handling blood transfusions HCPs through CRRT delivery, right from and a spectrum of antibiotics for the same patient set-up to patient disconnection. The patient: they feel less stressed than in the past PrisMax system also includes an auto-effluent and the library promotes patient safety.” drain accessory that is designed to reduce treatment interventions and decrease therapy Nursing consultant, Union Hospital downtime3, thereby freeing up nursing time Starling Fluid Management Monitoring System and enabling more time for patient care.

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empowers HCPs with accurate measurements for fluid therapy The Starling system is a robust non-invasive fluid management monitoring system that enables HCPs to provide personalised intravenous (IV) fluid therapy based on accurate patient measurements. Over 80% of hospitalised patients receive IV fluids, making fluid therapy optimisation a critical step for ensuring positive patient outcomes and reducing healthcare costs5. The Starling system provides a continuous dynamic assessment of fluid responsiveness enabling HCPs to make informed clinical decisions. It can be used across different care areas within a hospital.

“We are satisfied with Starling’s performance as it gave us fast and accurate parameters during a 12-hour surgery, even with the frequent use of diathermy. The results are easy to interpret, and it gave us more confidence to quickly tailor therapy according to the patient’s status.” Anaesthetist, Public Hospital.

Baxter Healthcare is dedicated to using data-driven insights to empower HCPs in making optimal clinical decisions; so, our products are continuously evolving to match advances in therapeutics. In the future, digital therapy management solutions will also become available, namely TrueVue Therapy Management on the PrisMax system and IQ Enterprise Suite on the Evo IQ Infusion Platform. These digital therapy analytical tools provide auto-documentation and simplify the Continuous Quality Improvement processes with actionable insights, thus freeing HCPs from administrative tasks to focus more time on patient care.

1. Health Facts of Hong Kong, 2020 Edition, Department of Health

2. Baxter market research studies of ICU behaviour and workflow

3. Baxter – PrisMax Limited Controlled 4.

5.

Distribution Report #ER6877 Rev A. Data on file. 2018.

Baxter Healthcare Corporation. Evo IQ Human Factors Studies. 2018.

Yucha CB, Hastings-Tolsma M, Szevereny NM. Differences among Intravenous extravasations using four common solutions. J Intraven Nurs.

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67

EVENT COVERAGE: CHINA BUSINESS AWARDS

HKB lauds top companies in China International Business Awards and Technology Excellence Awards 2021

T

he rapid spread of COVID-19 across the globe jolted businesses across industries and left multiple countries struggling amidst the economic downturn. However, with technology and digital transformation taking centre stage, Chinese companies were able to see their businesses thrive during the crisis.

Hong Kong Business recognised these outstanding international firms and exceptional technology companies at the China International Business Awards and China Technology Excellence Awards held virtually throughout the month of September.

The China International Business Awards lauded global companies that have found a solid foothold in China, whilst the China Technology Excellence Awards honoured enterprises that have remarkably contributed to transforming industries through technology. The winners, in turn, shared their thoughts on dominating the prestigious awards programmes through virtual interviews.

Nominees for the China International Business Awards were judged

by Mark Gilbraith, China Consulting, Consumer Markets, Health and Technology Industry Leader at PwC China; Ben Huang, National Head of International Business at Grant Thornton China; Jason Yau, Partner & Regional Leader, Asia-Pacific at RSM; Gordon Gao, Tax Partner & General Manager at BDO China Tax, BDO Tax Limited; and Jens Ewert, MNC Affairs Lead Partner at Deloitte China.

Meanwhile, China Technology Excellence Awards nominations were judged by an equally elite panel of judges consisting of Wilson Chow, Global Technology, Media and Telecommunications Industry Leader at PwC; Mark Lian, Technology Sector Leader at Deloitte; and Martin Ngai, Telecom, Media & Technology Tax Leader, Greater China at EY. Congratulations to the winners!

