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Journal of The American Chamber of Commerce in Hong Kong

www.amcham.org.hk

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July 2011

COVER SPONSOR

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July 2011 Vol 43 No 07

Contents

Richard R Vuylsteke

Editor-in-Chief Daniel Kwan

Assistant Editor Kenny Lau

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COVER STORY

WASHINGTON DOORKNOCK

CHARITABLE FOUNDATION

LAW

The inauguration of the Beijing-Shanghai High-Speed Railway is a milestone in China's urbanization. Second-tier cities along the railway lines are now much more accessible and better positioned to attract investment and other "first-class opportunities" in an expanding economic development

AmCham delegation flies to the nation’s capital to meet with appointed and elected US officials for an annual information-exchange and advocacy exercise on issues of trade and tax reform

AmCham honors local students for their exceptional academic achievements, leadership skills and involvement in community service, and an NGO for its commitment to social needs

What you need to know about the US Foreign Corrupt Practices Act and UK’s Bribery Act in relation to compliance in a world of time-honored local customs and corporate hospitality

Publisher

Advertising Sales Manager Regina Leung

biz.hk is a monthly magazine of news and views for management executives and members of the American Chamber of Commerce in Hong Kong.

Its contents are independent and do not necessarily reflect the views of officers, governors or members of the Chamber.

Advertising office 1904 Bank of America Tower, 12 Harcourt Rd, Central Hong Kong Tel: (852) 2530 6900 Fax: (852) 2537 1682 Email: amcham@amcham.org.hk Website: www.amcham.org.hk Printed by Ease Max Ltd 2A Sum Lung Industrial Building, 11 Sun Yip St, Chai Wan, Hong Kong (Green Production Overseas Group) Designed by Overa Creative Co Rm A, 12/F, Sun Fai Comm Bldg, 576 Reclamation St, Mongkok ©The American Chamber of Commerce in Hong Kong, 2011 Library of Congress: LC 98-645652

CHARITABLE FOUNDATION

AMCHAM NEWS AND VIEWS 04 Chairman’s Memo Rob Chipman recaps this year’s Washington Doorknock, an annual advocacy trip to the nation’s capital, and talks about AmCham Charitable Foundation’s scholarship awards

06 New Business Contacts 42 executives joined AmCham’s business network last month

18 Foundation Awards to Give Back to Community The Chamber honors 26 students for their exceptional academic achievements, leadership skills and involvement in community service as well as one outstanding NGO for its commitment to the needy

20 Following My Dreams Ka-Ling Wu, a recipient of AmCham Charitable Foundation’s US Studies Scholarship Awards in 2010, talks about her experience as a freshman at Brown University

40 Mark Your Calendar

COVER STORY

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08 Rail Link Opens New Opportunities The high-speed railway between Beijing and Shanghai in June is poised to become a driver of economic growth for second-tier cities along the new milestone development in China's transportation sector

WASHINGTON DOORKNOCK

12 US Competitiveness Declining in Asia?

AmCham delegation reiterates the importance of boosting US trade and the need to make the US more competitive internationally through reformed business and personal tax laws

For comments, please send to biz.hk@amcham.org.hk

22 Mountains Not So High, The Emperor Not So Far Away An increase in enforcement cases under the US Foreign Corrupt Practices Act and UK’s Bribery Act has created new challenges to multinational corporations operating in developing economies

26 Long Arm of the Law – The UK Bribery Act Justin Williams of international law firm Akin Gump Strauss & Feld LLP explains in detail what the new law means and how it might affect the way some companies do business

EDUCATION 28 US MBA Students to Work on China Consulting Projects A program run by 13 US business schools under which MBA students work in the field to help companies examine and deal with their business problems on the ground

WOMEN OF INFLUENCE 30 The Foremost Good Fortune The story of an American diagnosed with breast cancer while living in Beijing without the comfort of family and friends

TRAVEL 34 Here Comes the Sun! Get Packed and Hit the Road Whether you’re planning to travel near or far, to relax or find adventure, with or without children, there are choices to suit everyone

AMERICAN TOPICS 38 AmCham Celebrates “Fourth of July” A special lunch for guests and families at the Bourbon Bar & Smokehouse in Soho, Central, with a delicious buffet spread of authentic American food as well as live entertainment

Single copy price HK$50 Annual subscription HK$600/US$90

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COVER SPONSOR

Board of Governors Chairman Robert Chipman Vice Chairman James Sun Treasurer John Sigalos Executive Committee Frank Lavin, Anita Leung Belinda Lui, Charles Wellins Governors Brian Brenner, Tom Burns, Jacob Cefolia, Janet De Silva, Rob Glucksman, Peter Levesque, Charles Ma, Toby Marion, Ross Matthews, Andrea Richey, Catherine Scown, Leland Sun, Colin Tam, Elizabeth L Thomson, Richard Weisman, Frank Wong, Sara Yang Bosco, Shengman Zhang Ex-Officio Governor President

David L Cunningham Jr Richard R Vuylsteke

Chamber Committees AmCham Ball Apparel & Footwear Business Briefing China Business Communications & Marketing Corporate Responsibility

Kay Kutt Andre Leroy Don Meyer Wendy De Cruz

Energy Entrepreneurs/SME Environment Financial Services

Sean Purdie Donald Austin Bradley Punu Kuresh Sarjan Catherine Simmons Peter Johnston Hanif Kanji Ross Matthews

Food & Beverage Health & Wellness Hospitality & Tourism Human Capital

Susan Reingold Ed Ahnert

Noble Coker Peter Liu

Information Technology & Telecom Rex Engelking Intellectual Property Alvin Lee Law Eric Szweda Pharmaceutical Stephen Leung Real Estate Brian Brenner Senior Financial Forum Alvin Miyasato Senior HR Forum MaryAnn Vale Sports & Entertainment Ray Roessel Taxation Evan Blanco Trade & Investment Patrick Wu Transportation & Logistics Brian Miller Women of Influence Jennifer Van Dale Lee Georgs Young Professionals Roger Ngo

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Rob Chipman Chairman

Dear Members,

Chairman’s Memo

The Dog Days of summer have arrived with a vengeance! It’s a blistering 37 Degrees and a sweltering 70 percent humidity outside as I write these lines (in the cool air-conditioning of my office). Many of our members have made the understandable decision to get out of Hong Kong for the summer and are enjoying family holidays in cooler climates. I envy each and every one of you! Many of you know that my company is in the executive relocation business, and this is our busiest time of the year so I have to stay in town, while my family is in US. I’m very happy to report that we have concluded another successful AmCham Doorknock trip to Washington, DC. Led by our president Richard Vuylsteke, your AmCham team spent several busy and productive days in our nation’s capital. I encourage you to read Richard’s full report in this issue to learn in details of who we met, what was discussed, and the hot topics in Washington these days.

The AmCham Charitable Foundation presented its annual US Studies scholarship to Lu Kay Yan of Chinese International School, Adrian Lo Man chuen of Li Po Chun United World College, and Laurelle Cheng Lok Kwan of King George V School recently. In addition, a number of Prize Book awards were also given out the past June 30th. We wish the 2011 AmCham scholars every possible success with their studies in the US and look forward to hearing more from them when they visit home next year.

The 4th of July celebrations were wonderful with the AmCham lunch event on July 2nd being the high point for this writer. Your Chamber commandeered the excellent Bourbon Bar and Steak House in Soho. Barbecued ribs, chicken, all kinds of exotic beers, bluegrass music, a magician, and many other attractions awaited all those who were in attendance. If you weren’t able to make it this year, AmCham will be organizing its traditional Independence Day event again next year and you will not want to miss it.

AmCham past Chairman Gary Clinton was recently in town. Gary was leading a contingent of postgraduate students who were touring Asia as part of Global Business Project Program to develop leadership and help companies solve business problems on the ground. It was good to see Gary and catch up with him. You can read more about GBP in this issue of biz.hk.

FCPA stands for the Foreign Corrupt Practices Act and is something that touches many of our members. The DOJ (Department of Justice) and the SEC (Securities and Exchange Commission) are set to ramp up enforcement, so biz.hk interviewed Kelly

Austin of Gibson, Dun and Justin Williams of Akin Gump – to give our readers some insight on what we can expect regarding more stringent FCPA enforcement and the related new UK Bribery Act. One of AmCham finest accomplishments has been the development of the WOI (Women of Influence) Awards.

Recent recipients include Ka Shi Lau of Bank Consortium Trust (2010/2011), Elizabeth Thomson of ICS Trust (2008/2009), Jing Ulrich of JP Morgan (2006/2007), and Christine Loh of Civic Exchange (2003/2004). This year’s WOI conference is scheduled for November 11th and it promises to offer the best speakers in town so book your places early. The WOI Committee held a luncheon event recently featuring Susan Conley who is the author of an interesting book, The Foremost Good Fortune. If you are looking for a good read, Conley’s book would be an excellent choice.

As usual, biz.hk is full of interesting articles – some of which I have mentioned but many of which I have not. So find a comfortable chair, kick off your shoes, and have a good look at your Chamber’s magazine. I hope you enjoy it.

Rob Chipman Chairman

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New

Business Contacts The following people are new AmCham members: eBay Hong Kong

Mercer (Hong Kong) Ltd

Hong Cheng Managing Director

Violet Chan Manager, Corporate Affairs

Michelle Shao Asia Public Relations Director

AlixPartners Ltd

Energizer Asia Pacific Inc

Aetna

Robert Morris Managing Director

Michelle Leung Regional HR Director - South & West Asia

Allied Pickfords Hong Kong/ SIRVA Relocation Limited

General Electric International, Inc

Olivier Jourdan Director, Business Development

American Eagle Outfitters Asia Ltd Venus Lui Product Safety/Testing Technician

American International Assurance Co, Ltd Terrence Roberts Senior Vice President - Group Corporate Solutions Joel Lieginger Regional Business Development Gordon Watson EVP & Regional Managing Director

Brink's Asia Pacific Limited Michael Beech President

China Merchants Holdings Int'l Catherine Chow Senior Manager, Commercial and Strategic Planning Department

Chubb Group of Insurance Companies Jonathan Doherty Greater China Regional Manager

City University of Hong Kong Teresa Li Manager, Mainland and External Affairs Office

Kin Liu Head of Structured & Corporate Finance

Hill & Knowlton Asia Ltd Glenn Schloss Deputy Managing Director, Hong Kong

Hong Kong Mercantile Exchange David Day Head of Marketing Ann Cresce General Counsel Albert Helmig President

Hong Kong SkyCity Marriott Hotel Nicholas Tse General Manager

New Balance Athletic Shoes (HK) Ltd Peter Cragan Regional Financial Controller

Organising Solutions Limited Carole Bird Business Development Manager

Russell Reynolds Associates (HK) Ltd Ashley Wallace Research Consultant

SCAD Nickie Green Director of Human Resources

Simba Logistics Michael Saunders General Manager - Business Development

Standard Chartered Bank Hongkong International Theme Parks Ltd Debbie Ommette Director, Compensation and Benefits & HRIS

Klako Group

Peter Massion Managing Director & Head of Transaction Banking, Hong Kong

TUV Rheinland Hong Kong Ltd

Pinky Lam Business Development Manager

Louisa Mak Vice General Manager - Public Relations, Greater China Marketing Christopher Burling Business Development Executive - Hardlines Ralf Scheller CEO & President

Lee Hecht Harrison

Valtera Corporation

Kristina Koehler Director

Le Meridien Cyberport

Dale Carnegie Training

Connie Burchfield Director, Leadership Development

Kyle Lundby Director, Asia Pacific Region

Daniel Liukkonen Performance Consultant

Lifestyle Solutions (Asia Pacific) Ltd

Winnitex Ltd

David Yurman

Petra Loho Program Consultant

Cherin Wai Sales Manager

Mallesons Stephen Jaques

Withers

Kenny Kwok Retail Operation Manager Cleopatra Chan Marketing Director Brenda Wong Retail Director

Jill Wong Special Counsel

Timothy Burns Registered Foreign Lawyer

View our other members at:

http://www.amcham.org.hk/index.php/AmChamMembers.html

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COVER STORY 45,000 km in just five years. The Beijing-Shanghai High-Speed Railway will become only one of eight high-speed railway corridors crisscrossing the country by 2015. In contrast, the US currently has one high-speed rail service running between Washington DC and Boston.

