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Arthur Bowring, Managing Director, Hong Kong Shipowners’ Association

Under Development

It is Hong Kong’s differences, and the constant change in economy and infrastructure, that maintains the SAR’s competitive edge

Any returning visitor to Hong Kong seems to remark on the changing skyline, the changing shape of the harbour and the loss of landmarks – especially hotels. My wife misses the convenience of (or rather, the conveniences in) the Hilton Hotel, and recent visitors seem to be lost in their choice of hotel now that the Furama is a rather large hole in the ground. Residents are used to the noise of pounding jackhammers, a background that doesn’t seem to have quietened much during the economic downturn.

Exporting manufacturing, selling services
The city is not only changing physically. Government statistics show that the services sector generated more than an incredible 86% of Hong Kong’s GDP in 2001, up from 67% in 1980. A corresponding decrease is seen in the manufacturing sector, where companies have moved most low-value-adding work out of Hong Kong into the Pearl River Delta region, a move resulting in both an exponential expansion of Hong Kong-controlled manufacturing capability and also generating closer ties with Hong Kong’s hinterland on the mainland. The increasing number of containers being shipped through Hong Kong is proof of these ties.

The ratio of Hong Kong’s export of services to GDP is also significant by international standards, ranking second in the region in 2000 in terms of the total value of exports of services after Japan, and ranking ninth in the world.

There have been, as expected, political changes. As is well known, Hong Kong was returned to the mainland of China in 1997, becoming a Special Administrative Region. The phrase ‘One Country, Two Systems’, now in unfortunate danger of being overused and therefore misunderstood, aptly and concisely describes the special status of Hong Kong: a region, not a country; an administration, not a state; a chief executive at the head of our government, not a governor and not a president or prime minister.

Change – as normal

In and out: rising transhipments highlight Hong Kong’s increasing ties with the hinterland

The one question, naturally, that has been on all visitors’ lips since the Handover has been ‘What has changed’? The stock answer would be ‘not much’, pointing out, perhaps, the changed colour of post-boxes (to green) and the changed emblems on policemen’s hats. And on the surface of this sea of constant change, it seems that nothing much is different. There is still the feeling when walking in town of being late for something, everyone rushing past except the tai-tais on their shopping expeditions. The big, brash international shops still occupy the prime sites in Central, and the smaller cheaper bargain stores still operate out of their ‘temporary’ plastic-enshrouded sites in Mongkok and Stanley.

The special and (until Macau was handed back) unique status of Hong Kong created many uncertainties and problems. We spent an inordinate amount of time convincing people in other countries that the return to China was not absorption by China, that Hong Kong would remain independent in all but sovereign issues. Our chief executive trod a very fine line between reassuring international investors and trading houses, and the central government in Beijing, that the status of both would be preserved. With Hong Kong’s press pack snapping at his heels, it has not been an easy job, although one that is now generally accepted might have been more suited to a career politician than a businessman.

But it is the antics of that press pack that proves one of Hong Kong’s major strengths, that of the continuation of the freedom of speech and the willingness to speak out. Demonstrations are not uncommon, whether silently by members of the bar or noisily by tax-threatened domestic helpers. Newspapers are critical of government policies, and, sometimes distastefully, revealing of famous people’s love-lives.

It is this ability and willingness to criticise and comment that makes Hong Kong different from its neighbours in the region, and it is one of the reasons why Hong Kong remains significant.

Lifting trade: Hong Kong’s imports and exports are rising again

Competitive edge
At an Association Luncheon in November of last year, Lars Carlsson, Chairman of Intertanko, made the point that the competitive edge is created through differences, not sameness. Sameness leads to price competition, or commoditisation. Once all the differences disappear, the only item left to compete with is price. And then the only way of showing profit is by trading in bulk, so that the small margins add up to a positive return.

Hong Kong has many differences. Our rule of law is one, firmly supported by all sectors of government and business, and kept alive by the independence of the judiciary. We are concerned about the effect of government legislation to satisfy the requirements of Article 23 of the Basic Law, that of subversion against the central government and theft of state secrets, but we are sure that our concerns will be listened to (eventually) by our government, and legislation passed that does not go beyond the most simple intent of the Basic Law. Certainly, our courts have shown themselves time and time again to be politically independent, decisions reinforced by our having the final court of appeal in Hong Kong, not in London or Beijing.

Our internationalism is another difference, evidenced by the large number of expatriates that have made Hong Kong their home on a permanent or temporary basis, as well as by the internationalism of our newspapers and restaurants. Hong Kong remains expatriate-friendly, always mindful that it is through the integration of local and expatriate qualified and experienced labour that an economy will grow in this increasingly globalised world. We are concerned that we are not training sufficient English speakers, a concern translating into an increased emphasis on foreign language skills, which include Mandarin. But it is apparent to the resident that English is fast becoming the second language, with many Hong Kong island taxi drivers now able to understand and speak English. Hong Kong is no longer a hardship posting, much to the regret of some expatriates.

Vive la difference
It is these differences that make Hong Kong significant. If the ‘pro-Beijing camp’, frequently referred to in the press as if they have a special link to our central government, is to be believed, then Hong Kong should become more Chinese. According to their ‘politically-correct’ philosophy, there should be a reversion to Chinese languages and adoption of Chinese practices in government and the law.

But it is central government which has made it very clear that it wants Hong Kong to remain different. Hong Kong’s value to the mainland and to the region remains only if it is kept different, if we value and exploit our differences and continue to explore more ways to be different. Because it is only through our differences that we will continue to be of value both to our home country, China, and to the world economy.

As anyone in the business of creating value knows, it is hard and takes innovative work to continue to explore and create differences, especially differences that add value to the customer and the business. It may be frustrating to some die-hard conservatives, but Hong Kong, out of a desire to add value and build strength, makes a point of continually reassessing its role, its function and its place in the world economy.

Hong Kong maritime study
Relevant to the readers of this publication is that a government-funded study into the maritime industries in Hong Kong will be published in the near future, once again reassessing why we are doing what we are doing, and how we can add better value to Hong Kong’s economy and to the businesses of our customers. The study reflects on the value the industry brings to Hong Kong (a per capita value that is not matched by any other industry), and discusses how better to spread the word about the vast amount of business that is being done here, as well as how to reorganise our private and public sectors to work more efficiently together. One of our much envied strengths is the close relationship our Association has with our government, a strength that we intend to build on while maintaining the independence of both.

It is the well-considered changes in our city under development that result in the differences that create the value we offer. The one thing constant in Hong Kong is change, making the place, and the pace, so exhilarating to its residents and our many visitors.

Author: Arthur Bowring,
Managing Director,
Hong Kong Shipowners’ Association.
Website: www.hksoa.org.hk

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