China International Business Awards 2021 General Mills China Retail Global Sources Diversified Services Logitech Computer Hardware

China Technology Excellence Awards 2021 ACDL International Limited Mobile - Luxury Retail Amazon.com Inc E-Commerce - Retail

ACDL International Limited

Datasite Fintech - Financial Services Hugobiotech Co.,Ltd. Biotechnology TeamViewer Germany GmbH Enterprise Software - Computer Software Trip.com Group Online Services - Travel Services

Datasite 68

HONG KONG BUSINESS | Q4 2021

Global Sources

Hugobiotech Co.,Ltd.

General Mills China

Logitech HONG KONG BUSINESS | Q4 2021

69

BIOTECHNOLOGY

Hugobiotech receives the Biotechnology award at the China Technology Excellence Awards 2021 The firm developed PACEseq, the most innovative pathogenic data AI analysis system.

Hugobiotech Co., Ltd.

Infectious diseases, accompanying us novelty and the core advantage of PACEseq from the very start of the human race, also lay on its artificial intelligence (AI) ever since hundreds of thousands years platform trained by microbial database, ago, were poorly diagnosed due to the quality control data, sequencing and clinical lack of proper methods. Over 50% of the big data, carrying out ultra-high dimensional etiological pathogens of patients with eigenvalue analysis and a filtering model for infectious diseases could not be identified. accurate diagnosis. Combined together the In addition, the abuse of anti-microbial drugs ‘wet lab’ and the ‘dry lab’ of PACEseq, more and the emergence of multi-drug resistant than 50% of previously unknown etiology pathogens have become a growing threat to of patients with phenotypic heterogeneity the global healthcare system. Hugobiotech, could now be identified. Hence, anti-infective a rising star in the field of clinical pathogen regimes could be selected accurately and diagnosis, developed PACEseq, one of accordingly to better treat the patient and the first metagenomic next-generation reduce unreasonable use of antibiotics. sequencing Since its roll(mNGS) diagnostic out, PACEseq and analytical has achieved system in the HUGOBIOTECH WILL CONTINUE TO a significant world, to speed CREATE UNIQUE TECHNOLOGICAL competitive up and improve of INITIATIVES TO MAKE MICROBIAL advantage the accuracy more than 85% TESTING EASIER EVEN IN THESE accordance of pathogen CHALLENGING TIMES. detection. This rate in testing high-throughput pathogenic DNA sequencing microorganisms based stateof infection. of-the-art technology solved a long-time Currently, it has served more than 1000 problem that bothers clinicians for centuries, clinical hospitals and 2,000 clinical which is to determine the etiology of departments and tested more than 100,000 different infectious diseases. clinical samples across 150 central cities in PACEseq detects the cell-free microbial 31 provinces of China. nucleic acid in the clinical body fluid samples, Hugobiotech invested enormous financial utilizing its own automatic nucleic acid and labor efforts on R&D including the purification system and library preparation improvement of current PACEseq platform system to avoid aerosol contamination and and the development of new diagnostic variation caused by different lab personnel. products and bioinformatic pipelines.

Not just the ‘wet lab’ mNGS technology, the The results of PACEseq analysis from the 70

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study on the etiological classification and diagnosis of meningitis based on omics characteristics concluded successfully in the national key research development project as part of China’s ‘13th Five-Year Plan’. Hugobiotech’s innovative combination of biotechnology and AI was also granted the ‘Beijing National New Generation Artificial Intelligence Innovation and Development Pilot Zone - Open Laboratory for Intelligent Sequencing Scenes’ by the city of Beijing.

Hugobiotech has been held in the good graces of the top biotech venture capitals, which helps Hugobiotech to implement its core product commercialization strategy and technological upgrades with sufficient capital support. Hugobiotech has received nearly 600 million CNY of investment from top venture capitals, due to its deep layout in the NGS industry, as well as IVD qualification and artificial intelligence resources, which will further promote Hugobiotech to achieve its mission: ‘Digitalize Pathogen Diagnosis, In China For Global’.