Beijing

Rail Link

Langfang Tianjin (West and South)

From left to right: Frank Lyn, PwC China Markets Leader, Li Qi, Nanjing Vice Mayor, and Charles Chin, PwC Central China Assurance Leader, cut the ribbon for PwC China Nanjing Office.

Opens

Cangzhou

Yellow River

Dezhou

Photo Courtesy: PwC

New Opportunities

By Daniel Kwan The opening of the Beijing-Shanghai high-speed railway in June is a milestone event in China’s urbanization. Second-tier cities along China’s high-speed railway lines are now much more accessible. Together these cities offer first-class business opportunities as they are expected to drive China’s economic growth with huge amounts of state and private investment, new infrastructure, and an influx of talent.

Jinan Taian

W

Qufu East Tengzhou East Zaozhuang Xuzhou Suzhou East Bengbu Dingyuan Chuzhou

Nanjing

Yangtze River 8

Thriving places

hen Louisa Wong, Group Managing Director of Bó Lè Associates, arrived in Chengdu more than 10 years ago to open a new office of her head hunting firm, she had not expected that recruiting the right person would be so difficult.

“I was sitting in Crown Plaza Hotel – it was then the only five-star in Chengdu – and the people we interviewed were mainly general managers with background in manufacturing but they were not really interested or appropriate,” Wong recalls.

Wong’s experience was typical of foreign and overseas managers in China a decade ago. Back then, few overseas investors would venture out of China’s top-tier cities. A side trip from Beijing and Shanghai to Xian to admire the terracotta warriors there would probably be the best foreign CEOs would attempt if they ever visited China.

But that talent drought is long gone. Senior Zhenjiang executives, managers, professionals – local Chinese and expatriates – are now making Danyang their way to inland cities in doves.

Changzhou What make the second and third-tier cities tick? Today, cities like Wuxi Chengdu, Dalian, Nanjing, and Wuhan are thriving places of Suzhou commerce, with large developing Kunshan consumer and industrial markets.

Business like tourism, investment, and commerce and trade has taken

Shanghai

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off. The convenience of travel – made easier by high-speed trains and domestic flights – has redrawn the business map of China by making many areas of the country far more accessible. Indeed, getting in and out of first-tier cities cannot be easier nowadays.

“It is just 37 minutes away from Beijing by high-speed rail,” Wong says of Tianjin, which today is often described as the future city of the Bohai Gulf Region. “You can go to Tianjin for lunch and return [to Beijing] on the same day – going down Changan Avenue will take even longer.”

China speed The speed of changing infrastructure in China is amazing. Benefited hugely by the government’s stimulus program, lines of communication – be they rail, highways, air, or marine – are developing so rapidly that it’s a challenge to keep up with the changes.

The best example of such “China speed” is the Beijing-Shanghai high-speed trains, launched June 30.

Construction of the rail project, which cuts the travel time between the two cities to just shy of five hours, was completed a full year ahead of its original 2012 schedule.

“The 1,318-kilometer link, starting from Beijing and ending at Shanghai, chains together the country' s prosperous Pan-Bohai and Yangtze River Delta economic zones, speeding up the movement of people, goods, information and capital,” says the official Xinhua news agency about the 221-billion-yuan link.

This north-south rail link connects Beijing, Tianjin and Shanghai, and 11 other cities each with a population over one million in the four provinces of Hebei, Shandong, Anhui, and Jiangsu.

These regions have more than one-fourth of the nation's population.

China’s high-speed rails covered a total of 8,358 kilometers in 2010, according to official reports. The government has plans to Louisa Wong expand the mileage to

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The reasons behind the rise of China’s second and third-tier cities are manifold. Key among which are their increased accessibility and that these cities are becoming huge business hubs with vibrant economic activities.

Although these cities may be little known outside of China, many of them are homes to Chinese conglomerates with business around the world. They may be the nameless “OEM” manufacturers of big foreign-brand leaders or huge state-owned giants which sell exclusively to Chinese consumers. The electric appliance manufacturer Gree in Zhuhai of Guangdong Province is a good example. Gree had annual sales of 61 billion yuan in 2010 (US$9.43 billion) but it is hardly a household name in the West.

Moreover, these cities have become more attractive as a growing legion of top Chinese executives, who used to work for MNCs in first-tier cities, have found even better career prospects working for local Chinese firms. Feeling that their prospects for advancement may be limited in foreign companies, increasing numbers of seasoned Chinese managers are considering C-level management positions in Chinese enterprises. Unlike their western counterparts, these Chinese companies are far more aggressive and confident about expanding into China’s inland provinces.

At the same time, soaring property prices in first-tier cities are driving young Chinese graduates to second and third-tier cities to escape the former’s high rents and ever-rising costs of living. Well educated and highly skilled, these young executives fill the gap of middle management and front-line staff of local businesses.

The arrival of senior managers and young talents is a catalyst to local economies. They provide a much-needed pool of human capital for businesses to tap into as they expand locally. Unlike migrant workers, white-collar income earners and their families are consumers with strong spending power, and they are attracting both

Key facts about Beijing-Shanghai high speed railways Distance: 1,318 kilometers Investment: 220.9 billion yuan Travel time (Beijing-Shanghai): five hours Current travel speed: 250-300 km/h Second-class ticket (300 km/h): 555 yuan Business-class ticket (300 km/h): 1,750 yuan Project broke ground: 18 April 2008 Official launch date: 1st July 2011

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foreign and Chinese brands to move inland.

This partly explains the sharp increase of interest among major brands – both high-end luxury ones and mass consumer goods – to extend their reach outside of China’s coastal cities. Prada, for example, has opened up shop in Shenyang. When Nestle announced in July it will buy Hsu Fu Chi, one of the country’s biggest manufacturers of confectionery and baked products, for US$1.7 billion, it is not just eyeing its business in coast cities but also its vast distribution network countrywide.

Hot jobs Stanley Ching, Senior Managing Director of CITIC Capital, describes what’s happening in China today as the second phase of urbanization. “In the first phase of urbanization, people couldn’t find decent jobs close to home and they had to go to other places,” Ching says.

Most commonly, the destination was China’s coastal provinces and cities.

“Now, with the improvement of infrastructure as well as the development of some of the major cities in their own provinces, people actually are finding good job opportunities in or near their home towns,” Ching says. “For example, we have Foxconn building plants in Henan and Chongqing, and we know that these provinces are two of the biggest sources of migrant workers.”

Ching hesitates to give a date of when the second phase started, but suggests that the transformation probably picked up speed five or six years ago – roughly about the same time the government began to invest heavily in its transportation infrastructure. He uses data from Wuhan – a major second-tier city in central China – to illustrate his point. Beginning from 2004, according to him, more and more graduates from universities in Wuhan have chosen to stay after graduation instead of looking for jobs in other cities.

“In 2000, only 25 percent of the college graduates in Wuhan stayed there [after graduation]. In 2004, the number went up to 48 percent and the number in 2008 went even higher to above 50 percent,” he says.

“This is a dramatic change from the past when almost all college graduates wanted to work in cities like Beijing and Shanghai. Who would want to work in Wuhan, Changsha [of Hunan Province], or other second-tier cities? This has changed and the trend is very obvious,” he adds.

There are many factors behind the change – competition for jobs, rising living costs in first-tier cities, and family choices. Ching believes that career prospects also play a key role. As more multinational companies extended their reach into China’s heartland, opportunities to climb up the social ladder are no longer limited to first-tier cities anymore.

“Many of the multinational companies – particularly the US companies – are expanding into the second-tier cities,” he says. “If you look at General Electric, they announced last year that they are going to build six research and development centers all in second-tier cities like Wuhan, Shenyang, Chengdu, and Xian. They know they have to go where their products

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go. They have to go where the talents are.”

“First-tier cities like Beijing and Shanghai will keep their status as international metropolitan cities but second-tier cities will play more and more important roles in China’s development,” Ching says.

Wong of Bó Lè AssociStanley Ching ates agrees that many Chinese enterprises can now attract talents with lucrative remuneration packages as attractive as those offered by MNCs. Some Chinese companies may not be as generous in their basic packages, but they more than make up for that in bonuses. “Two million yuan a year of salary for a general manager is really quite common now,” Wong says. “And bonus can come not just once a year, it can be issued anytime.”

“But you need to have to have faith in your ability to be successful and to last,” says Wong, whose firm has already set up nine offices in China. “This is not for someone who will just hit and run.”

Real estate market This large pool of human capital has major impact on the real estate market in second and third-tier cities.

While it is difficult to identify the driving forces – speculation or real demand – figures from the National Bureau of Statistics show that new home prices in May, excluding what the government calls “affordable housing,” have grown month-on-month in 50 of the 70 cities monitored across the country.

Paul Keogh, Managing Director and Chief Investment Officer of RREEF China REIT Management, which has investment in Beijing and Dalian, says that the potential of China’s second and third-tier cities is enormous. First-tier markets like Beijing and Shanghai are beginning to enter what he calls “the stabilization phase,” but second and third-tier cities promise investors higher return.

“The China [real estate] market will develop in phases,” Keogh says. “We are most of the way through the first phase which is for opportunistic capital, and it’s of higher risk and predominantly development related.”

Cross-border investors will demand a higher risk premium to invest in second and third-tier cities because of their relative lack of transparency, higher counterparty risk, and regulatory risk, Keogh points out.

Domestic Chinese investors are different as they are more comfortable to invest locally. As more MNCs chose these cities to set up their back offices, they are crucial to the development of the local economy.

“Whether you got back offices or support functions, the benefits that they’ll bring to the secondtier cities – say Hangzhou or Nanjing – will be in retail, housing and other services,” he says.

“You’ve got the development of second-tier cities which are becoming self-sufficient in their own right. It may have started as back office from the first-tier cities but

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what will happen is that it will become self-sufficient as services and consumers and retail develop.”

REITs in China Keogh, who has more than a decade of experience investing in real estate in Asia-Pacific, is optimistic about the future of China’s real estate market despite retreats in recent months.

“The infrastructure that’s being developed is going to create so much more accessibility and transparency and wealth to cities outside of Beijing, Shanghai, Guangzhou, and Shenzhen that I think the growth of those cities is going to be exponential,” he says.

“The opportunity the government is creating through its enhanced infrastructure is significant,” he adds.

However, Keogh believes products such as REITs (Real Estate Investment Trust) may take longer to become acceptable to investors who generally have an appetite of higher risk. “Once the investors have a bigger appetite for longer-term and stable recurring income generating properties, that’s when they will want and create demand for REIT products,” he says. “But at the moment, most people don’t appreciate it.”

“I think the emergence of REITs is inevitable and it will happen although REITs are perceived and expected to be a lower-risk product,” he adds. “China at the moment is not perceived to be a low-risk environment.”

“The potential for REIT in China is enormous. My only hope is that they are done in the very best in class basis – learning from all of the different markets that have successfully implemented REIT,” he says.

He is concerned that REIT would not be seen as the “exit strategy” for existing property owners and that the first REIT in China should be structured for the “ultimate investors.”

