biz.hk Oct 2012 by The American Chamber of Commerce in Hong Kong

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Journal of The American Chamber of Commerce in Hong Kong

www.amcham.org.hk

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October 2012

TO NEW HEIGHTS Jay Walder MTR CEO

COVER SPONSOR

HKUST MBA

THE WORLD’S Financial Times 2010-2012

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Your Best Guidebook for Settling in Hong Kong Living in Hong Kong is a compendium-style all-you-need-to-know guide for newcomers to

school, getting settled when arrived and enjoying life in Hong Kong. This consumeroriented book is designed as a sort of “hotline” with useful phone numbers and contacts to other sources of help. Living in Hong Kong bookshops in Hong Kong. AmCham members often buy the book for their relatives and Americans), the book is one of the best-selling publications for AmCham.

EXCEL IN ASIA LEAD THE GLOBE

Contact: AmCham Publication Department Advertising Manager: Regina Leung Direct Line: 2530 6942 Email: rleung@amcham.org.hk

October 2012 Vol 44 No 10

Contents

Richard R Vuylsteke

Editor-in-Chief Daniel Kwan

Managing Editor Kenny Lau

Advertising Sales Manager

Publisher

COVER STORY

CHINA BUSINESS

FOOD BANKING

REAL ESTATE

Jay Walder, a New York native who joined Hong Kong’s MTR Corporation as CEO earlier in the year, talks in an exclusive interview about his passion for trains, his decision to take up the position in Hong Kong and his vision of delivering quality service, strengthening links with the local community and maintaining growth

Managing Director and Chairman of Global Markets, China at JPMorgan Jing Ulrich foresees a slower but healthier economic rebound in China as economies in Europe and the US have yet to make a full recovery

In Hong Kong to attend the Feeding the World: Asia’s Prospects of Plenty Summit, President & CEO of the Global Foodbanking Network Jeffrey Klein shares his vision of tackling hunger and food waste across the globe

A number of business sectors, particularly those of lower margin, are now turning to different alternatives and options in their search for office space amid high local rental cost in an uncertain global economy

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)

AMCHAM NEWS AND VIEWS 04 Chairman’s Memo James Sun takes note of a packed schedule of events at AmCham in the coming weeks, including the annual Women of Influence conference on Nov 2, Election Central where participants will get to watch live results of the US election on Nov 7, the annual Beijing Doorknock in late Nov, and a tour of Tencent’s headquarters in Shenzhen on Dec 7

37 executives joined AmCham’s business network last month

41 Mark Your Calendar

COVER STORY

Governor of Connecticut Dannel Malloy explains why his state, often referred to as the world’s insurance capital, is a great place for investment in not only finance and insurance but also other life science and biotechnology areas

URBANIZATION

08 The New Yorker Who Will Take MTR to New Heights Ten months into his new job as CEO of MTR Corporation, Jay Walder in an exclusive interview talks about his passion for trains, his decision to take up the position in Hong Kong and his vision for the mass transit railways

©The American Chamber of Commerce in Hong Kong, 2012 Library of Congress: LC 98-645652

CHINA BUSINESS 16 Is a China Rebound Close?

26 Grappling with China’s Rural Land Problems

biz.hk 10 • 2012

ENVIRONMENT 31 Captain of the Trash Contingent Formerly a cabinet maker and author of a new book called Plastic Ocean, Charles Moore of California talks about the devastation of plastic pollution and why we all need to be concerned about it

SPORTS & ENTERTAINMENT 33 AmCham Hosts 7th Golf Open Tournament Golf enthusiasts participate in the annual event in teams of four and enjoy a day full of buffets and fun golfing at the Discovery Bay Golf Club in sunny weather

REAL ESTATE 36 Mitigating High Occupancy Costs in Hong Kong’s Office Market

Gao Yu, China Country Director of international NGO Landesa, speaks on social inequality among China’s rural population in the countryside where 700 million people live on US$2 a day

A number of business sectors are now turning to different alternatives and options in their search for office space amid high local rental cost in an uncertain global economy

FOOD BANKING

HUMAN CAPITAL

28 On a Mission to Feed the World’s Hungry

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

Governor of Maine Paul LePage in a conversation offers a glimpse of economic opportunities in the northeastern US state renowned for various high-tech, precision machining industries, in addition to lobsters

24 State’s Soft Cell

07 New Business Contacts

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

TRADE & INVESTMENT 20 The Maine Man

biz.hk 10 • 2012

38 Multinational Leadership Migration to Growth Markets Implications as a result of an accelerating trend of MNCs moving top executives, divisions, and even global corporate headquarters to growth regions

COVER SPONSOR

Chairman’s Memo Board of Governors Chairman James Sun Vice Chairman Richard Weisman Treasurer Peter Levesque Executive Committee Janet De Silva, Frank Lavin, Anita Leung Philip Leung, Belinda Lui, Alan Turley Governors Evan Auyang, Sara Yang Bosco, Brian Brenner, Tom Burns, Walter Dias, Rob Glucksman, Toby Marion, Thomas Nelson, Andrea Richey, Colin Tam, Elizabeth L Thomson, Frank Wong, Shengman Zhang Ex-Officio Governor President

Robert Chipman Richard R Vuylsteke

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

Rex Engelking Andre Leroy Donald Meyer Frank Wong Susan Reingold Robert Grieves

Energy Dominic Yin Entrepreneurs/SME Donald Austin Environment Bradley Punu Financial Services Catherine Simmons Brock Wilson Food & Beverage Hospitality & Tourism Human Capital Information & Communications Technology Insurance & Healthcare