Meanwhile, as a leading player in the clinical microbial testing of the healthcare industry, the power of the world-class technology of Hugobiotech was put at the frontline during the pandemic of COVID-19.

Hugobiotech will continue to carry its social responsibility and contribute more to the public health.

With enduring development of technologies, magnificent innovative achievements, the recognition by enormous number of clinicians and investors, and tremendous growth of the company, Hugobiotech and PACEseq was honored the Biotechnology Award at the China Technology Excellence Awards 2021.

“Hugobiotech will continue to create unique technological initiatives to make microbial testing easier even in these challenging times. This is not only to push the technology boundaries in China but also to build something useful for the One Health of the whole world. We will not stop working with medical experts and consulting services across 4000 tertiary hospitals in the country to create a network where information and technology are shared for the betterment of the society,” said Han Xia, Ph.D., CEO of Hugobiotech.

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71

OPINION

KING AU

Hong Kong can do more in fight against rising cybercrime in financial sector

T

he economic cost of the COVID-19 pandemic is estimated to be in the region of US$5-US$6 trillion in terms of lost global GDP. Its cost in broader terms is, of course, immeasurably higher. The cost of annual cybercrime worldwide is forecast to reach about US$6 trillion this year.

That valuation makes cybercrime more profitable than the global trade of all major illegal drugs combined. Its mounting cost and impact runs deeper than ever having accelerated discernibly since the start of the pandemic because of both the largely unplanned increase in homeworking, ecommerce and electronic trading, and the fact that criminals have been forced online too.

Financial sector an attractive target The financial services sector is heavily targeted by hackers and other cyber criminals, who are attracted to the sensitive data on individuals, businesses and governments held by banks and other financial institutions. As a sector, it typically features in the top five sectors for severity and frequency of cyber-attacks.

During the first three months of the pandemic, attacks against the financial sector increased 238% globally, while 80% of financial institutions reported an increase in cyberattacks in 2020, according to VMware. Indeed, in a survey of global business customers, Allianz found nearly half citing cybercrime as the top risk for the financial services sector, ahead of the pandemic, business interruption and legislative or regulatory change.

As a leading global financial centre, Hong Kong is an attractive target for cyberattacks. It’s an unfortunate fact that the level of economic losses experienced in the city as a result of cybercrime is on an upward trend.

During the past decade, Hong Kong has seen a huge increase in cybercrime, with reported incidents rising from 2,206 in 2011 to 12,916 in 2020. During 2020, the number of cases rose 55% from 2019. The value of those crimes rose from HK$148 million in 2011 to a staggering HK$2.96 billion last year.

Smart City Blueprint needs cybersecurity plan Hong Kong can certainly do more to protect itself from cybercrime.

It’s holistic Smart City Blueprint brings together payments, transport, energy, education, water, work, living spaces and other elements that comprise a modern a city in a vision underpinned by digital technology.

It is important and clearly positive that the blueprint incorporates cyberspace safety to the vision: “Enhance the Government’s cyber security capability to address new security risks, facilitate collaboration among stakeholders to promote awareness and incident response capability in the community.”

But more could be done; more planning is needed. Clearer work plans with policy priorities over a longer time horizon are important because they can facilitate different stakeholders, including businesses and industries in Hong Kong, to coordinate and make their part of contribution correspondingly.

Hong Kong would benefit from the establishment of an independent 72

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KING AU Executive Director, Financial Services Development Council

commission, similar to the Australian Signals Directorate or the Cyber Security Agency of Singapore. Alternatively, it could set up a cross-bureau working group that will coordinate both regulatory and enforcement actions.

In Hong Kong, there is no specific legislation that deals with cyber offences. The legal framework for cyber offences is set out in other existing legislation, such as Personal Data (Privacy) Ordinance, Unsolicited Electronic Messages Ordinance, Interception of Communications and Surveillance Ordinance and Official Secrets Ordinance.