According to him, easier accessibility will indirectly help reduce risks for investors and that will eventually bring more investment to second and third-tier cities, and this in turn will indirectly accelerate the stabilization of the real estate market in first-tier cities.

Long-term view Ching of CITIC Pacific agrees that through building up the transportation network, cities are converging and that cities clustered along the railway lines can become major economic power centers.

“The high-speed rail system will effectively create a few big economic zones – in the south, east, and the west,” Ching says. “Then because the travel time between those cities would be reduced to less than two hours, they will come together as very strong economic powers in their regions.”

He believes that investment will continue despite restrictions imposed by the government to cool speculation. In addition, he points out that investors are maturing.

“People investing in China have changed quite a lot,” he says. “Their mindsets have changed from a more opportunistic kind of play to a more long-term view.”

Using CITIC Pacific’s investment in Changsha as an

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example, Ching says while Chengdu in Sichuan Province is already crowded with investors, Changsha in Hunan remains an attractive location – again, thanks to the high-speed railway system. “We want to avoid some of the competition and we want to identify cities that are undervalued for our investment,” he says.

So what does it mean to real estate investors? Ching says China’s efficient high-speed travel system has essentially opened up a lot more opportunities especially in retail and residential properties.

“The implication for real estate development is that although real estate has a very heavy speculative nature, the real demand is very strong.”

“Just think about what opportunities are available along the high-speed rail,” he says. “It provides a very convenient place for people to live even if they can’t afford very expensive housing in the first-tier cities. From Shanghai it’s only 20 minutes on the high-speed train to Kunshan or Suzhou [in Jiangsu Province], where you can enjoy very good living conditions.”

“People do ask whether offices are still a Paul Keogh good asset class for investment in second-tier cities, and that remains a big question mark,” Ching says, “because with this kind of transportation, do people really need to rent a nice office in second-tier cities?”

“We are focusing on residential and a lot more in the retail sector such as shopping malls.”

The future Looking ahead, Wong of Bó Lè Associates says as the Chinese government continues to push domestic consumption and development in second and third-tier cities, opportunities for western businesses and talents abound. Hot jobs in areas such as IT, finance, insurance, and real estate – fields that used to be only available in first-tier cities – are now opening up.

Yet there are still some areas in which second-tier cities cannot match first-tier ones. For example, most of these cities cannot yet offer high-quality international education services, but they are catching up rapidly.

Foreign business chambers are also expanding in new cities, providing support and services to expatriates and their families who are new to the country.

Given China’s size, where should investors and businesses target in the coming few years? Wong says cities like Hangzhou, Nanjing, Wuhan, Xian, and Shenyang are to be watched closely. “If you aren’t there, you should be,” she says.

Correction

In the May issue of biz.hk, a photo of the AmCham Ball on page 44 carries the wrong caption. It should read: “Al Benki, Senior Vice President, OHL Global Freight Management & Logistics, and Jane Ann Benki.” We offer our sincere apology to Mr and Mrs Benki for any inconvenience caused.

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WASHINGTON DOORKNOCK opportunity to eat the US’ lunch.”

The facts are sobering. “The number of intra-Asian FTAs has exploded, rising from six to 70 over the past 15 years; 18 more have been completed but not yet implemented; and an additional 70 are under negotiation,” says a recent US Chamber report entitled A Line Down the Pacific? The Stakes for US Engagement in the Asia-Pacific Region.

By contrast, the United States has concluded only two FTAs with Asia (Singapore and Australia). The three with South Korea, Columbia, and Panama have been negotiated and re-negotiated, but still not passed.

Despite intense lobbying by the US Chamber of Commerce in Washington, overseas AmChams, and a broad

US Competitiveness Declining in Asia?

By Richard R Vuylsteke “We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.” – US President Barack Obama

E

ach year representatives from the 27 AmChams in the Asia-Pacific Council of American Chambers (APCAC) fly to Washington DC to meet with appointed and elected US officials on a “Doorknock” – an information exchange and advocacy exercise that focuses on economic and business issues critical to US business interests in Asia.

AmCham HK’s Washington Doorknock trip (June 12-16) overlapped with the first day of the annual APCAC Doorknock, held at the headquarters of the US Chamber of Commerce. This gave the Hong Kong delegation (see box) an opportunity to interact with other leaders from AmChams in Asia and with senior US Chamber executives before following its own agenda of meetings focused on HK-China topics.

All the chambers agreed to emphasize two macro issues in Washington.

First, the importance of boosting US trade in order to help create jobs, with the highest near-term priority being passage of three Free Trade Agreements (FTAs) pending on the Hill.

Second, the critical need to make the US more competitive internationally through reformed business and personal

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spectrum of businesses in the US, Congressional approval of the FTAs remains in doubt.

Meanwhile, challenges to US competitiveness in Asia are increasing.

According to the US Chamber report cited earlier, “The US share of Asia’s international trade has actually declined by 9 percent since 1990 as Asian nations have negotiated preferential trading agreement among themselves. As Asian production chains have expanded to meet booming regional demand, US suppliers of intermediate goods are being left behind.”

“The message is simple,” said US Chamber Executive Vice President for Government Relations Bruce Josten during an APCAC briefing. “The US is losing out in global competitiveness.”

tax laws; strengthened export promotion activities; improved visa and entry procedures for business people, tourists, and students; and better immigration processes and related procedures to assist foreign direct investment in the United States.

FTA frustration The region’s AmChams were disappointed that they needed to deliver the message of many previous Washington Doorknocks – “Pass the three pending FTAs with Korea, Columbia, and Panama!” – emphasizing that it is a “make or break time” to secure US inclusion in Asia’s increasingly complex trading system with its proliferating bilateral trade agreements.

Particularly worrisome was the push by the European Union to sign agreements in the region that would make US products and services less competitive with European companies. Although starting later to work on these agreements, including a major one just concluded with South Korea, the EU has taken advantage of slow US implementation of trade agreements, which as several speakers said, “Gives the EU the

Photos courtesy of White House

Washington Doorknock 2011 Participants Special thanks to these chamber leaders who took time off from their own busy schedules to participate in more than 30 meetings in Washington DC, June 12-16 .

Rob Chipman CEO, Asian Tigers KC Dat AmCham HK Chairman Tom Burns Global Director, Content & Services Intel Semiconductor Ltd Member, AmCham HK Board

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Andre Leroy Marketing Director Modern Testing Services (Global) Ltd Chairman, Apparel & Footwear Committee, AmCham HK Richard Vuylsteke AmCham HK President

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transits Hong Kong, there is a good chance that the decision to buy, along with much of the trade financing, was done through Hong Kong.

During its meeting with USDA officials, the AmCham delegation encouraged them to provide all the resources possible, including staffing, to further grow the market for US agricultural products – including wine – both in Hong Kong and in the Mainland.

Tax reform on hold During the week, US tax issues came up frequently, but the delegation was told repeatedly not to be optimistic about any tax law changes in the near future, even though the US tax system is out of step

From left to right: US Consul General Steve Young, US Commerce Secretary Gary Locke, former Hong Kong Secretary for Commerce and Economic Development Rita Lau, and Permanent Secretary for Commerce and Economic Development (Commerce, Industry and Tourism) Yvonne Choi at the signing ceremony of a Memorandum of Understanding on Cooperation in Wine-related Business in May 2010 in Hong Kong

Much needs to be done by business, as well as government. As US Department of Commerce officials pointed out when meeting with the AmCham HK delegation, less than 1 percent of US companies export, and of these companies, 58 percent export to only one country (most often Canada or Mexico).

As an estimated 95 percent of the world’s consumers and 73 percent of the world’s purchasing power is outside the United States, the need for more US companies to go global is abundantly clear. Trade creates jobs both at home and abroad.

AmCham HK embraces the goals of President Obama’s National Export Initiative (announced in the January 2010 State of Union Address) to double US exports in five years and grow 2 million US jobs, and it sees passage of the FTAs as essential to these ends.

“Our message, especially in light of the US-hosted APEC meeting coming up in Hawaii later this year, is that the US needs to be seen as seriously engaged in Asia,” says AmCham HK Chairman Rob Chipman. “To fail again on passing the FTAs will send the wrong message – it will look like we are turning our backs on the commercial opportunities of trade with the fastest growing region in the world.”

AmCham HK messages to US appointed and elected officials remained consistent with previous Doorknocks – push solid trade agendas, including

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passage of FTAs; continue to work on market access issues with China; and enforce trade rules and remove barriers to the sale of US goods and services abroad.

Advantage

Hong Kong “Our trade goals during the upcoming APEC meetings are positive for all trade partners – we want markets to be open, free, transparent, and fair as possible,” Kurt Tong, the State Department’s Senior Official to APEC, told the APCAC delegations. “We are urging greater attention to green growth and environmental goods; continued work on regulatory convergence; and taking on a new generation of trade and investment issues, such as facilitating global supply chains.

“Hong Kong is a prime example of an economy that already embraces those goals, and its economic strength especially illustrates the value of free trade,” says Chipman. “That’s why we need to keep telling Hong Kong’s story.

Doorknock trips help keep Hong Kong on Washington’s map. We always stressed the long-term role Hong Kong has played as a business gateway to China.”

“One of our messages to Congressional staff,” says AmCham HK delegation member Tom Burns, “was that US

companies new to Asian markets, especially SMEs, should utilize the decades of experience and world-class expertise of Hong Kong’s professional services to target, penetrate, and succeed in China and other Asian markets.”

“We also reported on the close cooperation between AmCham HK, the Foreign Commercial Service and Foreign Agricultural Service at the US Consulate, Invest HK, and HKTDC in assisting US companies that were trying to set up in Asia using Hong Kong as a base and for Chinese companies wanting to go global,” Chipman says.

With so much emphasis on the US relationship with Mainland China, it is sometimes easy to overlook Hong Kong – not only as a gateway to Mainland China and the region, but also as a market itself. One good HK story: Agriculture.

Hong Kong has been the fastest growing large market for US agricultural products over the last five years, increasing nearly 170 percent over that period.

In the last calendar year, exports to Hong Kong reached a record US$2.97 billion, a substantial 39 percent increase over the previous record of $2.1 billion in 2009.

Hong Kong is now the seventh largest export market in the world for US agricultural products. No less important, Hong Kong is the decision making hub for many agricultural importers within the region. Even if the product never

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with the rest of the developed world and the trends in business and personal taxation are counterproductive for US strength as a foremost trading economy.

“The US deficit is the issue of the decade, and this makes any reduction in taxes remote at present,” said John Bussey, Assistant Managing Editor and Executive Business Editor of The Wall Street Journal. Bussey and others pointed out that tax reform is seen as a necessary goal by many in both political parties, but the presidential election season has already begun, which means late 2012 will be the earliest time to expect much attention to this issue.

“Tax reform – as I know you want to urge changes in the double taxation of Americans overseas – is really a future

“We see PRD growth and the simultaneous HK business and economic integration with South China as being the big story for the next decade.”

Washington attorney Elliot Feldman, far left, invited Doorknock participants, from left, Andre Leroy, Rob Chipman and Tom Burns to see the local team play.

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issue, because the presidential election campaign is already heating up,” Richard Bush, Director of the North Asia Institute at the Brookings Institution, told the AmCham HK delegation.

“As you say, tax reform is a competitiveness issue for the US, but if overseas AmChams are going to have a role in policy recommendations on this, they should be prepared for the action when it finally starts and they need to be as forceful as possible.”

HK-China As in previous Doorknock trips, AmCham HK’s interlocutors were interested in the chamber’s perspectives on economic and commercial trends in China, especially changes in supply chains, with factories being relocated to China’s west as well as to Southeast Asia; complications arising from the shift from an export-oriented economy to greater domestic consumption; labor trends, including the expectations of China’s “Y generation”; and the impact of China’s growing middle class on the consumption of food, products, and services.