Veronica Sze Damien Lee Janet De Silva Peter Liu

Rex Engelking Owen Belman Hanif Kanji Intellectual Property Gabriela Kennedy Amy Lee Law Clara Ingen-Housz Pharmaceutical Stephen Leung Real Estate Alan Seigrist Senior Financial Forum Alvin Miyasato Senior HR Forum Jacqueline Algar Sports & Entertainment Raymond Roessel Taxation Evan Blanco Trade & Investment Patrick Wu Transportation & Logistics Brian Miller Women of Influence Jennifer Van Dale Young Professionals Sherry Lin

Dear Fellow Members: Very soon 2012 will be behind us. We are now at the time of the year when we gear up for the final dash to the finish line. That’s why in the coming two months, the Chamber will be so packed with activities and events that our calendar looks more like a fully-parked parking lot – every available spot taken. I will just highlight three events here for your attention. Our annual Women of Influence conference will be held at the Four Seasons Hotel on November 2. Again, we have finalized a powerful line-up of speakers and panelists including the Chief Secretary Carrie Lam Cheng Yuet-ngor as the morning keynote and Dr Azita Owlia, Vice President of North Asia of Connell Brothers, as the luncheon speaker. This year’s theme is “Pathways to Personal Success.” This is the ninth WOI conference since it first

began in 2003. The event’s longevity speaks for itself. Mark your calendar for it. Just five days later is the US Election Day. This year, we have chosen a new venue for our Election Central where you are welcome to join fellow AmCham members and others to watch the US election results live as they come in. It will be held at the Jones Lang LaSalle office at Three Pacific Place on Queen’s Road East. Regardless which candidate you back, this is also an event that you will not want to miss. In the past year, we have organized a number of delegations to China especially to Guangdong Province. Very often, we arranged site visits, meetings with government and business leaders, and sometimes participation in local conferences that coincided with the visits. On December 7, we will visit the headquarters of Tencent in Shenzhen. Tencent runs the largest and most used internet service portal in China. For anyone who is interested in the online business and social media in China, the visit will guarantee great learning opportunities, and we can have an inside look at the leading online company in China. It is just a half-day tour – so you have no reason not to join. I would also like to report to you about the progress of two advocacy items. We have finalized our submission of comments for Chief Executive’s Policy Address. After rounds of discussions and reviews, we have examined a number of business issues that we believe are of importance to you and your business, and are critical to Hong Kong’s long-term competitiveness. We have looked into the controversial (but

biz.hk 10• 2012

now much watered-down) Competition Law, the shortage of international school space (again), and put forward specific suggestions to address the issue of poor air quality. The submission is just the beginning; we have lined up a series of meetings with government secretaries to follow up on many of these issues. Finally, our Beijing Doorknock this year will take place in the third week of November to continue our discussions with the Chinese leadership. With the conclusion of the Communist Party Congress in early November, it will be an opportune time for us to connect with the new leadership and continue the dialogue which we re-started three years ago. We will report to you on our discussions in Beijing in the next issue, so stay tuned. Just a final reminder before I close: We have already sent you our annual membership and business outlook survey. Every year, we seriously solicit your opinions and comments – they can be about our services or events, problems you face in Hong Kong, or any issues which you may want us to look into. We would really appreciate your feedback. Your comments will greatly help shape our agenda in 2013. Thank you.

James Sun Chairman

biz.hk 10 • 2012

New

Business Contacts The following people are new AmCham members: Architex Interiors Ltd

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

Eric Fong Vice President

Asian Institute of Management

LC 98-645651

Shirley Lai Hing Pang General Manager - Supply Chain

Hong Kong Jockey Club, The

BFI Wealth Management Limited

Scarlette Leung Director of Corporate Business Planning and Programme Management

Coach A (Hong Kong) Co., Ltd

ISBN 978-962-7422-03-7

Modern Terminals Limited

Corina Tong Managing Director - Client Service & Marketing Richard Kateley Executive Vice President

Steven DeKrey President

Vivien Chiew Operations Manager Alisha Ma Managing Director Joan Zhou

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.

Heitman HK Limited

Masanori Takeuchi Director

CTC Asia (Hong Kong) Ltd Laurence Yung Commercial Manager - Southeast Asia

Dun & Bradstreet (HK) Ltd Evangeline Wong General Manager

Hongkong International Theme Parks Ltd George Gross Chief Financial Officer

ICS TRUST (ASIA) LIMITED Claudia Bolaños Business Development Manager Gillian Chan Director, Business Development

Kobre & Kim LLP Robin Baik Associate

Lord Asia Pacific Ltd Epic MMA Club Kevin Hardacre Business Development Manager Ramona Pascual Manager of Operations Cole Sirucek CEO

Ernst & Young Byron Khoo Partner

Rebecca Williams President APAC

Mattel East Asia Ltd Alberto Morales Regional Director, HR, APMEA Claire Gilchrist Vice President, APMEA, Mattel Brands Consumer Products Michael Fulkerson Senior Director, Marketing, APMEA

Newell Rubbermaid Meredith Sorée Vice President, Human Resources - APAC

Oracle Systems Hong Kong Limited Michael Julian Strategic Business Manager

Otis Elevator Co (HK) Ltd Alvin To Manager, New Equipment Sales

RLM Finsbury James Hill Associate Partner Queenie Tsao Partner Alastair Hetherington Partner, CEO Asia

Schiff Macau Company Limited Jonathan Schiff Chairman

Tradecard Asia/Pacific Ltd Cliff Entrekin Vice President, Business Development Andrew Dempsey Vice President, Global Services Tony Low Managing Director and Senior Vice President

Y Stage Productions Limited Guangdong Sanvo Chemical Industry Technology Ltd Bing Qiang (Ernest) Chen Managing Director

Microsoft Hong Kong Ltd Aaron Painter SMS&P Director

Dickson Tong Director

View our other members at:

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

biz.hk 10 • 2012

COVER STORY

The New Yorker

Who Will Take MTR to New Heights Jay Walder is the new boss of MTR Corporation, which operates Hong Kong’s world famous railway system. Now 10 months into his new job, Walder shares with biz.hk his passion about railways, his decision to take up the Hong Kong challenge, and his vision for the MTR

By Shirley Lau

Jay Walder

Photos: Create Images

biz.hk 10 • 2012

t six feet six, Jay Walder enjoys a unique perspective when he rides the Hong Kong MTR. “The hand rail in the middle of the carriage is just about the right height to decapitate me,” he quips. “But if I stand away from the railing, I can look up and down the entire train from one end to the other.” In a way, the New Yorker had no trouble finding an advantaged position on trains ever since he was a small boy riding the New York subway from his home in the Rockaways. “There is for me one very special memory with my dad. When I was a young kid, you could look out the front of the train

from a window in the first car and see where the train was going. I was too small to be able to see over the window, so my dad used to pick me up and I would make believe that I was the train captain driving the train," Walder recalls.

New York minute Fast forward to reality more than four decades later, Walder, 53, became the captain driving the Metropolitan Transportation Authority (MTA), the transportation agency that runs the New York subway. It was a much more challenging drive than his childhood game, but the Queens native managed to deliver.

During his two-year tenure that began in October 2009, he helped to reduce the cash-strapped authority’s budget by some US$500 million – though the cutbacks also came with the painful price of job losses. He also made numerous service improvements by embracing new technology. New York mayor Michael Bloomberg called him “a first-rate leader with big ideas,” “a world-class transportation professional” and “the kind of person we can't afford to lose.” But alas for New York, it did lose Walder. In July last year, the public transport expert announced that he would leave the MTA and take over Hong Kong’s MTR Corporation. It was a decision that surprised – and baffled – many.

biz.hk 10 • 2012

“New York is my home city. There were few things that would be able to pry me away. Within the international transportation community, the system that I’ve always held in the highest regard, the one that I think really exemplifies what a world leading transport system can be and should be, is the MTR,” Walder explains to biz.hk. “It was probably the only place that could cause me to really consider [leaving New York]. As much as I loved the work in New York, this was an opportunity to lead what I think is the leading transit system in the world. For someone who's been in this business for a long time, that was an opportunity too good to pass up."

biz.hk 10 • 2012

Hong Kong opportunity This belief of having to be quick to grasp a rare opportunity was apparently mutual for the MTR. In late 2010 when MTR's former chief executive officer Chow Chung-kong unveiled his intention to retire in a year’s time, the rail operator went on a worldwide search for a new leader to head the corporation, which in recent years has been fast expanding at home and abroad as well as pushing ambitiously into Mainland China. The MTR, as

Walder describes it, is a multinational company with rail operations in London, Melbourne, Stockholm, as well as Beijing, Shenzhen and soonto-be Hangzhou in China. At such a period of change for the Hong Kong company, a veteran transit manager with an impressive and international CV like Walder apparently fit the bill. After all, he helped to

overhaul the aging London Underground and introduced the popular Oyster smart card in his position as

the managing director for finance and planning of Transport for London before chairing the MTA. And when he first joined the New York transport agency in the 1980s as a financial analyst, he worked on a large-scale program to renew the decaying subway system with its graffitiscarred trains. So the MTR offered him the top job, and it didn’t take long for Walder to accept it – even though the decision meant he and his wife would have to relocate to Hong Kong with only their 13-year-old son and not their two elder children, one at university and the other working in New York as a sports journalist. The trio landed in the city a year ago. Then on New Year’s Day in 2012, Walder started his new job, for which he has laid out three major priorities: delivering quality services to the public, strengthening the MTR's links with the Hong Kong community, and maintaining growth for the company.

Customer service At the MTR, Walder does not have to face the kind of headache that he found himself battling in New York and London. While the condition of the Big Apple’s subway has improved dramatically from the 1980s, Walder still faced a whopping US$800 million budget deficit when he arrived back there in 2009. As for the London Tube, it had long been known for its

biz.hk 10 • 2012

unreliable service and the bad state of some stations. The MTR has none of these nagging problems. Rather, it is famous for its quality services with a punctuality rate of 99.9 percent. In this regard, heading the Hong Kong transit agency seems a relatively easy ride, but Walder says it's everything but. “Easy doesn't come up very often,” he says with a laugh. “For all of the similarities and differences [between the different metro systems], the challenge is always about saying: 'how do we continue to drive better customer service?’ The ways in which you do that may be different in each of the places, but the guiding principle is the same. Customer service is critical because there's probably no public service that touches people more than a transit system does… At the MTR, the challenge is to make this company even greater and provide even better services. There's nothing easy about it.” The abundance of cash and reliable service aside, another thing that sets the MTR Corporation apart from its New York and London counterparts is its property portfolio. At present, its real estate investments include 13 shopping malls and some 80,000 apartments built above the MTR stations and depots across the territory, the majority of which are under the publicly listed corporation's management. The New York and London transit operators are also involved in real estate investment, but to an extent not to be compared with the MTR. This for Walder is another challenge he is ready to embrace. “No one does it to the degree to which we do right here in Hong Kong. Real estate is a much more significant part of our operation. This has been a

biz.hk 10 • 2012

learning experience for me. It’s not just a question of property development but also property management. So I don’t just go out and ride the trains, but I go out to our shopping malls and housing estates, meet with our managers and talk about their challenges. I think it’s incumbent upon me to do this,” he says.