Regulation and oversight fragmented The regulation and oversight of these different pieces of legislation is fragmented. The Cyber Security and Technology Crime Bureau (CSTCB) of the Hong Kong Police Force is responsible for handling cyber security issues and for carrying out cybercrime and technology crime investigations, computer forensic examinations and prevention of technology crime.

At the same time, the Office of the Privacy Commissioner of Personal Data (PCPD) oversees data related issues, and adherence to its Guidance on Data Breach Handling and the Giving of Breach Notifications. There’s also the Commissioner on Interception of Communications and Surveillance.

In the financial services sector, there are the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (SFC) and the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the SFC. Regulation and oversight of these businesses and individuals is part of the SFC’s role.

Besides the SFC, the Hong Kong Monetary Authority (HKMA) and Insurance Authority (IA) also have their respective guidelines to assist their licensed institutions in handling cybersecurity issues. Some degree of coordination is seen, but more efforts towards coordinating policy responses need to be made.

Omnibus cybersecurity protection Many of the world’s leading jurisdictions in cybersecurity have an omnibus cybersecurity protection law as a core element of their cybersecurity framework. Hong Kong should consider introducing its own omnibus Cyberspace Protection Ordinance.

With the HKMA’s introduction of the enhanced competency framework, the market has generally seen an improvement in the cyber resilience of the banking sector. However, given the high level of interconnectivity among various areas within the financial services industry, the banking sector’s progress could be undermined if the other sectors do not demonstrate a comparable degree of resilience.

Going forward, the city needs to keep pace with international cybersecurity standards. One way would be to consider adopting the cybersecurity frameworks of jurisdictions widely viewed as leaders in the field.

HONG KONG BUSINESS | Q4 2021

73

OPINION

GABRIEL LEUNG

Mind the gap: The risk of digital inequality

W

e are living in a defining moment that will shape the fate of future generations. On the one hand, the pandemic and its economic fallouts uncomfortably exposed existing fractures in global societies, yet on the other, it inspired unprecedented international collaboration and innovation. The steps we take now to shape how we collectively emerge from this crisis will determine whether we are able to do so inclusively, or whether significant portions of society will be left behind, unable to access the opportunities of the digital economy.

Unquestionably, technology played a critical role in the world’s ability to respond so swiftly to the COVID-19 pandemic; rolling out telemedicine, remote working and vaccinations in record time. As we watch digital advancements play a critical role in getting us through the crisis, it becomes clear that the world has become ‘digital first’ and the way forward will be in a digital economy. Those who are left digitally disconnected, whether due to lack of infrastructure or digital literacy, will become marginalized and unable to benefit from the evolving advancements and opportunities.

It is certain that we will continue to see significant investments in digital transformation beyond the pandemic. As we build this digital economy, global leaders and technology giants have an opportunity to ensure we address the risk of exacerbating the digital divide and intentionally create a digitally inclusive society that affords everyone access to the latest technology.

According to The Global Risks Report 2021 published by the World Economic Forum, infectious diseases, livelihood crises, extreme weather events, cybersecurity threats and digital inequality are the top five most concerning short term global threats.

It might come as a surprise to see ‘digital inequality’ ranked high on the global agenda, but it makes perfect sense that ‘digital inequality’ is a concerning threat when we consider that those who do not have adequate digital knowledge or technology access are more prone to being left out and becoming ‘illiterate’ in the 21st century. That is not an acceptable outcome.

As we move through what we hope are the final stages of the pandemic, I see an opportunity to bridge the digital divide in three key areas: connectivity, digital literacy, and access to insights.

Connectivity - the fundamental building block For people living in urban cities, it’s hard to believe that half the world remains offline. About two-thirds of school-age children, or 1.3 billion children aged 3 to 17 years old worldwide, do not have internet connections in their homes. Children in sub-Saharan Africa and South Asia are the most affected, with around 9 in 10 children unconnected.