AmCham HK reported on its Beijing Doorknock, where its delegation met with senior Chinese officials in Beijing (31 March-1 April) and discussed the implications of China’s 12th Five-Year Plan for Hong Kong-South China social, economic, and business integration.

In a luncheon meeting with Congressional staff and representatives from other government organizations, including the Export-Import Bank, AmCham HK outlined the growth of business opportunities in Hong Kong for US professional service providers under the Plan; the expanded role of Hong Kong as a gateway out of China for Chinese companies going global; and the huge number of business opportunities ahead as the Pearl River Delta develops into an integrated megalopolis.

“We see PRD growth and the simultaneous HK business and economic integration with South China as being the big story for the next decade,” Chipman says. “The PRD is already the richest region of China, but with the goals set out in the Five-Year Plan, there are great opportunities for international businesses in such areas as green energy technologies, air and water quality, service industry management, and internationalstandard education and training.”

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Challenges ahead At a time of extraordinary Asian growth, the US is not focused on the commercial opportunities in Asia. Wars in the Middle East and Central Asia, and a large cluster of serious domestic issues, occupy people’s thoughts.

The HK delegation repeatedly heard about the soaring US deficit, high unemployment, still-weak economic growth, and a politically polarized Congress in gridlock over health care, other benefits and entitlements, immigration laws, and a host of pending legislative items.

“The US anxiety level is very high,” says John Bussey of The Wall Street Journal. “People are realizing that the middle class style of life common in the ‘70s is over, as is the US monopoly on manufacturing. Worldwide, the US is less economically dominant.”

The US needs to step up its game in Asia, Kurt Campbell, Assistant Secretary of State for East Asian and Pacific Affairs, told the APCAC Doorknock participants. “We need to link the US to Asia and demonstrate how that creates jobs in the United States. Frankly, given the domestic issues at hand, it’s a hard sell, an enormous challenge. But the US has to be engaged in Asia in every sense – 21st century history will be written in Asia.”

“Asia isn’t seen here as a creator of US jobs,” says Charles Freeman, a senior China scholar at CSIS (The Center for Strategic and International Studies). “With the APEC meeting late this year, it’s an important year for the US to engage Asia.

One part of that is to finally pass the FTA with Korea. This must pass, or Asia’s view of the US commitment to trade will suffer real damage.”

“One reason AmCham Doorknock trips to Washington are so important is that the Congress and the Administration need to hear from people on the ground in Asia,” says Keith Luse, a senior staffer on the Senate Foreign Relations Committee.

“You need to help keep people inside the Beltway informed. That means we need specifics – we need you to dig deeper on facts that will provide worthwhile input to the policy debates here.”

“If issues such as US trade with Asia, taxes on business and Americans overseas, regulatory and market access with China are important to US business leaders in Asia, then they and the overseas AmChams need to craft clear, consistent, and frequent messages to Washington,” says Chipman.

“Our work is cut out for us.”

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Meetings & Briefings Senior US Administrative Officials Department of State

Joe Donovan

• Kurt Campbell, Assistant Secretary, East Asian & Pacific Affairs • Joe Donovan, Principal Deputy Assistant Secretary, East Asian Affairs & Pacific Affairs • Daniel Kritenbrink, Acting Deputy Assistant Secretary, East Asian & Pacific Affairs • Kurt Tong, Senior Official to APEC

Department of Agriculture

Suresh Kumar

• Michael Scuse, Acting Under Secretary, Farm and Foreign Agricultural Services • Suzanne Heinen, Associate Administrator, Foreign Agricultural Service • Anne Dawson, Senior Policy Advisor, Foreign Agricultural Service • Dale Miller, Senior Advisor, Office of Trade Programs, Foreign Agricultural Service

Department of Commerce

Nancy Nord

• Suresh Kumar, Assistant Secretary for Trade Promotion and Director General of the Foreign and Commercial Service, Commerce • Craig Allen, Deputy Assistant Secretary for Asia, Market Access & Compliance, International Trade Administration • Patrick Santillo, Regional Director, East Asia & Pacific, International Trade Administration • Alain de Sarran, Deputy Regional Director, East Asia & Pacific International Trade Administration

Department of Treasury • Robert Dohner, Assistant Secretary for International Affairs Office of the US Trade Representative (USTR) • Claire Reade, Assistant US Trade Representative for China • Barbara Weisel, Assistant US Trade Representative for Southeast Asia and lead TPP (TransPacific Partnership) negotiator • Eric Holloway, Director for APEC Affairs Consumer Product Safety Commission (CPSC) • Nancy Nord, Commissioner • Anne Northrup, Commissioner

In addition, the delegation met with congressional staff, think tank-based China scholars, Washington journalists, and had a special meeting with Donald Tong, Commissioner of the HK Economic & Trade Office.

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CHARITABLE FOUNDATION

Give Back to Community

By Kenny Lau

From left: Angus Wong, Grace Chow (on behalf of Adrian Lo), Sachin Tipnis (on behalf of Thomas Tse), Kay Yan Lu, Terrance Lok, Laurelle Cheng, and Wallace Ng of Institute of Int’l Education, at the scholarship award ceremony

2011 Scholarship and Scholar award recipients US Studies Scholarships are awarded to three local high school graduates who will be attending university for a full-time undergraduate program in the US, while Scholar Awards are presented to three full-time MBA students from CUHK, HKU and HKUST. All award winners are recognized for their exceptional academic records and leadership skills as well as their involvement in community service.

US Studies Scholarship recipients

Scholar Award recipients

Kay Yan Lu Home school: Chinese International School Intended US college: University of Pennsylvania

Angus Wong Chinese University of Hong Kong

Adrian Lo Home school: Li Po Chun United World College Intended US college: Yale University Laurelle Cheng Home school: King George V School Intended US college: Wellesley College

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Thomas Tse University of Hong Kong Terrance Lok Hong Kong University of Science & Technology

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mCham Charitable Foundation was founded to initiate ways to “give back” to the Hong Kong community and it has consistently achieved such goal in the past 25 years, touching the lives of those who came across many of the charitable programs.

“The Foundation has helped facilitate the betterment of the Hong Kong community, including local schools and the overall environment in which we live, through a range of activities,” says David L Cunningham, chair of the foundation and past AmCham chairman (2009).

The Foundation was formally established in 1985 at the recommendation of past AmCham chairmen including William Mortson (1972), Glendon Rowell (1974), Edwin Burrell (1976), Bob Adams (1979), James Sweitzer (1980), Alex Blum (1981), Thomas King (1982), Frank Martin (1983) and Gage McAfee (1985). It is under the aegis of a Board of Trustees, who served as chairmen of the Chamber in past years.

“Hong Kong has been a very hospitable host to AmCham and to AmCham member businesses, and we feel a sense of wanting to do something to show our gratitude,” says Tom Gorman, a trustee of

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the Foundation and past AmCham chairman (1995). “The reason for existence of the foundation is a reflection of the spirit of gratitude to Hong Kong.”

“What we consistently try to do is to take limited resources and apply them to showcase people who deserve recognition for their achievements in community service and scholarship,” he adds.

The idea of the Community Service Award is to recognize and award funds to smaller organizations that are on their way up and working to make a difference for the less advantaged of the community. In many cases, “they are doing good things without getting paid for it. These people are donating their time, energy and effort to worthwhile causes,” says Gorman.

The Foundation works in collaboration with American Women’s Association of Hong Kong. “We accept nominations from a wide variety of sources, and AWA is very helpful to us in terms of accepting submission from charities and doing the vetting and due diligence,” Gorman points out.

The Community Service Award was renamed to what is now known as The Ira Dan Kaye Community Service Award, to honor a past AmCham chairman who passed away in June 1999. Kaye was not only a past chair of the Chamber but, over a long period of time, a great contributor to the community in many different respects, including playing Santa Claus at an orphanage in Macau every year.

“He used to say it was one of the highlights because he could bring smiles to the face of these needy kids,” Gorman recalls.

“He was very active in community causes, to an extent for many years people did not realize because he was low key and humble,” he adds. “We felt it was a great way both to honor Ira and to continue that legacy.”

Through scholarship and prize book awards, the Foundation recognizes students in Hong Kong for their achievements in leadership, scholarship and community service as a way to invest in the future of Hong Kong. “We continue to place a great emphasis on educational campaigns, to nurture and sustain the spirit of entrepreneurship among the next generation in Hong Kong,” Cunningham points out.

“As Hong Kong has gone from a manufacturing powerhouse to a service center, its ability to continually move up the value chain in services will be critical not only to Hong Kong maintaining its

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competitiveness but redefining its competitiveness and moving ahead in generations to come,” Gorman believes.

“So, we need talent and talent requires education,” he adds. “Hong Kong needs to continue to produce smart people. The extent to which we could help is, we believe, a good contribution to the community.”

It is very encouraging and heartening to see the kind of talent of student through the scholarship and prize book awards, Gorman says. “It is not just about their academic achievement, which is just incredible, but also about their involve-

ment in social responsibility programs.”

Every year, hundreds of applications are submitted for the scholarship awards, and it is always a difficult task selecting just a few recipients from a very rich pool of talent, Cunningham points out.

“What is certain is that all of the award winners have demonstrated their strong commitment to excel, their courage to explore a new horizon as well as their potential to achieve entrepreneurship or to become leaders in our community,” he says. “I really look forward to see how these budding stars will develop in the future.”

The Ira Dan Kaye Community Service Award Only around one percent of abused children are brought to the attention of professionals, says Dr Patricia Ip, an executive committee member at Against Child Abuse (ACA), recipient of 2011 Ira Dan Kaye Community Service Award.

“What we advocate for is a AmCham Charitable Foundation Trustee Tom Gorman, caring environment free from left, presents the Ira Dan Kaye Community Service Award 2011 to Dr Patricia Ip, Executive Committee member of violence for each child to grow and Against Child Abuse (ACA) develop,” Ip says. “We are pleased with the recognition which reflects a community concern for child abuse.”

Apart from helping abused children and their families, prevention is also essential, Ip adds.

“There is ample evidence that adverse childhood experiences are associated with risk-taking behavior, chronic diseases and premature death,” she says. “With one of the lowest birth rates in the world, for Hong Kong to have a sustainable population, reducing child abuse and neglect is important.”

Against Child Abuse was founded in 1979 and registered as a non-government organization a year later. It has focused its work on child protection with a strong emphasis on advocacy. It offers hotline services through which the public can report suspected cases of child abuse and the agency can provide social workers to investigate and provide counseling services.

AmCham Charitable Foundation Prize Book Awards

Front row from left: AmCham President Richard Vuylsteke, AmCham Charitable Foundation Trustees Mark Michelson, John Kamm and Tom Gorman, with Prize Book Award winners

The Prize Book Award is an annual educational incentive scheme in which 20 local high school students are awarded a set of prize books and a HK$1,000 scholarship for their academic excellence as well as achievements in community service and leadership.

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Following My Dreams

MEMBERS DIRECTORY

Ka-Ling Wu,a recipient of AmCham Charitable Foundation’s US Studies Scholarship Awards in 2010, talks to biz.hk about her experience as a freshman at Brown University

biz.hk: How do you like Brown after a year of study there?

Wu: It has a good environment for students to learn. It is also a place where students actively interact and help each other.

Instead of just memorizing stuff, you are made to think. While I attended a local high school in Hong Kong, we focused more on preparing for examinations and learning to come up with accurate answers to questions. Now it is more about critical thinking and what we learn on the path of finding solutions.

There is no one particular way they want you to do certain things.

Professors are also very friendly and easy to approach, and I would meet with professors and ask them questions during their office hours 2-3 times a week. They are also very quick in replying emails from students. It becomes very easy to communicate with them. And it doesn’t always have to be academic but other topics like career paths. They are more like your friends. biz.hk: Has there been any unique experience?