Reaching out For Walder, reaching out to the crowd is a familiar task. On the first day of his job at the MTA back in 2009, he was at the Flushing-Main Street subway station in Queens to meet commuters. When Hurricane Irene hit New York last summer, he greeted evacuees at the Far Rockaway-Mott Avenue station. Now in Hong Kong, he also gets out there to canvass people's views on train services. “A couple of weeks ago, I spent a Sunday morning in the MTR Opinion Zone. It is basically an opportunity to talk to passengers on the train and get their opinions about how we’re doing,” Walder says. "I went up to the first person and introduced myself. The passenger said: 'I think the MTR is really great, but I do have one suggestion: the train is too cold!’ Then I went up to another person and introduced myself. She said: ‘The MTR is great, but I do have one suggestion: it’s too warm in here!’” Obviously, it is not easy to satisfy everyone. The train temperature hasn’t been changed, but Walder says he will make an effort to listen to people and respond accordingly. With him at the helm of the MTR, Hong Kong commuters can expect a series of upgrades and improvements. These include higher train frequency

(62,000 more train trips by the end of the year compared with 2011), lifts for all stations, and public toilets in interchange stations such as Admiralty, Mongkok and Prince Edward. The “Art in MTR” initiative, launched in 1998 to bring artwork and art-related events to train stations, will also be “taken to a whole new level.” In November, the MTR will host an international conference on art in transit for industry experts from different parts of the world to exchange ideas. Based in part on the results of the event, the MTR will expand its art program and bring in what Walder calls “the wow factor to our stations.”

Fare review But it’s not as if the public always appreciates what the MTR does. Over the last three years, the corporation has raised its fares three times based on a Fare Adjustment Mechanism (FAM) agreed with the government in 2007 which links fare adjustments to inflation and wages in the transportation sector. The latest increase, at a rate of 5.4 percent, took place in June. Each time fares were raised, the MTR came under public criticism, with opponents saying it was not justified given the MTR’s annual profits (HK$14.7 billion in 2011). Finding a balance between public interest and corporate interest, as Walder admits, is a fine wire to walk. “Fares have gone up less than inflation and less than the increase in wages, even for those at the lowest income levels. It’s good news that the mechanism works well and provides the resources we need to run the railway. At the same time, it’s not exactly what the public wants,” he says.

“That's human nature and that's understandable…We want to be able to ensure that the fare structure is affordable to people. On the other hand, we always need to ensure there’s sufficient money over the long term for us to be able to continue to invest in the system. We’re putting HK$4 billion every year in investing in our system, in things you don’t always get to see, such as our staff going down to the tunnel on the Island Line at 2am to chip away deteriorating concrete and put in new concrete blocks. We have to find a balance between those things." Currently a review is being carried out on the FAM, which is subject to an appraisal every five years. Walder believes the review will aim to strike

that delicate balance between serving the public and the ability to maintain a sustainable financial model to ensure the quality of MTR services.

Top guy The first time Walder visited Hong Kong was in 1999 when he flew into town from Singapore where he was a visiting Harvard lecturer. As with many first-time visitors, he got the usual cultural shock from vibrant Hong Kong. “My hotel was near Causeway Bay. I had this incredibly peaceful trip on the Airport Express. But when I came up at Causeway Bay I was bombarded by everything that was

going on there. It was a funny experience,” he says. Now, no more a newbie, Walder knows his way around Hong Kong and he loves spending weekends on the city's various hiking trails with his wife. On weekdays, he takes the MTR to commute and to keep his finger on the pulse of the train service. To the general public, he's still an unfamiliar face, but he naturally stands out every time he steps into a train. “I am always the tallest person in the carriage. I can literally look down the entire train. I have a completely different view of an MTR train than anyone else does,” he says. As the top guy at the MTR, he surely does.

biz.hk 10 • 2012

CHINA BUSINESS

Is the China Rebound Close? AmCham organizes over 400 events and committee meetings every year. Of them, a number stand out as the crowd-drawers attracting audience who come back every year for the same speakers. Jing Ulrich, Managing Director and Chairman of Global Markets, China, J. P. Morgan, is one such speaker and this year her presentation on China’s economy at the Renaissance Harbour View Hotel was no exception

By Daniel Kwan

China’s GDP showed further signs of moderation in the third quarter of this year. Will the People’s Bank of China take more proactive measures soon to support the economy?

t was the fifth consecutive year that Jing Ulrich, Managing Director and Chairman of Global Markets, China, J. P. Morgan, spoke at AmCham. With Europe’s economy in doldrums and the US’s recovery in slow-motion, China – despite uncertainty over its economic growth – becomes the market to watch. Is the current slowdown in China a harbinger of things to come? Or is a rebound just around the corner? Unlike three years ago, according to Ulrich, the recovery this time around will take longer. “This time around we are not experiencing a V-shape rebound. If anything, a recovery in the Chinese economy will be much slower compared to 2009 and the period of time it will take for the economy to rebound will be much longer,” she said.

Room to maneuver Although the recovery will be slower, it will be healthier. For the first time in many years, China’s GDP growth in 2012 will likely be on target as the government has forecasted at around 7.5 percent (see graph). The reduced growth rate actually is a very respectable growth number and reflects that the government is treading carefully in order to sustain the momentum on the one hand and keep inflation in check on the other. Ulrich believes that unlike other governments, the Chinese Government has a lot of room to maneuver in steering the economy to avoid a hard landing with its monetary and fiscal policies. Although the central bank has cut bank reserve requirement ratios and interest rates in the summer months, it still has much firepower to

biz.hk 10 • 2012

Jing Ulrich

Photo: Thinkstock

further support the economy if necessary. “The government is acting in a very prudent fashion. They want to monitor food prices, CPI inflation, and housing prices before they cut interest rates or the reserve requirement ratio,” she added.