As COVID-19 swept the globe, forcing school closures, the digital divide has only worsened. We heard stories of students without internet access huddled outside fast food restaurants to continue learning on shared Wi-Fi networks. Companies—including Hewlett Packard Enterprise (HPE)—responded by offering Wi-Fi hotspots in buses, stadium parking lots, and even a passenger ferry.

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HONG KONG BUSINESS | Q4 2021

GABRIEL LEUNG Managing Director, Hewlett Packard Enterprise Hong Kong

While effective, these are all temporary solutions. Longer term, we must provide connectivity that is seamless, ubiquitous, affordable and secure. The reason is simple - the lack of internet connectivity doesn’t just limit children and young people’s ability to connect online; it prevents them from competing in the digital economy. It isolates them from the world.

Just as the United Nations pointed out that universal access to electricity is essential for participation in the modern economy, so too is connectivity essential in a ‘digital first’ world. Digital inclusion will require building digital infrastructure and skills that support all organizations, from rural hospitals in Cambodia, to farmers in Indonesia, to schoolchildren in poorly-connected rural areas across the world. This is precisely the reason why HPE is supporting the Smart Africa Alliance.

Digital literacy – the essential skills Technology and education have long been considered proven channels for economic advancement. But the barriers are increasing. According to the Organization for Economic Cooperation and Development, 60% of adults lacked basic digital knowledge and skills when workplaces and schools suddenly closed due to COVID-19.

The divide in digital literacy in Asia Pacific is particularly distressing.

While Singapore enjoys the top spot among ASEAN countries, about 150 million adults in Southeast Asia (SEA) remain unable to access digital technologies. In other words, nearly a third of the SEA population is digitally excluded.

While government and policymakers play a critical role in formulating rules and processes to bridge the divide, businesses, especially technology companies, can directly impact individuals’ digital literacy through upskilling training and STEM programmes.

Many countries have already partnered with technology providers— including HPE—to develop innovative STEM programmes such as Cyber Squad games, which help youths learn computer science in an engaging way and build necessary ‘digital muscles’ to brave this new, technological world.

Critical insights – beyond data Today we have left the ‘information age’ and are living in the ‘age of insight’. In order to compete and excel in the digital economy, businesses and organizations will need to be able to move beyond simply capturing data, to being able to analyse and draw insights from the vast amounts of data being captured by billions of devices around the world.

Those seeking solutions and breakthroughs in areas like healthcare, climate change, agriculture or food security will require access to and skills to work with advanced technologies such as artificial intelligence and machine learning. To build an equitable global society, these technologies need to more accessible to organizations that are currently too small, underfunded or underequipped to access and benefit from these advancements.

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75

OPINION

LAUREN ZHAO

Why Hong Kong’s small businesses need to reimagine future growth

S

mall and medium-sized enterprises (SMEs) are a cornerstone of Hong Kong’s economy. They employ 1.2 million people and account for 45% of Hong Kong’s overall employment, so their prosperity is critical to our city’s success.

The pandemic has exposed the vulnerability of global supply chains and has been a wake-up call for many local businesses to review and improve the resilience of their operations. For recovery to take root, businesses need to act to avert further disruption and ideally emerge even stronger than before.

Lockdowns and restrictions have also accelerated the growth of e-commerce around the world and customers everywhere are buying more online; research organisation Digital Commerce 360 estimates that online sales globally grew by over 24% to nearly US$4.3 trillion during the pandemic year of 2020.

This means now is the time for small businesses to reimagine their customer base and connect to new audiences, and digital innovation is integral not only to how they will unlock this challenge, but also as a means to guard against any future uncertainty.

Analysis from Tech Monitor has shown that digitalised companies have performed better financially, and more firms are moving digital transformation up their agenda. But what do business owners need to do to improve their resilience and create more opportunities in the e-commerce space?