Wu: Brown is a very liberal school, where students are encouraged to express themselves in an open-minded way. The campus is a common place for different groups of people to meet and hang out. I remember one day when a group of religious leaders had a political rally on campus, it was amazing to see

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how quickly students got together to do a counter-rally. In 20 minutes, about 1,500 students of our total student body of 6,000 got together in support of rights of minority groups. And I was one of them. biz.hk: What about dorm life?

Wu: It is fun, especially when you are able to talk to your friends or get together anytime. The school itself is very international, and I have gotten to know many students from many different places around the world. It is certainly a good experience and one of the reasons why I chose Brown, because a large international student body can lead to broader, vigorous discussions and different opinions. biz.hk: Did you miss home during your freshman year?

Wu: I was not too homesick, but I was not very used to the food and weather. I never had any experience with snow, and I was excited to see it for the first time. When the first big snowfall came, we went to out to play. It was a lot of fun.

But, then it got slippery and dirty on the ground and I was very much looking forward to spring. When I came back to Hong Kong this summer, I really appreciated sunny weather. biz.hk: Were you involved in any extracurricular activities?

Wu: I started playing rugby as a club sport, which I never played in Hong Kong. I also went into a volunteer program as a tutor for local high school students in Providence, Rhode Island. biz.hk: What was the most valuable thing you learned during the past year?

Wu: It was actually through my participation in the rugby team. At first, I thought it might just be fun, but I learned way more. I learned a lot more about teamwork and trust among teammates.

The trust you earn from other

Ka-Ling Wu, center, with her friends

teammates is something you wouldn’t find from doing other things. I also learned to be more persistence through playing the game. biz.hk: Are you still interested in a career in green development?

Wu: After my first year at Brown, it turned out to be something what I really want to do. And I found myself to be more determined in what I am studying for. I really don’t mind having to study hard or to spend extra time in the lab. biz.hk: Has your perspective on life changed after a year abroad?

Wu: Interestingly, I became a little less pragmatic and focused more on following my dreams. I now think more about what I truly want to do in the future.

What hasn’t changed is my belief in education. Education is really a great opportunity. A child with an education can be beneficial to society because that child is likely to help create a better place for others.

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w w w. a m c h a m . o r g . h k

biz.hk: How did you feel when you left for Brown University a year ago?

Wu: I was excited because Brown is my dream school. I was also a little nervous because I had never been to the US before. When I first arrived at the campus, it was “wow” at first sight and I told myself that I finally made it there.

People in the US are very nice and helpful. They might just be people sitting next to you on a bus; but if they see you with two large suitcases and a backpack, they will offer their help.

2010/2011

www.amc ha m.org .hk

Over 500 pages in three major sections, including a complete guide to chamber services, corporate sponsors and AmCham Charitable Foundation. This directory lists nearly 1,900 members from over 700 companies and organizations.

ISBN 978-962-7422-03-7

LC 98-645651

LAW

Global trend

The increased enforcement of the FCPA reflects a global trend. There has been a surge in anti-corruption enforcement globally over the past 10 years. The Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law in July 2010 is the latest legislation by the United States to give the SEC extra teeth to go after financial criminals. Moreover, the UK Bribery Act just came into effect on July 1 (see sidebar), and the United Nations has a Convention against Corruption, and the Organization for Economic Cooperation and Development (OECD) has its own anti-corruption initiative.

Local enforcement against corruption has been stepped up and individual countries are actively raising standards. “A set of global anti-corruption standards has been evolving in a way that makes the risks in this area increasingly substantial,” Austin says.

In Asia, for example, “China has strict laws against corruption and the number of prosecutions has gone up. Indonesia also has strict laws. India just acceded to the UN Convention against Corruption in May and will soon pass a bill which is its equivalent of the FCPA. The country has also looked into commercial bribery legislation,” Austin adds.

Increased cross-border coordination and cooperation has led to more successful prosecutions, with joint enforcement actions increasingly common. By way of example, “Siemens settled with the German authorities and with the US,” Austin says. More recently, “Johnson & Johnson and its subsidiaries were investi-

What You Need to Know about the US’FCPA and the UK’s Bribery Act A significant increase in enforcement cases under the United States’ Foreign Corrupt Practices Act (FCPA), coupled with the implementation of the UK Bribery Act, has created new challenges to multinational corporations operating in developing economies, including China, where accepting favors – bribes or no bribes – can be the norm. This calls for a sound global compliance program for MNCs setting out guidelines to accommodate time-honored local customs and appropriate corporate hospitality without crossing the line, Wilson Lau reports

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he writing is on the wall. Running a global business these days requires exceptional sophistication in governance because any missteps can create serious problems in multiple jurisdictions. Expatriates who are new to Asia – China in particular – are often told that the law doesn’t apply locally because the “mountains are high and the emperor is far away.” In an increasingly flat world this is no longer true especially as local regulators and law enforcement agencies flex their muscles, often in line with the US’ Foreign Corrupt Practices Act (FCPA).

The US enforcement statistics are staggering. In 2010 alone, there were 74 new FCPA enforcement actions brought by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), compared with just five in 2004. There are reportedly approximately 150 open FCPA investigations involving various companies. Individual executives are also increasingly the targets of investigations. In a recent sting by the FBI, for example, 22 individual defendants were arrested.

“In many recent cases, the US government has gone after individual executives and functional

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leaders in their individual capacities, such as the head of sales in Asia and the head of finance,” says Kelly Austin, a Partner at law firm Gibson, Dunn & Crutcher LLP. The US government has also pursued more industry-specific enforcement actions. In these sector-specific sweeps, the authorities begin examining the suspected misconduct of one company, and then expand their review to others in the industry.

For instance, if one customs broker and freight forwarder is under investigation for paying bribes to foreign officials to move equipment into Nigeria, it may put the entire sector under the spotlight.

“The US authorities may wonder,” Austin says, “If there is one freight forwarder potentially paying a bribe, how would the other companies manage to get goods into Nigeria without doing the same? To the extent the US government has jurisdiction, it will start looking across entire industries and launch investigation into companies, regardless of where their headquarters are.” The past year saw crossindustry US enforcement actions in the oil and oil services, logistics, tobacco, and telecommunications sectors.

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gated by both the US and UK authorities. The settlements were with both governments, but each settlement took into account [the other].”

In addition, an increasing number of non-US entities now fall under the scrutiny of the DOJ or SEC. These entities include foreign issuers (including those with American Depository Receipts listed on stock exchanges in the US); foreign agents working for US companies; US affiliates and foreign subsidiaries; foreign companies with US subsidiaries, and foreign government officials and foreign entities acting in the United States.

“When foreign companies are listed in the US capital markets, or they trade ADR in the exchanges, they put themselves within the ambit of the FCPA,” Austin warns. Several Kelly Austin Chinese-headquartered companies that operate exclusively in China but are listed in the US have been under SEC investigation over a range of compliance issues, including alleged FCPA violations.

“Through listing, these companies are subject to US securities law, but they do not necessarily have in place the proper corporate governance and compliance processes,” Austin points out. More than a dozen Chinese companies have been delisted or suspended from US exchanges recently.

China risks China is generally perceived as a country with serious corruption risks. Last year, it ranked 78th on the Transparency International Corruption Percep-

Transparency International 2010 Corruption Perceptions Index 2010 CPI Score Very Clean

Highly Corrupt

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9.0 - 10.0 8.0 - 8.9 7.0 - 7.9 6.0 - 6.9 5.0 - 5.9 4.0 - 4.9 3.0 - 3.9 2.0 - 2.9 1.0 - 1.9 0.0 - 0.9 No date

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Third-party intermediaries

Successor liability

Under the FCPA and the UK Bribery Act, compa companies are liable for the improper conduct of their third parties, including distributors and dealers, in the area of corporate entertainment. In some FCPA enforcement cases, improper items of value and excessive gifts and entertainment have been given through a third party (agent), on behalf of the US-listed or headquartered companies.

“If a company hires an agent that pays a bribe or provides excessive entertainment or gifts, the company may be responsible,” says Kelly Austin, partner at law firm Gibson, Dunn & Crutcher LLP, points out.

Selection of third parties and agents is therefore important. These third parties should have the experience of dealing with MNCs and a good understanding of their standards.

Anti-corruption risks are increasingly important in the context of mergers and acquisitions because of the concept of successor liability. If a company purchases an entity with a history of paying bribes, the purchaser may be liable for that activity after the acquisition.

Companies are expected to conduct proper due diligence to the extent that is possible pre-acquisition.

However, there often may be limits on how far due diligence can go before the acquisition. “For instance, if it is a tender or auction, a company may not have the time or ability to get much information about the entity for sale,” Austin points out.

“Sometimes a listed company may have particular disclosure issues that limit how much information is released,” Austin says. “Or it is difficult to look at every single site of an MNC operating in many markets. Nevertheless a company needs to do as much as possible so that it can say it understands how the business goes to market – and if there are any improper payments, it has a sense of what those might be.” Regardless of any limits on due diligence, implementation of a robust anti-corruption program immediately post-close is critical.

Officials or executives Particularly for MNCs operating in emerging markets, the question of just who qualifies as a “foreign official” under the FCPA is difficult to answer.

Across Asia, many commonly private enterprises are owned or controlled by the government, with their employees potentially considered officials. The US enforcement authorities have historically taken a broad view on this point, including healthcare professionals, Chinese journalists, and employees of state-owned and state-controlled entities within their definition of a “foreign official.”

Over the last year, the “foreign official” question has been the subject of both litigation and congressional hearings in the US, with companies arguing that the US government’s position goes too far.

“I think companies will continue to litigate this question because it is not clear,” Austin says. For now, though, many companies operating in Asia take a practical approach when deciding whether employees of SOE’s are public officials.

“There [may be] no public information about how much the government’s control is in a particular entity. Most companies operating in China simply deal with [the question] by assuming, or erring on the side of assuming, that people in these companies are government officials.”

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tions Index – in the same league as Thailand, Columbia, and Lesotho.

According to Austin, China has well established anti-corruption laws and regulations. Authorities are also increasingly enforcing laws punishing corruption in business and government. Between 2003 and 2008, more than 120,000 people were convicted for corruption-related crimes.

When it comes to the FCPA, the DOJ and SEC have brought 29 enforcement actions against corporations relating to business activities in China since 2002.

Among them, 20 since 2004 were cases against corporations and 13 were against individuals.

In China, building relationships, or guanxi, often holds the key to successful business. The practice of giving gifts at festival time or providing entertainment to cultivate relationships is a standard practice. A company can engage in legitimate business hospitality, promoting its goods and services, which is allowed in specific provisions in the FCPA. “But hospitality should be reasonable and customary,” Austin says.

“There should be control and transparency concerning what is paid.”

Overseas travel is one area that requires special attention. Many Chinese customers specifically call for overseas factory inspections or an overseas training tour. A number of FCPA enforcement actions, including the 2011 settlements with IBM and Rockwell Automation, have involved companies which failed to exercise sufficient control over such trips. “[Overseas] trips should have strong legitimate business purposes, such as training, inspection of production to enhance knowledge, and quality checking,” Austin says. “It would be considered inappropri-

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ate to have … customers visit a factory for half a day and then be provided 10 days of traveling around tourist destinations — though some Chinese customers have asked for that.”

Strict control over the itineraries to ensure they match business purposes is therefore essential. The invitation process should be transparent to the Chinese customer entity, and ideally the Chinese customer entity should select the attendees of the visit.

While reasonable and bona fide promotional expenses are permitted, “There is no limit on or definition of what is the reasonable amount paid as business hospitality or business trips,” Austin explains.