China’s real GDP growth vs. official target 16 14 Real GDP Growth

Measured steps

When the 2008 financial crisis hit, China responded with a RMB4-trillion stimulus program bankrolling hundreds of infrastructure projects across the country from railways to highways to bolster the economy. The money-pumping exercise did save the economy from sliding into a slump but it also led to over-capacity on the production side and a sharp rise of speculative investment in the property market. The Government soon took steps

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8 Official Target 6 4 2000

2002

2004

2006

2008

2010

2012

Source: JP Morgan

Breakdown of China’s fiscal expenditure 2011 (RMB bn)

2012 (RMB bn)

2011-2012 YoY Change

% of total fiscal spending

Education

1611.6

1892.9

17.5%

15.2%

Social Welfare

1114.4

1293.8

16.1%

10.4%

Rural Subsidies

989.0

1124.1

13.7%

9.1%

Healthcare

635.7

734.8

15.6%

5.9%

Social Housing

382.2

439.8

15.1%

3.5%

Community

764.1

858.6

12.4%

6.9%

Transportation

747.5

822.5

10.0%

6.6%

Technology

380.6

434.5

14.2%

3.5%

Culture & Media

189.0

217.9

15.3%

1.8%

Source: Ministry of Finance

to tighten liquidity and impose restrictions on home sales to keep the bubbles from bursting. As a result, inflation which once reared its ugly head in 2008 has since come down to 2-3 percent level this year. With the 2009 lessons in mind, the Government is now acting carefully in rolling out new stimulus programs. Instead of pumping money into the economy as it did three years ago, the Government has taken much more measured steps in financing infrastructure projects. Although it has announced some RMB1-trillion of investment in recent months, some of the projects are in fact earmarked under the 12th Five-Year Plan (2011-2015). “It’s very hard to quantify how much money is incremental new money, and how much money has already been earmarked,” Ulrich said. “But we know that the central government is trying to ramp up infrastructure investment to try to boost the flagging economic growth.” In understanding the government’s strategy, Ulrich pointed out that what’s lacking in the government’s investment program is more spending on “social infrastructure” namely items such as education, health care and welfare (see table). Although China already has some of the world’s best airports and railway networks, it is lagging in its social infrastructure. The absence of a wellestablished social safety net will hammer consumers’ confidence to spend and make it more difficult for China to switch from the investment-driven growth model to one that places more emphasis on consumption for growth.

“Let’s interpret the infrastructure concept in a broad sense. It doesn’t mean just beautiful buildings or structure above ground but also infrastructure underground like sewage as well as soft infrastructure in terms of hospitals, social welfare, and educational facilities,” Ulrich explained. “If the government takes into account infrastructure in a broader sense, there will be a lot of new investment that are required in the future years.”

Future years Looking ahead, Ulrich expressed confidence that the current slowdown will pave the way for healthier growth and even more opportunities in future years. She based her arguments on the fact that there are powerful drivers to keep the China’s economy growing and there is continuity in government’s policies in the long run. First, she stressed that China’s urbanization will continue and it will remain a key driver for growth for the country. According to her, China’s current urbanization rate stood at about 51 percent compared with the 80-percent average in countries in Europe and America. “For every single year in the coming 30 years, conservatively speaking, 50 million people [in China] are transitioning from an agrarian lifestyle to an urban lifestyle. That means 50 million people will earn a lot more compared to being farmers. Urbanization remains a very powerful driver of demand growth in China,” she said. At the same time, China will prosper given the

biz.hk 10 • 2012

fact that income continues to grow at a healthy 10-12 percent annually giving rise to an evergrowing vibrant and expansive middle class in the country. “China’s middle class is getting bigger and more affluent. In the future years, one of the main drivers for China’s economy will be consumption and services,” she said. “China’s economy is transitioning to a new era and this new era will be marked by slower headline GDP numbers – we are no longer going to grow at eight or nine percent.” “Although the growth rate may soften to six or seven percent, the quality of growth will be much higher compared to the past.”

Policy continuity Top on many people’s mind is the upcoming leadership change in China. Ulrich observed that there is continuity in government policies in spite of the leadership change. “This upcoming leadership transition will be very important and we only have this major transition once in a decade when both the president and premier will change,” she explained. “After the

The American Chamber of Commerce

Charitable Foundation

new leadership takes over, the current so-called ‘policy inertia’ may pass and I don’t see a drastic change in the overall policy direction.” When asked by the audience what other steps the Chinese government can take to boost economic activities, Ulrich suggested that one possible tool would be cutting taxes. Taxes in China are actually high and the government’s robust fiscal position would provide sufficient room to reduce the burden on both individuals and businesses. “China is in a unique position among the big countries in the world where the central government’s fiscal position is still very strong and it can afford to cut taxes to boost economic activities,” Ulrich said. “I would argue against a big spending program because if you spend too much money like we did in 2008 and 2009, you are going to end up with a situation that we saw in 2010 with over-capacity, high inflation and inefficiency of investment.” “I would say a structural tax reduction will be very beneficial for the overall economy and not just for large enterprises but small enterprises in particular and individuals,” she added.

I would like to donate: HK$ Name: Title: Company:

AmCham Charitable Foundation is the philanthropic division of AmCham with a vision to contribute to the community leveraging from its influence within the international business community in Hong Kong. Founded in 1985, the Foundation is governed by a Board of Trustees composed of Past Chairmen of AmCham resident in Hong Kong. The Foundation emphasizes the importance of education, and presents scholarships to outstanding university and secondary students every year. The Foundation partners with the American Women’s Association (AWA), and provides financial assistance to smaller and lesser known charities helping children, elderly, and disadvantaged people with health and special needs. The Foundation also presents the Ira Dan Kaye Community Service Award recognizing committed volunteers who have served the community generously, and giving a donation to the charity of the person’s choice. Giving back to the community is a vital value of AmCham and it is made possible through donations from AmCham members, and fundraising events such as the AmCham Ball, and the upcoming Charity Dinner. Get involved! Donate now