Build up and back up Many businesses were caught off-guard by the rapid spread of the pandemic which uncovered weaknesses in their supply chains, creating shortages and backlogs. According to PayPal, an overwhelming 86% of Hong Kong’s businesses have experienced supply chain disruption and logistical issues because of the lockdowns and border closures.

When the pandemic first hit, supply chain disruption in China focused the need for greater diversification. And subsequent unforeseen events such as the March 2021 blockage of the Suez Canal, a route which accounts for about 30% of the world’s daily shipping container freight, have further emphasised the fragility of global supply chains at the moment.

Hong Kong business owners should continue to recognise the need to recalibrate their expansion strategy and decentralise operations to shield themselves from any potential market disruptions, for example by investing the necessary time and money in expanding their networks of tier-2 and tier-3 suppliers to secure stocks and available transport capacity.

Look for customers in new markets With its enviable connectivity by land, air and sea, Hong Kong is well positioned to grow further as both an import and export gateway to Asia Pacific. As retail businesses shift out of survival mode, they recognise the need to look further afield for growth opportunities, with 64% of e-commerce business owners in Hong Kong saying they need to increase demand or find more customers as soon as possible, and 76

HONG KONG BUSINESS | Q4 2021

LAUREN ZHAO Managing Director UPS Hong Kong, Macau

45% believing it is urgent for them to find customers overseas (PayPal).

Asia Pacific is the closest and most natural place to start. While China is currently Hong Kong’s top export destination, an expanding middle class and GDP growth, advancements in technology and infrastructure and rapid transition to online purchasing mean neighbouring markets in Asia Pacific also offer tremendous untapped opportunities for businesses to expand their customer base.

Indonesia, for example, recorded surging e-commerce sales in 2020, with the total value estimated to have increased 37.4% to US$25.3 billion, according to research firm GlobalData. Thailand came second after Indonesia in terms of internet economy size, amid the country’s rising internet penetration rates in recent years. The number of Thai households shopping online has surged by 58% during the pandemic, according to NielsenIQ, accelerating the country’s shift to e-commerce.

Know before you go For small businesses in particular, where teams tend to be lean and resources stretched, the effort and investment required to reinforce a supply chain that’s likely taken some time to build can seem daunting.

But UPS has dedicated experts that can help.

From simplifying paperwork to demystifying the nuances of a multilateral trade agreement, specialist knowledge and expertise can help build flexibility, reliability and peace of mind into supply chains, meaning businesses can adapt quickly when dealing with the unexpected. We have seen demand for these services rise since the outbreak, reflecting economic trends and a rising level of awareness and action. We have also seen rising ambition to look overseas for solutions and growth.

Although challenging, many companies are already making great strides in unlocking new opportunities overseas; Hong Kong-based tech accessories company Native Union is just one example. When the company was planning its recent expansion into Japan, the team faced a problem they weren’t able to solve alone which would have delayed plans considerably. But after talking to UPS, we were able to collaborate and find a solution that means Native Union now enjoys a smooth and simplified shipping process that complements the company’s individual growth ambitions.

Time to think digital SMEs play an essential role in supporting the economic recovery and development of Hong Kong. As the pandemic has accelerated the shift away from physical stores to digital shopping, they are investing in digital to reach customers and stakeholders at an unprecedented pace. A recent report by data management company Veeam shows that two-thirds of Hong Kong businesses are investing in initiatives to accelerate digital transformation to further improve their ability to roll with market volatility and evolving customer demand.

In today’s fast-paced, e-commerce-driven world, businesses everywhere need to be bold, agile and innovative. This can seem daunting but digital innovation is making it easier than ever before for SMEs to reach new markets and reduce friction along the way.

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77

OPINION

LAWRENCE CHIA

Events are evolving, but is your agency standing still?

Professionals must continuously redefine and reimagine how to engage with audiences

A

s the pandemic anxiety in Hong Kong recedes amid the relaxation of social distancing rules, local business sentiment is improving, with the help of measures such as the Consumption Voucher Scheme.