Accordingly, companies need to implement clear standards and to ensure that hospitality expenses are closely tied to a business purpose. Corporate hospitality conducted in a transparent and open manner helps reduce risk.

“In practical terms, many companies have low limits on gifts to Chinese officials. For instance, in the event of an agreement signing ceremony or press conference, it will be customary to give the Chinese parties a gift,” Austin says “It is fine as long as it is done publicly as a token of goodwill and is not intended to change the parties’ decision-making in your favor.”

Local laws and guidelines may provide useful guidance for companies too. “Sometimes a particular country has specific limit on what a government official can receive. For instance, Hong Kong has strict guidelines for its civil servants.”

Local customs Multinationals are subject to local anti-graft laws as

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well as those in the home jurisdiction of individual companies. Depending on the nationality of individual executives, the law in various countries may also apply to them personally.

When MNCs set up a compliance program, the program should meet the strictest standard or combine the strictest requirements, regardless of where their business activities are. “A global MNC needs a global policy,” Austin says. Companies should then determine if local requirements and local risks require particular guidance or focus.

While MNCs wish to observe local cultures and customs, they should first ascertain whether certain customary conduct is against the local law. For instance, it is customary to give cash at weddings or funerals in Korea. The Korean government has issued specific guidelines for civil servants on such conduct.

“A company can decide if it can give cash as a token on such occasions” once it understands the local requirements, Austin says.

Even if the local custom is to make payments to officials, though, it does not mean such payments are acceptable. Although a certain practice may be customary, it might be against the local law, let alone the US or UK laws. Both the US and UK enforcement authorizes have repeatedly reminded companies that they cannot rely on the fact that a practice is common in a local market to escape liability.

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Falling in line The world is increasingly flat and anti-corruption standards worldwide are being harmonized. Now more than ever, having a robust compliance program in place is important for companies doing business in Asia.

“There are a lot of guidelines,” Austin says. “The real challenge is how a company can set up a global program that works in many different countries and how the company implements and enforces it. This is

the hard part: you can design the best program, but it needs people that care about it, follow it, and are out there to enforce it [to be effective].”

A company’s compliance program should include a clear and strong compliance policy and the information should be available in local languages. Employee training is vital. So is regular communication, including from the senior leadership, which is seen as “tone from the top,” as a means “to emphasize compliance matters,” Austin says.

In addition, sound financial and internal controls

Long Arm of the Law – The UK Bribery Act

biz.hk: Who will fall under the jurisdiction of the UK Bribery Act? Williams: There are four offences under the Act: • bribing another person; • being bribed; • bribery of a foreign public official; and • failure of organizations to prevent bribery For the first three offences, the Act applies wherever any element of the offence occurs in the UK or involves a person or entity with a “close connection” to the UK. However, companies are exposed to the new corporate offence of “failing to prevent bribery” if they are incorporated in the UK or if they simply “carry on business” in the UK. If a company meets that test, then it may be guilty of an offence if a person “associated” with that company then pays a bribe anywhere in the world in order to obtain some advantage for it. The only defense in those circumstances is for the company to demonstrate that it had “adequate procedures” in place to prevent bribery. biz.hk: How can a company be certain it has “adequate

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procedures” in place?

Williams: The Act does not define what “adequate procedures” means. However, guidance published by the UK Ministry of Justice lists six principles to be taken into account: (i) proportionate procedures, (ii) top level commitment, (iii) risk assessment, (iv) due diligence, (v) communication (including training), and (vi) monitoring and review.

For each principle, the Guidance identifies the sorts of procedures that companies might introduce, but does not indicate what may be “adequate” in any given case. In short, that is left to the judgment of individual companies according to their own circumstances and the particular risks they face.

or assets to an affected company.

requires and therefore why measures are needed to protect against exposure under that statute.

biz.hk: Under the UK Bribery Act, how can companies maintain corporate hospitality without breaching the law?

Williams: Unlike the US’ FCPA, there are no exclusions for reasonable corporate hospitality. That means that if hospitality satisfies the various requisite elements of bribery, such as being in connection with performing a function improperly or influencing a foreign public official, then it may give rise to an offence.

However, the UK government has given non-binding guidance that it does not intend to prohibit reasonable and proportionate expenditure for bona fide hospitality.

Companies should review their hospitality policies and consider the introduction or tightening of safeguards, such as a review and approval system.

biz.hk: Does it mean that Chinese companies that do not carry on business in the UK may still be affected by the new Act when they deal with companies that do?

Williams: Yes. Companies affected by the Act are likely to seek measures Justin Williams from those with which they contract if the assets or business being acquired or if the relationship being established could expose them. This arises in particular if they are performing services on behalf of an affected company, such that they can be considered to be an “associated person” for the purpose of the Act. Other circumstances where Chinese companies may be affected include where they are selling shares

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procedures” to prevent persons associated with it from paying bribes.

“The guidance on the Act actually sets out elements of an effective compliance program,” Austin says. A number of other authorities have also provided guidance. “From the US government perspective, the US Sentencing Guidelines set out elements of an effective program. The OECD has also issued guidelines.” Wise companies continuously evaluate their compliance programs against these guidelines and against the evolving global standards.

biz.hk: Is it advisable that one side in a negotiation imposes compliance procedures on the other through the terms of their contract in order to demonstrate compliance with the Bribery Act? Williams: In a deal, companies affected by the Act should consider measures to enable the risk of bribery to be understood and for that risk to be addressed. Therefore it will be important that those who are responsible for negotiating and administering contracts understand what may give rise to an exposure and, where an exposure exists, what measures are proportionate responses. This is likely to involve appropriate due diligence in the first instance. Measures to deal with bribery risk might include anti-corruption representations and warranties, for example that the counterparty has not committed any acts of bribery and has or will implement an anti-bribery compliance program itself. Depending on the circumstances, more onerous measures might be appropriate such as monitoring and sanctions and remedies for breach.

Under the UK Bribery Act, which came into effect in July, any Chinese company that carries on business in the UK commits a criminal offence if any person associated with it pays a bribe anywhere in the world. The extensive reach of the new law has raised a few eyebrows among companies whose business goes across borders. Justin Williams, Partner of international law firm Akin Gump Strauss Hauer & Feld LLP, has advised clients on the new legislation. He talks to biz.hk about what to watch out for under the Bribery Act and offers some practical advice: biz.hk: Against what background did the UK introduce the Bribery Act on July 1st?

Williams: Many countries including China have laws that prohibit foreign corruption, but until recently many have thought that only the US took vigorous steps to enforce their laws. As a result of pressure by the US and by the Organization for Economic Cooperation and Development (OECD), countries in Western Europe have recently stepped up enforcement activity. It is in that context that the UK parliament passed the Bribery Act on April 8th 2010, which came into force on July 1st 2011.

should be in place, including processes about how vendors and third parties are paid. Another part of an effective program is to qualify and monitor all third parties, Austin says. Finally, “a testing mechanism should be incorporated so that it is able to audit the program and processes to see if they are effective.”

Although many MNCs have already adopted these measures, it would be worthwhile to review them again, particularly given the implementation of the UK Bribery Act on July 1st. The Act provides a defense for an organization that can show it had in place “adequate

biz.hk: For companies which carry on business in the UK, what safeguards or procedures do they need to consider under the new Bribery Act when they deal with Mainland Chinese companies that operate with different business etiquette, and may not share the same international standard of transparency?

Williams: The bottom line for companies which carry on business in the UK is that they must have adequate procedures in place to prevent bribery. When dealing with parties with different cultural expectations, explanation is likely to be needed on what the UK Bribery Act

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biz.hk: Any special advice for firms such as agents, portfolio firms of corporations, and private equity firms?

Williams: Companies affected by the Bribery Act will be exposed to the actions of others which perform services on their behalf. Plainly agents fall into that category. Depending on the circumstances, portfolio companies, joint ventures and other structures may as well. A significant factor in determining whether the test is satisfied is the degree of control a company has over a relevant third party entity. biz.hk: What are the key differences between the UK Bribery Act and the US’ FCPA that would have the biggest impact on multinational corporations? If a company is already in compliance with FCPA, is it safe under the UK Bribery Act? Williams: In a number of areas, the Bribery Act is stricter than the FCPA; therefore FCPA compliance does not guarantee Bribery Act compliance. For example: • FCPA only prohibits the active offence of payment of a bribe, whereas the Bribery Act also criminalizes requesting/receiving a bribe; • whereas the FCPA applies only to the bribery of foreign officials (i.e. those performing an official function), the Bribery Act also applies to the bribery of private, non-“official” citizens and companies; • the FCPA has exemptions for small “facilitation” payments and reasonable hospitality, whereas the Bribery Act does; and • the Bribery Act’s corporate offence of “failure to prevent bribery” has no direct equivalent in the FCPA. biz.hk: What can multinational corporations do to ensure compliance with the UK Bribery Act and the US’ FCPA? Williams: Companies should mitigate their exposure by introducing adequate procedures to prevent bribery. This will necessitate a top-level commitment and is likely to involve assessing the risks to which each company is exposed, introducing and implementing effective and proportionate policies and procedures to address those risks, and then regularly monitoring and reviewing compliance. For those companies which already have FCPA policies and procedures, these should be reviewed and amended as necessary in light of the Bribery Act.

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EDUCATION

Photo courtesy of Gary Clinton

US MBA Students to Work on China Consulting Projects Managers deal with problems every day. Being involved in daily nuts-and-bolts can blind managers from seeing the solutions. Outside and professional opinions can help put things in perspective and provide managers analysis and suggestions so that they may tackle the issues differently. Not all companies can afford dedicated resources and manpower to do that. A program run by 13 US business schools under which MBA students will help companies examine and deal with their business problems on the ground is on offer

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ore than 30 MBA students from nine top US business schools and Tsinghua University in Beijing, China completed six actual consulting projects with multinational companies in the Mainland in May. The students are part of the Global Business Project Program (GBP), which puts teams of MBA students from schools to work solving real problems of companies in one of five target countries: Brazil, China, Japan, Thailand and Vietnam.

GBP is run by a consortium of 13 US business schools under the auspices of CIBER (Center for

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International Business Education and Research) and partially funded by the US Department of Education.

Participating schools include Columbia University, Duke, George Washington University, Purdue University, San Diego State University, Temple University, University of Connecticut, University of Maryland, University of Miami, University of North Carolina at Chapel Hill, University of Pittsburgh, University of Wisconsin and University of Hawaii at Manoa.

The GBP students apply functional, cross-cultural and foreign language skills to produce strategic advice that is focused, compelling and actionable.

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The teams can address likely client needs such as supply chain issues, marketing research, market entry, and new product introductions.

Under the program, student teams conduct project work from March through May, culminating in two weeks on the ground in the project’s destination country. The teams provide the client companies with final reports, including recommendations, research data and all other project related work at the end of the project.

Gary Clinton, 2011 GBP China Country Leader and former AmCham Hong Kong Chair (2007), recently met with Rob Chipman, AmCham Chairman, and Richard Vuylsteke, AmCham President, to discuss the program.

Clinton says that “GBP is unique among US business schools in that it draws MBA student expertise from all 13 participating schools, assuring our clients have students with high levels of industry, academic and language experience for their consulting needs.”

In its fourth year of operation, GBP had 17 projects in the five countries this year, with six in China. “This is the largest number of projects we have ever had in China and our client base is expanding to include a larger number of multinational companies,” Clinton reports. GBP China project clients cover small US companies, large European multinationals as well as a number of Chinese companies.

“We believe that a GBP project could be useful for any number of AmCham Hong Kong member companies and stand ready to discuss specific opportunities,” Clinton adds.

GBP project students are not paid for their work; instead, they receive academic credit. Clients pay a program fee to cover some administrative costs as well as the students’ in-country expenses during the final two weeks of the project.

