Ten years ago, Fortune magazine cover story ran a cover story quizzically titled "The Death of Hong Kong?" With the territory’s GDP per capita holding steady around the US$30,000 mark – giving it a place in the world’s top 10 – this question can safely be answered with a resolute no.
Hong Kong’s reputation for efficiency precedes it: you can arrive at the airport at 9am, be in the Central district by 10am, and set up a company and a bank account before lunch. An office – even name cards bearing the address of your firm’s new base – will be ready in time for dinner.
But what has made this well-oiled commercial machine one of the largest trading regions on earth? Consider this:
The legal system works. It’s honest and swift; judges are independent and their goal is conflict resolution, not retribution.
There is a stable and freely convertible currency.
Hong Kong is banker to both China and Taiwan, which allows them to do business with each other.
The banks and securities markets are well-regulated and offer an open and transparent system of doing business.
Hong Kong is the regional information center. Its free flow of information has made it a film distribution center, an IT and software center, and a center for publishers, cable and satellite broadcasters, PR associations, ad agencies, designers and architects.
There is a 21st century infrastructure. Its container port, airport, convention and exhibition centers, highways, office buildings and malls, hotels, telecommunications and banking facilities are all first-class.
In trade, no place is more efficient. The supply chain is second to none.
The growth of the last 40 years has not been an accident. Having had no hinterland for much of its history, Hong Kong has been forced to look outward. It is the prow of the ship. Goods were always imported and exported, so the profit margins were widened through the development of trading expertise – in logistics, law, insurance, finance, information and people – that is second to none. Rule number one: never underestimate the commercial genius of the Hong Kong people.
Underpinning the mammoth business infrastructure is good government – corruption is minimal and laws are followed and enforced. An effective government that can tap the genius of its people will engender a superior economy. Rule number two: Hong Kong is a 21st century city with deep roots in the best of both West and East.
The last decade has not been without its trials. Following their separation from Britain and reunification with China on July 1 1997, the people of Hong Kong were expected to go to work on July 2 as though nothing had happened. Well, something had happened. But we didn’t know what it was, and it affected our confidence – if not our sense of purpose.
The Asian financial crisis didn’t help the situation – but Hong Kong showed its ability to triumph in adversity. This fighting spirit emerged again during round one of bird flu in the late 1990s and in response to knock-on effects created by the US recession of 2000-2002, as well as the tragedies of 9/11 and SARS, which brought tourism – the region’s number one industry – grinding to a halt.
What did Hong Kong do during these seven lean years? It built. The West Rail, another link with China, mirroring the East Rail of the KCRC, arrived; a new town was created in Tinshuiwai, now home to 250,000 people; new spurs appeared on the MTR and much needed highways were constructed around the New Territories.
Technology didn’t go unnoticed, with the opening of both the Science and Technology Park, a base for some of the finest R&D facilities in Asia, and Cyberport, an advanced IT facility that has spawned its own new mini-town on the southwest side of Hong Kong Island.
If Fortune is to be believed, all these things were taking place when Hong Kong was doing badly. Rule number three: Hong Kong lives in the real world.
Now China is open for business, Hong Kong is no longer an island. What China needs – usually described in terms of skilled human resources and efficient systems – Hong Kong supplies. In a Business Outlook survey by the American Chamber of Commerce in Hong Kong, members said that location was among the top four reasons for investing in the region. In a similar survey carried out by AmCham in Guangdong, members said that proximity to Hong Kong was one of the top two reasons for investing in Guangzhou.
People in Hong Kong who couldn’t speak a word of Mandarin 10 years ago now give speeches in the language – and this has helped make the Hong Kong stock market the place for Chinese companies to list.
Yet Hong Kong isn’t just Hong Kong anymore – it has reinvented itself as an integral part of China. Hong Kong processes people into China through its advisory services and processes Chinese companies back out to the rest of the world through its capital markets and global trading and information systems.
Rule number four: never under-estimate the unity of the Chinese people. The "One Country, Two Systems" rule is working better than anyone anticipated and it is the key to Hong Kong’s future. What’s good for China is good for Hong Kong.
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