That sounds like good news to the hard-hit MICE industry.

After the pandemic put a stop to face-to-face events more than a year ago, the industry explored new ways to meet demand for brand activation and audience-brand engagement, such as by shifting audience experience safely online or offering an increasingly ‘integrated experience’ – a seamless confluence of live physical and online content. These new product models helped the industry survive the pandemic; but with the worst of the emergency over, is it time to focus on preparing for a return to in-person events?

The answer is ‘no’. The new product models, and especially the integrated experience, are not merely stopgap measures or an outgrowth of contingency planning. Online and integrated experiences are plainly here to stay, in part due to their inherent applicability during future crises. Like the pandemic, we probably won’t see the crises coming – which is why we should always treat predictions with healthy scepticism.

As things are, though economic activity in Hong Kong has seen some improvement, it is still below pre-recession levels, and even the predictions aren’t entirely rosy. As shown in advance estimates on GDP for second quarter of 2021 released by the government in late July, the economic recovery of Hong Kong is slightly slower than expected and remains uneven: The region’s GDP rose by 7.5% from a year earlier, following 8% growth in the prior quarter.

Furthermore, the OECD’s latest Economic Outlook projects that global income at the end of 2022 will be around US$3 trillion less than was expected before the pandemic.

Other reasons why online and integrated will stay around are the same as before the pandemic: the experiences they offer 78

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LAWRENCE CHIA Group Chairman and CEO, Pico Far East Holdings Limited

can be both memorably distinctive and shared by a potentially unlimited audience, helping brands secure an impressive event ROI. The industry and market had already been moving in their direction, and the crisis merely accelerated the shift.

Virtual will become even more of a mainstay when the digital natives of Gen Z and Gen Alpha grow into consumer market dominance. At that point, offering a choice of participating in live events either in person or via a laptop or mobile device will become a best practice. Further development of the model will very much be in line with their expectations, habits and needs.

It is already obvious that agencies who embrace the integrated experience will be the most likely to sustain their business in the long term – but with one caveat; their success will hinge on whether they can actually deliver what they embrace. That – and even capturing future opportunities – will require fundamental organisational change.

In the past, MICE industry agencies were specialised ‘live event production experts’, ‘digital marketing strategists’ and so on. When it comes to planning and delivering integrated events, however, the process becomes hugely more intricate, complex and blurry. Input is required from a wider spectrum of creative, marketing, analytic, digital, technical and administrative talent, as well as a whole new level of coordination. Just as the boundaries between analogue and digital are erased, so will be the traditional boundaries between offices, teams and individual skill sets. As a matter of necessity, nobody can afford their own silo any longer.

The changes already underway may seem challenging, but it is worth noting that change is nothing new to the MICE industry; it is fast-changing by nature, requiring its professionals to continuously redefine and reimagine how to engage with audiences. As usual, the next industry renaissance will be led by those who can meet challenges with resilience.

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HOSPITALS UNDER ATTACK SINGAPORE’S MASSIVE DATA BREACH SHOWS THAT HOSPITALS NEED TO STEP UP THEIR GAME IN ORDER TO WARD OFF POTENTIAL ATTACKERS AZHAR HARUN CEO, UMSCp14

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In Print, Online, Mobile, Events, Awards, and Research HONG KONG BUSINESS | Q4 2021

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OPINION

DHEERAJ SHAH

The ‘technology’ shots that stores need to level up customer experience

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tores have always been at the epicentre of retail disruption, be it the onslaught of digital or the recent pandemic. Despite ominous predictions, stores have risen like a phoenix to cater to shifting business landscapes and shopper behaviours. Retailers who view their stores through a new lens will realize endless possibilities because: •

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Stores are seeing footfall of a different kind: While there is a dip in in-store footfall, there has been a surge in footfall of a different kind—buy online pick up in-store (BOPIS), curbside pickup. Store only footfall may be an irrelevant key performance indicator, albeit temporary. Hence, the way we measure footfalls has to change.