In addition, clients commit to the participation of a senior executive who will attend the GBP Kick-Off meeting in Washington, DC in March, and continue to work closely with their GBP team throughout April and May in creating the project’s scope of work, providing pertinent data, responding to team recommendations and progress, and providing feedback to the team and faculty advisor at the

project’s completion.

Dr Lynne Gerber, GBP Program Director and Director of Action-based Learning at The University of North Carolina’s Kenan-Flagler Business School, highlights the importance of GBP for MBA students.

“GBP is a key element of our focus on action-based learning where students tackle real business projects with real companies,” Gerber says. “Our clients depend on the recommendations and actively participate in all aspects of GBP.” A critical part of the success of GBP is in finding the right kind of projects for the MBA students. “We need to spread the word about GBP to interested parties, including AmCham Hong Kong members looking for solutions to business problems they face in Asia,” Gerber continues.

GBP projects are offered in the spring semester each year. Both clients and students apply for a project starting in October. Client projects and applying students are screened by a selection committee comprised of faculty, business executives and administrators to ensure the best possible matches.

AmCham members interested in discussing a specific project opportunity in China should contact Gary Clinton at glclinton@gmail.com or Lynne Gerber at Lynne_Gerber@unc.edu.

“We believe that a GBP project could be useful for any number of AmCham Hong Kong member companies and stand ready to discuss specific opportunities.”

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Preferred GBP project characteristics include: • An established company or non-profit organization with well-defined business processes • A defined set of needs that can benefit from the attention of an MBA student consulting team collectively versed in the language and culture of the target country as well as the business related aspects of the project • Senior management that is ready to devote time and resources to the work of an MBA team • A potential outcome that will enhance business performance of the company in general, but specifically in the project’s destination country

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WOMEN OF INFLUENCE ‘Cancer in China’ could have been the title of the memoir she wrote about these experiences, but Conley chose instead the title The Foremost Good Fortune, based on an old poem that names freedom from illness as the foremost good fortune.

The unknown

The Foremost Good Fortune Contracting breast cancer is a life-challenging experience. For American Susan Conley, who was unlucky enough to be diagnosed with the disease while living in Beijing, the diagnosis brought with it the extra stress of dealing with it far from the comfort of family and friends.

Liana Cafolla catches up with Conley during her recent visit to AmCham to meet with members of the Women of Influence Committee.

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hina’s rise brings with it a yawning need for foreign expertise that continues to suck in talent from around the globe.

That expertise rarely comes alone; it also brings – or drags – families: spouses and children, along with all their dreams, frustrations and hopes.

Pack and unpack Moving abroad is a life-changing choice. Once the decision has been taken, the initial reaction is often headiness, coupled with the intoxicating mix of curiosity and excitement that made every college-days trip an adventure. But as those who have done it know, moving abroad for work reasons with a family and children in tow is a world away from those care-free backpacking days.

The enormity of the move does not fully set in until the destination has been reached and the bags unpacked. It is then, often, that feelings of dislocation and culture shock, or even panic, set in. When the move involves young children, it is even more traumatic, as parents must absorb the worst of the children’s worries and cushion them against the most difficult aspects of the move, such as missing their friends and having to change schools, all while coping with their own fears and frailties.

It is usually the women who deal with the brunt of translocation problems. Regardless of who is following whom, it is women who cope with the new schools, who forage for familiar food in strange supermarkets, who arrange the treats and play dates that make transi-

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tions bearable.

Often, the experience of moving to a new place brings much more than expected. New surroundings encourage exploration. New languages are learned and friendships made, previously unexplored talents have a chance to flourish, and expatriates return home with a global perspective that changes their world view forever. Their children have the potential to become true world citizens from their experience of sharing classrooms and sandpits with kids from totally different cultures and backgrounds.

The “marbles”

Occasionally, though, the experience is darker.

The unexpected happens. And because it happens in a new, strange environment, it is more frightening and the outcome less predictable than it would be at home.

In such circumstances, no experience is more challenging than a health scare.

That is what happened to writer Susan Conley, who moved from Portland, Maine to Beijing to accompany her husband, Tony, and their two young sons on a two-year posting. Halfway through the posting, Conley discovered small lumps near her left breast, “marbles”, she called them.

Fearing cancer, she went for a consultation where her worries were dismissed out of hand. Finally, she was correctly diagnosed with breast cancer and underwent surgery in Beijing before returning temporarily to the US for a mastectomy. After the operation, she went back to Beijing to complete the posting.

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It is perhaps no surprise that Conley’s title was inspired by a poem as her own poetic writing is evident from the book’s writing style. The story lilts from scene to scene with a polished rhythm and an almost audible lyricism. The content contrasts with the style, which deals with heavy subject matter, starting with Conley’s trepidation at leaving her home in Portland for the unknown Chinese capital.

Soon after their arrival in Beijing, Conley verbalizes in her book her fears about the move: “…I can see my fear of living in China up close.

Fear of losing control, of being alone in this country, unable to manage for my kids. Fear of not being able to learn the language. Fear of not finding a way to belong.”

Conley says she always knew she would go to China. “I felt that moving to China was inevitable. I always knew China was part of my relationship. I was very excited to come.”

Tony, her husband, is a lifelong sinophile, who had no such hesitation about the move. He speaks Mandarin fluently, and has hankered to return to China since his love affair with the country took hold in his teens. And so they leave, with their two pre-school aged sons.

Her immediate reaction to their departure was mixed, she remembers now.

“It was a very complicated reaction. It was not elation. It was, ‘oh my God!’ We knew we were going to be tested. I just knew that there was going to be this great adventure on the other side.”

Although their apartment had been rented and the children’s school arranged before they leave, and while Tony’s mastery of Mandarin means he can help with the most pressing and mundane problems – ordering unknown food in strange restaurants, giving instructions to the driver – Conley finds herself more at sea than many expat wives.

Her husband is the company’s first employee to be sent to China, so there is no readymade network of other wives and experiences for her to draw on. Little by little, she makes contact with the mothers of her children’s classmates, and manages to hire a domestic helper and learn some Mandarin. She ventures out on expeditions to examine fake handbags, sits through tedious lunches with barely-known women, and forays for comfort foods at the overpriced international food store.

“I was terribly lonely, at first, moving to Beijing,” she recalls. “There were pockets of expats. Beijing is all spread out. It’s all about trying to feel like you belong, at first.”

While it was Conley’s first time in Beijing, it was not her first travel experience – she had lived in Paris

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“It was a very complicated reaction. It was not elation. It was, ‘oh my God!’ We knew we were going to be tested. I just knew that there was going to be this great adventure on the other side.”

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YOUR DONATIONS ARE WELCOMED! you want reasons to flee Beijing, they abound.”

Nonetheless, she takes her cancer back there with her, and soldiers on. Her life changes – she goes out less, takes care to choose clothes that make her new silicon breast look normal, and feels a distance from her sons that allows her to imagine their lives without her, while at the same time feeling closer to, and less demanding of, them.

As well as confronting the challenges of China, she is now faced with coming to terms with the shortcomings of her own body, and the isolation she feels as a cancer patient. Now, she feels that she swims in a lake where only people with cancer swim.

“But the biggest surprise of all is still that Tony is not in the lake. That he’s never going to be able to swim the lake. He doesn’t have cancer. The thin line between having and not having seems malleable sometimes, but for me that line is everything. It separates.”

Glass half-full for a year while in college, had travelled around Europe and backpacked in South East Asia. But she had not been to China.

Conley’s determined attempts to overcome the frustrations of living in Beijing and to encourage her young sons to enjoy the challenges of living in a completely different culture are suddenly arrested by her discovery of breast cancer, and the stress of facing surgery in a developing country where medical standards can be inconsistent at best.

“Yes, I do feel unusual,” she wants to burst out.

“I’m about to have breast surgery in China with an unwilling surgeon. I don’t have family here, so while I’m in surgery, my children will be watched by our wonderful ayi, whose last name I am still a little unsure of. She lives in a small village out near the airport and I don’t know the name of that either or what these lumps are doing inside my breast.”

She thinks that the hospital was just lacking experience.

“I don’t think they’d seen a lot of breast cancer,” she says now. “They kept telling me to go to Hong Kong. [They told me] I’d get no ‘patient care’ here.”

Hardest decision The surgery needed to be followed by a mastectomy, for which she opted to return to the US. It is to Conley’s credit that, despite the urge she felt to stay in Portland after her operation to take comfort from the proximity of family and friends, she decided to go back to Beijing.

Returning, she says in the interview, “was the hardest decision.” In her book, she writes: “If I’m not careful, China could become an adversary. Because I’ve arrived looking for evidence that we shouldn’t have returned: the toxic air. The traffic. The spitting. If

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To support the work of the AmCham Charitable Foundation, your donation can be made by:

CHEQUE:

Payable to: “American Chamber of Commerce Charitable Foundation” CREDIT CARD:

AMEX / Visa / MasterCard / Diners {Please Circle One} Cardholder’s Name: Card Number: Issuing Bank: Expiry Date: Cardholder’s Signature:

The book is not a depressing read, as it could have been with a less positive hand at the tiller. Conley’s love of the poetic seems to have won the upper hand in this tale of survival in inhospitable surroundings, and she eschews a raw account of the impact of the disease in favor of revealing just enough glimpses into her mental state.

Her haunting fear that the cancer could return is palpable, but never overtakes the smooth cadences of the story. She does not lose her basic good humor, though her patience is sorely tested, nor her talent for meticulous observation and her ear for the snippets of everyday life led by the Chinese people she comes into contact with.

Her advice to other women moving abroad in a similar situation is to focus on maintaining a positive attitude and to allow things to just happen.

“I think that freefall can be rather profound. It helps to be really open, and to try not to control things, as there’s so little that you can actually control in China. Will yourself to be the ‘glass half-full’ person.”

It can also help to find a hobby, she says.

“I did embrace yoga. You need to find your thing, and that gets you out of [your loneliness].”

When the family finally returns home to Portland, Conley hopes that she has taken the best of China with her, and left the worst of her illness behind.

“It may make no sense, but I held on to the idea that by being back in our house I would once and for all be divested of cancer. I had never known cancer in that house…”

Readers will wish that for her, too.

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For official donation receipts, please mail us your contact details with your name, address and telephone number to: American Chamber of Commerce Charitable Foundation 1904 Bank of America Tower, 12 Harcourt Road, Central, Hong Kong Attn: Finance & Administration

TRAVEL

Here Comes

Get Packed and

Hit the Road

Great Barrier Reef. Photo courtesy of Tourism Australia

By Liana Cafolla

As summer looms, everyone’s thoughts turn to the holidays. Whether you’re planning to travel near or far, to relax or find adventure, with or without children, there are choices to suit everyone

F

or many in Hong Kong, holidays are not just an opportunity to relax, but also a chance to escape from the city’s humidity, heat, pollution, and crowds. We have selected some holiday options around the Asia-Pacific that offer a connection with the great outdoors, whether on land, on sea, by the beach or in the mountains. Take your pick, and have a wonderful summer.

Bali Bali is a perennial holiday favorite for those seeking sunshine and relaxation in natural surroundings. Long sandy beaches, cool hill retreats, clear waters and affordable spas are some of its attractions.

The island’s laidback atmosphere appeals to independent travelers, couples and families, who can choose from hotels of all grades and sizes in many different areas along the coast or inland.

The popular Balinese resort area of Seminyak offers many excellent restaurants, interesting boutiques and art galleries, and a fine sandy beach.

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There are plenty of hotels to choose from here.

One high-end newcomer that has made a stylish landing and is attracting rave reviews is W Retreat & Spa. Designed by Hong Kong architects AB Concept to offer luxury in a contemporary Balinese-inspired setting, the hotel is on the beachfront, and offers rooms as well as one-, two- or three-bedroom villas with private pools that are ideal for groups or families.