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TRADE & INVESTMENT

The Maine Man

Last month Governor of Maine Paul LePage brought a trade delegation to Shanghai and Hong Kong where he told Nadine Bateman that there's more to the state than lobsters – although they are the best

Little Long Pond in Acadia National Park of Maine

biz.hk: How is Maine’s economy doing? LePage: Maine’s economy is doing reasonably well from the standpoint that the unemployment figure is below the national average. In fact we’ve added jobs since I became governor in 2011. The national average unemployment is around 8.5 percent, Maine’s is 7.2 percent [although seasonally adjusted we expect it will drop quite a bit as summer’s over]. We’re having a pretty good crop

from agriculture this year – the weather’s been co-operative. It’s a record year for harvesting lobsters and tourism has been good for the most part of summer – we weren’t hampered by the economic downturn so much this year – people were visiting Maine, which is very important because tourism is our number one industry. Visitors come to see the small, quaint New England towns by the ocean – we have a very long coastline and it’s [especially beautiful] in

the Fall when the leaves are turning multi-colors. biz.hk: What are your major industries? LePage: The biggest industries we have are microchips, forestry, tourism and agriculture. We’re rapidly moving into aerospace and biotechnology, and education plays a very big part. We have a number of different machining shops which are historical for Maine – we’ve always been very

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strong in the precision-made factory machining sector, many of which make parts and then sell to OEMs so you don't always get to know that they’re from Maine. For instance, a very large number of stents for hearts are made in Maine, and the whole process was invented at the medical centre where the surgeon who pioneered that is still there. We’re also strong in the pulp-and -paper and semi-conductors industries – we have two major plants (including Texas Instruments). Then

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there’s telecommunication equipment – some of the first satellite communicating was done out of Maine as a defense project back in the 1960s, and the spin-off has been a number of companies using that technology for different projects. biz.hk: Which industries offer the best opportunities for investment? LePage: Maine has a growing industry in high-precision machining of exotic metals. There are also opportunities in

Photo: Thinkstock

agriculture, particularly in marine life [such as] seafood. Renewable energy is another possibility. China is using a lot of coal but is trying to move away from that. We have a substitute pellet that may help make the transition away from coal – it’s a renewable, cleaner energy. [We’re hoping] there might be some investors in Hong Kong who may want to invest in converting this resource into renewable energy. There are opportunities in the

shipping industry, too. We have deepwater ports and a very long coastline. There’s a big project going on to expand the Panama Canal that is going to shorten distribution points significantly. We’re a major distribution hub. What we'll see over the next 10 years – with the cost of gas going up – is that shipping will become a very viable option. [Specifically] there’s a huge investment opportunity for creating a short sea shipping barge. biz.hk: What are your latest export figures? LePage: The export industry has grown 23 percent in the last five years – it’s one of our biggest growth areas – growing about nine percent last year. That’s specifically with China. Some of our largest growth areas have been in the biotech and medical products field. Also, precision machining – exports are up significantly in aircraft parts [more than 80 percent increase]; and seafood – our lobster exports have increased more than 500 percent in the last year – suddenly China has discovered the Maine lobster! There’s no such thing as a Boston lobster, by the way – they’re all caught in Maine but they get shipped out of Boston so they get renamed before they leave. Blueberries are our next export growth market. biz.hk: Tell us about Maine’s stringent regulations with regards to its lobster sizes. LePage: They are in place to protect the sustainability of the resource. By having a tail size we protect the females: We do two things: 1) We measure the tail size, and 2) We notch the tail on a female carrying eggs so that she’s not harvested. That way we sustain the product in the ocean so that every year can be a better harvest year and we have a good, strong healthy resource in the ocean. We protect the short, young and small, and we also protect the large breeders. The same set of rules does not exist in other lobster-producing areas such as Canada. They do not have a

sustainable practice. We do and we’re very proud of that – every year the harvest gets better, stronger and healthier. That's why our lobsters are so good [and] we have an awful lot available. biz.hk: Is boat-building part of your heritage? LePage: Yes. They are world-class. The craftsmanship is phenomenal – for both leisure and work boats. We have a number of companies that produce fishing and offshore boats. If you haven’t heard of the Hinckley, you need to come to Maine and visit the factory. Australia has been one of our largest export markets – it’s one of the top buyers of boats from Maine and we are having discussions in Brazil for their offshore needs. Also our military [boat industry] is the second largest in the US. A company called Hodgdon made a one-of-a-kind boat for the Navy Seals which goes at 90 miles an hour. We also have a company that manufactures limousines for super-yachts which has just secured a big contract in Europe. It’s definitely something we can offer China. biz.hk: What special measures can Maine offer with regard to the EB5 visa? LePage: Maine offers a good quality of life. It’s really a special place particularly in summer months when it’s so beautiful and never gets too hot. We have the ocean, the mountains and the agricultural fields – a little bit of everything. It’s probably one of the safest States in the US and is therefore a good place to live and raise a family. We have actually had Chinese mothers come to us and say their children have been educated in Maine secondary schools and university and ask do we have any projects they can invest in. We had to keep sending them to Vermont because we didn’t have EB5s set up. So we’re starting to work very closely, particularly with boarding school academies. We suggest that if your children are being educated in Maine, think about investing in an EB5. biz.hk: What education opportunities

Paul LePage

are there in Maine for overseas students? LePage: Maine has a good university system but one thing it has never done is to compete in a global market. The private schools have marketed to bring foreign students to Maine but the university has only just started. Also, Maine has seven academies that have been very progressive in attracting foreign students for around 20 years. They have very high quality programs. For example, Thornton Academy has just built a million dollar dormitory mostly for their Chinese students and they’re adding a second million-dollar dormitory next year. The academies are very committed to their foreign students and part of that is setting out really good internal programs to bring students in a little ahead of term time for home stays, be welcomed into the community, and start their sports programs early. Like Thornton, Foxcroft Academy has done a similar thing. Education is what develops your most valuable resource – the human resource. It also fits in to the overall trade and investment [process] as many of our companies have a number of Chinese PhDs.