Comparable sales just got a new avatar: Stores are now seeing newer revenue streams like influencer streaming and live commerce.

Tactile experiences have changed: The shopping experience has changed from see, touch, and feel to see, digitally touch, and feel as retailers are embracing mobile usage in stores for contactless product discovery, checkout, and payments.

Experiential retail has got bigger: New technologies like 7D and 9D are taking interactive and immersive experiences to the next level. Shoppers will visit smart stores to experience them.

In-store shopping is now shoptainment: Visiting stores will be a welcome change for lockdown-weary shoppers and a major source of entertainment. Customers will visit stores to find out what has changed, what do brands have to offer, and what others are buying—abundance, indulgence, and flaunting/ pride of owning status symbols will continue to produce happy hormones.

Ethical practices and sustainability are no longer nice-to-have: Shoppers, especially millennials, are deeply concerned about ethical sourcing and are seeking proof.

Shopping has become borderless: With phygital retail powered by augmented reality/virtual reality and emerging technologies, shoppers can experience stores from where they are. They can connect with associates virtually to make buying decisions.

Retail Stores are Experiencing Tomorrow Today There is less to debate about the endorphin rush that shopping at a physical store provides as compared to shopping at any other channel. However, the key now for the brick-and-mortar channel is to be a catalyst and supersede the convenience of omnichannel while keeping the excitement alive. Similar to a brilliant casting coup pulled off by Hollywood (think Cate Blanchet in Manifesto with over 13 roles or Tom Hanks in Cloud Atlas with over four roles), retail stores are now expected to portray multiple roles: 80

HONG KONG BUSINESS | Q4 2021

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DHEERAJ SHAH Global Head - Business Transformation and Supply Chain Management Retail Business Group , Tata Consultancy Services

Excite and Entertain: With social distancing norms driving the urge for physical interaction more than ever before, stores are expected to reinvigorate the excitement through innovative repurposing of store products and offerings and through shoptainment.

Explore and Engage: A complete reimagination of product exploration and customer engagement would be key given the increasing rise of enter and exit autonomous scan and go stores. As customers increasingly look for online-like convenience and a non-intrusive shopping autonomy while at the store, product exploration needs to become more phygital driven by hygiene. Showrooming, once considered a taboo, is likely to create new opportunities for store associates to engage with customers better and drive more value.

Enable and Exploit: Irrespective of channel preferences, stores are most likely to become the nucleus of the omnichannel proposition enabling curbside pickup, BOPIS, buy online ship to store or BOSS, and micro-fulfilment or crowdsourced deliveries.

So, what does all this mean for stores? Stores need to dynamically choose multiple avatars based on the context of customer interaction and the roles of store associates. What makes it more challenging is that all these avatars need to be portrayed simultaneously at the same time, unlike movies where there is a liberty of retakes and post-production.

This makes it imperative for stores to leverage the power of machines through artificial intelligence or machine learning algorithms for driving phygital customer experiences, workforce management, or intelligent in-store picking, automated microfulfilment or smart inventory management to manage demand from different channels or digital twins of stores. Thus, real-time, pre-emptive, cognitive smart stores are the fully vaccinated versions bringing in automation, intelligence, autonomous operations combined with hyper-personalization and unified commerce.

Conclusion In recent times, several brick-and-mortar retailers were able to meet the rising digital demand by moving their store inventories and by quickly enabling contactless fulfilment, while achieving inventory productivity and business goals.

Many are keen to accelerate sales growth, improve gross margins, increase inventory productivity, right-size selling, general and administrative expenses, improve working capital efficiencies, and lower the cost of doing business. Algorithmic retail and the machine first paradigm can help move omnichannel retail evolve into zen mode, transcending into purpose-centric shopping, ultimately freeing retailers from the slavery of channels.

HONG KONG BUSINESS | Q4 2021

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