Bali is also home to a Club Med resort, the familyfriendly, all-inclusive option that does away with the headache of finding something for everyone to do each day. Located on the beach at Nusa Dua, Club Med Bali has separate clubs for 2-3 year-olds, 4-10 year olds and 11-17 year olds, leaving parents plenty of leisure time to enjoy the Mandara-managed spa with its 14 treatment rooms, or one of the resort's two pools, one of which is a “quiet” pool – for adults. The more active can choose from a host of sporting activities including golf, snorkeling, aqua fitness, windsurfing, kayaking and more. The resort also organizes a range of family activities, as well as add-on excursions to some of the island's nature and animal attractions.

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Malaysia Another Club Med resort but one with a very different ethos and location is Club Med Cherating Beach, on Malaysia’s east coast. This is an eco-nature resort set in tropical rainforest with a four-kilometer beachfront. Outdoor activities include the Treetop Challenge Rope Course, designed to encourage outdoor adventure learning, team bonding, and leadership in the lusciously verdant natural surroundings. Parents and children over 12 can do the intermediate course together, while younger and older guests are catered for in separate courses.

For those who wish to explore on their own, the environment here is rich in flora, fauna and wildlife – including a nature reserve for sea turtles – and guests are given a book and map to encourage exploration. Another fun attraction is the funky and eco-friendly accommodation – guests are housed in traditional kampong-style timber bungalows standing on wooden stilts set in the rainforest.

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Fiji Kathmandu Taking a made-to-measure trip is one way to combine cultural exploration with personalized adventure in some hard-to-navigate destinations. A hasslefree way to visit the treasures of the Nepalese capital – where few streets are even named – is by private tour.

The city attracts visitors from all over the world to see its ancient temples Kathmandu. Photo courtesy of Cathay Pacific Holidays and palaces, participate in yoga or spiritual retreats, or shop for carefully crafted silverware and elegant tailoring. Cathay travel insurance, Bhutan taxes and visa fee, and the Pacific's 6 day/4 nights guided tour to Kathmandu services of an English- or Putonghua-speaking tour includes visits to the world’s oldest Hindu and guide. The itinerary includes hard-to reach cliffside Buddhist sites, the Chitwan National Park (a Tibetan-style dzong (a type of fort), and the country's UNESCO heritage site), with the option of staying in a “almost-living” museums, which offer insights into tented camp or lodge inside the park, and a jeep drive how the Bhutanese live. From $20,640 per person. safari to look for rare wildlife. From HK$14,530 per person.

Bhutan

Sailing in South East Asia

If you love the water and want to visit more than If holidays are all about happiness, then Bhutan – one destination, a cruising holiday could be for you. the only country to measure gross national happiness Consider chartering a luxury yacht to sail the waters of as a measure of its citizens’ well-being – should be high south-east Asia. on everyone’s holiday list. The mountainous kingdom For a special experience, the 164-feet long, fully nestled between China and India in the eastern Himaair-conditioned, black-sailed Silolona is a yacht like no layes is not easy to navigate, and is another good other. Built as a pleasure schooner to the standards set candidate for private tours.

by Lloyd’s Register, it’s not cheap but it will be memoCathay Pacific is organizing 7 day/6 night private rable. Manned by a professional crew of 17, its five guided tours for a minimum of two travelers from now staterooms – all with en suite bathrooms – are until the end of the year. The tours offer different spacious and luxurious. A vast deck in teak is designed accommodation choices, and include meals, transfers, for sunbathing and alfresco dining, and if you tire of the ocean views, there is also a library and multimedia center, as well as scuba diving, fishing windsurfing, kayaking and snorkeling.

From June to September, the boat is based in Indonesia’s Komodo National Park, a UNESCO World Heritage Site and Man and Biosphere Reserve, which offers diving, beaches and the chance to visit the resident Komodo dragon.

Reaching up to 10 feet long and weighing as much as 300 pounds, these are the largest and most lethal lizards in the world. All-inclusive rates start from US$13,500 per day (plus 10 percent Takstang Monastery, Bhutan. Photo courtesy of Cathay Pacific Holidays VAT and 11 percent service charge).

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Not many places can boast a combination of a farm in a tropical setting that also offers a spectacular beach, but Laucala Island in Fiji can. The resort is almost entirely self-sufficient, growing its own livestock and vegetables, and hand-crafting all its guest products using natural local resources.

The farm has cattle, pigs, goats and quails and a large vegetable and herb garden. There is also a working culture village, where local artists and musicians Cairns beaches. Photo courtesy of Tourism Australia. work, and a kids’ program that includes options for mountain-biking, tennis, pony riding, diving and even free babysitting.

Macau hotels can offer more than just gambling.

Accommodation is in huge, stunningly designed, Variety is assured from the sheer scale of the place, privately spaced, one to three-bedroom private with around 50 restaurants, three hotels brands and houses, each with its own pool, large outdoor living more than 2,200 rooms, suites and villas. For those spaces and outdoor tubs and showers. Prices are from young and old in a holiday mood, though, the biggest US$3,800 per house per night, including all food and draw will be hotel’s 4,000 square-foot sky-top wave drinks, a spa package and all activities. pool, with waves as high as 1.5 meters, and the adjacent white sandy beach, built using 350 tons of imported sand. Rooms cost from HK$1,688 including breakfast, round-trip ferry tickets, free mini-bar and Take to the roads on one of the planet’s largest late checkout. and least-inhabited countries. The wide, open spaces of Australia and New Zealand and their long, straight roads lend themselves to a driving holiday. With the sheer distances involved, a camper van offers a lot of convenience, allowing you to bring at least some of the comforts of home on the road with you. Companies such as Aussie Campervans will rent you a two- to six-berth motor home in various locations across Australia and New Zealand, while MyDriveHoliday also covers the US and offers campervans plus plenty of advice on routes, distances and places of interest. www.starwoodhotels.com/Whotels If you get tired of driving, combine the trip with www.clubmed.com.hk some add on excursions to out-of-the way sites, such as

Australia & New Zealand

Useful Contacts

the waterfalls, rainforests and wildlife habitats in Cairns, organized by Tropical Horizon Tours, as well as many other tours in the Queensland area. Tropic Wings organizes kangaroo, crocodile and koalaspotting tours and overnight trips to the Great Barrier Reef, among many other options.

www.cxholidays.com

Macau

mes-campervans-australia/

If all you have time for is a short city break, Macau beckons, with its myriad of mega-hotels just an hour’s ferry ride away.

The latest arrival on the hotel scene there is the Galaxy Macau, which has promised to prove that

www.tropicwings.com.au

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www.silolona.com www.laucala.com www.aussiecampervans.com www.mydriveholiday.com/motorho www.tropicalhorizonstours.com.au www.galaxymacau.com

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AMERICAN TOPICS

AmCham Celebrates

“Fourth of July”

In celebration of US Independence Day, AmCham hosted a special lunch for guests and families at the Bourbon Bar & Smokehouse in Soho, Central. Sponsored by HKUST Business School, Asian Tigers KC Dat, AT&T, and New Concept Mandarin Ltd, the event provided guests with a delicious buffet spread of authentic American food as well as live entertainment. Fantastic prizes were also given to guests in a lucky draw, thanks to sponsors Red Packet, David Yurman and Bourbon Bar.

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Frank Lavin Chairman, Public Affairs Edelman Asia Pacific

Sep The Shipping Point -

Sep AMCHAM 3 CLUB GOLF CHALLENGE The Hong Kong Golf Club, Deep Water Bay

The Sports & Entertainment Committee cordially invites you to this delightful short course which provides an excellent challenge for your short game. This time you can use any three golf clubs – but only three! Make sure not to miss this fun event! Parking space available at the Golf Club. Maximum 27 players - registration is first-come, first-served.

Format and Prizes

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Time: 12:00 - 2:00pm (sandwiches and beverages included)

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Fee(s): Member Fee: HK$250 Non Member Fee: HK$350

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MEDIA WELCOME

Includes: • green fee (inclusive of trolley and locker) • breakfast (sandwich + coffee/tea/chilled juice) • lunch • prize-awards (The easiest way to reach the Club is by taxi, but please note that No. 260, 6A and 6X buses run from the terminal in Exchange Square and stop at Admiralty and pass Deep Water Bay. Drinks and caddy service are additional.)

Time: 8:00am - 9:30am (light breakfast included) Fee(s): Member Fee: HK$150 Non Member Fee: HK$250

Venue: Hong Kong Golf Club Deep Water Bay Time: 9:00am - 2:30pm Fee(s): Member Fee: HK$780 Non Member Fee: HK$880

Flights of three. First tee-off at 9:30 am Holes 1-6 : Take the best score on every hole Holes 7-12 : Take the best 2 scores on every hole Holes 13-18 : Take the best 3 scores on every hole

For information, see website: www.amcham.org.hk Tel: (852) 2530 6900

Fax: (852) 2537 8824

Email: sanlee@amcham.org.hk

ble a l i a v A

2011 September

Peter Levesque Chief Commercial Officer Modern Terminals Limited

Package

Wed

Venue: AmCham Office 1904 Bank of America Tower, 12 Harcourt Road, Central

The Rise of China and The Future of Retail Supply

Peter Levesque recently published a book titled The Shipping Point - The Rise of China and The Future of Retail Supply. The book focuses on the rise of China and the future of retail supply chain management. It examines the opportunities being created in both consumer retail and logistics as a result of China's migration from a manufacturing economy to a consumer economy. Proceeds from the book are being donated to the Half The Sky Foundation in Hong Kong, which was created in 1998 in order to enrich the lives of orphaned children living in China’s social welfare institutions.

Levesque is Chief Commercial Officer for Modern Terminals Limited, based in Hong Kong and he has lived and worked in the Asia Pacific region for the last fifteen years. Levesque has over 20 years of international transportation and logistics experience and has been working in Hong Kong since 1996.

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Venue: AmCham Office 1904 Bank of America Tower, 12 Harcourt Road, Central

In this informative event, hear from former US Undersecretary of Commerce, Frank Lavin and discover how your business can tap into foreign markets. Also known as America’s “Salesman-in-Chief” at the Commerce Department, Frank was responsible for helping US companies enter new markets and win overseas. Now as Chairman of Public Affairs for Edelman Asia Pacific, Frank has worked with over 2,000 US companies as they formulated export strategies.

Offering a real-world strategy that any-size business can use to go global, Frank will share the lessons that can be applied to both US and non-US companies alike. He will offer a step-by-step approach to help businesses tackle the international marketplace by looking at five keys for entering new markets: • Country: Pick the right one • Customers: How they differ • Competitors: A different market • Capabilities: What you need to win • Capability Gap: How to close it

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Tue

2011 August

Aug Export Now! – Five keys to successful exporting

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Your Best Guidebook to Settling in Hong Kong is Now Available!

Living in Hong Kong is a compendium-style all-you-need-to-know guide for newcomers to Hong Kong. It is a definitive source on all manners of needs ranging from things to know on the first reconnaissance to getting settled and enjoying life in Hong Kong. AmCham members often buy the book for their relatives and friends who are new to Hong Kong. For human resources professionals, it is the most up-to-date and accessible guide you may use to bring your newly arrived expatriate colleagues up-to-speed.

Living in Hong Kong is available at the Chamber office and on its website. To place your order, please contact AmCham’s Finance and Administration Department, or simply go online to AmCham’s e-shop at http://www.amcham.org.hk/index.php/AmCham-Books.html To place your order, contact Hanna Chung AmCham Finance and Administration Department Tel: 2530 6934 Email: hchung@amcham.org.hk *Special prices available for bulk orders