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State’s Soft Cell Governor of Connecticut Dannel Malloy recently visited Beijing and Hong Kong where he talked about the state's thriving financial sector and opportunities for investment in bioscience – particularly stem cell research. Nadine Bateman reports

ften referred to as the “insurance capital of the world,” Connecticut is strong again in that area despite suffering from the effects of the global economic downturn. The hedge fund business is also thriving. In fact, finance and insurance account for around 21 percent of the state’s economy according to the latest figures available.

Growth areas On a recent visit to Beijing and Hong Kong, Governor of Connecticut Dannel Malloy spoke about these and other growth areas in his state and also about the opportunities for investment. “We’ve seen some growth in manufacturing, academia and research. The insurance industry is growing for the first time in a long time; visual entertainment production has also increased in the state as the result of some program offerings we have in that area,” he says. The state also saw improved figures in retail in 2011 and the first half of this year. “Connecticut has a big investment in financial

services and obviously the industry was most impacted in the recent downturn. We saw signs of slowing in late 2007 and then the collapse in 2008-2009 played themselves out writ large in Connecticut.” “We’ve seen some progress and recovery…although it’s slow, with the exception of the hedge fund industry which, even in bad investment return years, has actually continued to grow in Connecticut because we have substantial tax advantages over [for example] New York City.”

Job creation Since taking up office around 18 months ago, Governor Malloy says his administration has focused on job creation and retention.

Yale University Photo: Thinkstock

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“The creation of 23,500 private sector jobs has, of course, been offset by the continuing consolidation in government employment which is active in Connecticut and probably every other State. So that’s not a net number, it’s a net private sector number.” When it comes to investment opportunities, Malloy says the state has developed “a full array of product offerings” and incentives to invite further employment by domestic companies, and is “certainly happy to extend that to foreign-based companies.” He gives the example of an Australian firm that has recently aligned with an American one to build manufacturing facilities and a foreign product line in Connecticut.

Investing in bioscience He believes the state’s focus on bioscience, life science and biotechnology will be attractive investments for overseas investors, particularly from China. “We’re investing mightily in our infrastructure to support that industry [working with] Yale University and the medical centre at Farmington where we’ll be investing about a billion dollars on major new research facilities as a component of that investment and 80 additional tenured faculty research positions.” There are around 800 bioscience companies in Connecticut with around 70 categorized as ‘major.’ These include Boehringer Ingelheim, a family-run pharmaceutical from Europe; Pfizer, which has one of the largest research centers of its kind; and Alexion, the biggest pharmaceutical company by market capitalization, according to Malloy. “What we are saying is that Connecticut is the place for investing in biosciences and where you should have some facilities or a relationship or both. After discussions with the Chinese government and companies [in Beijing] we’ve found there’s a recognition that some of the multinational pharmaceutical product companies are lessening their investment in early product development – not eliminating it but lessening in favor of the expectation of some invention.”

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“Some of the smaller companies will bring their invention or product not to market but to auction and I think China will play a larger role in that development as a result of that.” “On the other hand, I think having concurrent or relationship projects taking place in the US, particularly with respect to the FDA (Food and Drug Administration) involvement will actually bring quicker value to new product development than research or development that takes place exclusively in China,” he says. “I think that represents an opportunity for Connecticut and for China and other evolving bioscience hubs.”

Stem cell research Malloy adds that Connecticut has a portfolio of products that is competitive with any of the 50 states, and strengths that exceed many of the states it competes with. These include Yale University research – a bioscience hub that stretches from Baltimore to North Carolina. He says Connecticut has been specifically active in stem cell research, making state grants for Yale University and University of Connecticut. “That program has been ongoing and is beginning to show some commercialization. Obviously it’s an evolving and emerging science still, [even though] it’s 20 years into its invention, but Connecticut stepped forward as an early investor with dollars not knowing how big federal involvement would be.” “We didn’t care what the federal government was choosing to do, and we decided to do something here in Connecticut and we'll continue to be a player in stem cell research as the science evolves.”

Chinese investors Malloy and his administration recognize that real estate is a big attraction to Chinese investors and says Connecticut has received interest in a number of spheres including hospitals, nursing homes and medical treatment facilities, “specifically in bringing expertise to those arenas – not on the operational side but on the design, execution and payment side.”

Dannel Malloy

When it comes to education services for overseas students, Malloy says he’s “had several conversations while in Beijing.” In addition to talking about university and college education, he was also having discussions about China sending larger numbers of students to high school in Connecticut which he says will benefit the presence of many “premium brand” boarding schools. Visa issues have hampered progress in that area but Malloy promises to get to grips with that issue soon “to make that easier and to make traveling easier – whether it’s for tourism or education.” He says the intention is to create additional opportunities in the state universities as well as some of the private institutions. Universities such as New Haven and Yale are keen to attract overseas students so Malloy says he’s going to work with the State Department to increase “by a substantial volume” the numbers of visas that are made available. Malloy admits the EB5 program has “not been as active in Connecticut as it could be.” He adds: “I know that’s important to China – I’ve heard that loud and clear and understood it.” “Because of familiarity and proximity, western States [in the US] have done better in that respect but now the East Coast – particularly the Washington to Boston corridor – is getting recognition. It represents some large opportunities as well, particularly as we shake off some of the impact of this very long recession.”

URBANIZATION

Grappling with China’s Rural Land Problems Occasionally, when we ponder on certain issues, we are struck by their enormousness. Take the topic of organic food for example. One may consider it in the context of its nutritional value, or link it with mega trends like food security (do we have enough to feed the people?). The following three interviews are with individuals who deal with issues of huge global significance every day. The first was with Gao Yu, China Country Director of Landesa who spoke at the Chamber in September on China’s rural land reform and urbanization

By Daniel Kwan

China’s rapid urbanization has lifted millions out of poverty but also create serious social problems such as shortage of arable land and food security Photo: Comstock/Thinkstock

andesa is an international NGO which has worked in more than 40 developing countries to improve lives of individuals, families and communities. It started working in China in 1987 and is one of the longest working NGOs on rural China. It has focused on helping families to secure their rights to land, registration and documentation, and implement equal land rights for women. Since 1999, it has partnered with the Renmin University in Beijing and Michigan State University to conduct surveys that provide insight into the challenges concerning China’s farmers and help inform on the Chinese government’s land policies. Its 2011 survey covered 1,791 households in 17 provinces that together contain an estimated three quarters of China’s rural population.

Landless but not urbanized In an interview with biz.hk following his presentation, Gao Yu, Landesa’s China Country Director, presents a picture of China that we don’t often read in the official press: while China’s rapid modernization has lifted millions out of poverty, it has largely bypassed the countryside, where about 700 million people still live – the majority of them on about US$2 a day. Despite claims that tens of millions of rural Chinese farmers have moved to the cities, Gao says the true picture was that majority of the farmers have become landless but not urbanized. “Many of the farmers who are so-called ‘urbanized’ actually end up staying in the margins of cities. They don’t get integrated into the urban system. For instance, they don’t enjoy urban health care. Their children are denied education and other social benefits,” he says. “Through our survey, we find at least 21 percent of the farmers actually are still living in the countryside. Twenty-eight percent still live at the borders of townships. Only about 18 percent of the so-called ‘urbanized’ people have actually established in

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Gao Yu

urban settings. So the actual rate of rural people who become fully urbanized is really low,” he added. In addition, incidence of taking of farmland from farmers or forced eviction remains prevalent. According to the survey, 43.1 percent of the villages have experienced their land taken away for non-farm use since the late 1990s. It is therefore not surprising that Chinese farmers are an unhappy bunch – farmers who are dissatisfied outnumber the satisfied ones by a margin of two to one (see chart). For an agrarian country like China, that’s a ticking time bomb. According to Gao, there were over 187,000 protests in Mainland China in 2010 and 65 percent were related to land disputes. “Social conflicts have got to a point that the government must take measures to address the root problem. I am also very concerned about the missed opportunities because of the land loss. These missed opportunities – in terms of increase in productivity and potential income available for farmers – are significant,” Gao laments.

Root problem Finding a cure to the root problem – reforms of China’s land tenure system and strict enforcement on the ground – has so far remained elusive to the majority of China’s 700 million rural residents. The issue has serious implications over China’s food security and social stability in the countryside. The Director believes the Chinese

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leadership is committed to tackling the problem but the complexity of the issues has made progress very slow and piecemeal. “Land reform involves many issues. The land tenure question is rooted in things such as local governments’ finance. About 40 percent of local governments’ revenue comes from land sales and in some cases the figure can be as high 80 percent. All these issues must be carefully considered before laws and reforms can be brought forward,” he explained. “The government is increasingly aware of the potential risk both on the social and economic sides. They are increasingly recognizing that if reforms are being driven forward, it’s going to have profound effect for overall development of the country. They have an open attitude about what reforms are needed.”

Should MNCs care? For multinationals, do they need to be concerned about China’s rural reform? To Gao, the answer is yes. “Not just for better corporate social responsibility, it’s also about business opportunities,” Gao points out. ”The potential income a Chinese farmer will get from land reform is very significant. According to our surveys, farmers’ additional income because of tenure security in 2010 was about US$1,800.” “To me, this spells a very good picture of increased consumption by Chinese farmers in the future. In the rural countryside in China, the consumption level is still very low – nothing close to the urban citizens who are perhaps the biggest growing market for western consumer brands.” But don’t rely on the middle-men. Gao says multinationals should take a genuine interest in China’s rural development and be prepared to take field trips to find out what’s really going on. “It is about the security of conducting business. Big companies who use rural land for their factories for example need to be concerned with rural land reform because currently some of

Farmers’ Satisfaction Level: Land Takings Very dissatisfied 16.7%

Dissatisfied 36.7%

Very satisfied 2.8% Satisfied 21.9%

Neutral 21.9%

Source: Landesa

the tenures may not be secure. There are rent-seeking behaviors and companies end up leasing a piece of land illegally.” “I don’t think companies should be given the impression that it is no good to do business in the rural countryside. There are good regulations and provisions to guide corporate investment activities. But companies need to conduct due diligence for their projects. They need to do things such as verifying facts in the field independently; don’t rely on the middle man to conduct business, and they should seek good consultancy and legal advice.” About the future, Gao believes reforms will happen but certainly not in a shock-therapy fashion. “It is not going to be a quick reform and it will take steady and solid efforts based on very good research and consideration of policies.” “The other thing is that it is about finding a solution which may not be necessarily available or widely-known now. For example, how to resolve the issue of local government’s revenues?” “I mentioned the Taiwan experience [of land reform] may be very useful but that is still not widely known in China. That’s why for organizations like Landesa, we should make greater contribution in terms of more effectively sharing those information and identifying options that are not yet widely-known.”

FOOD BANKING

On hunger Worldwide 868 million people do not have enough to eat. That means one in eight people are suffering from hunger. (Source: The State of Food Insecurity in the World 2012, FAO) Hunger and malnutrition are the number one risk to health worldwide. Each year the death toll exceeds that of AIDS, malaria, and tuberculosis combined. (Source: World Food Program, 2012) Every day, nearly 16,000 children die from hunger-related causes. That’s one child every five seconds. (Source: United Nations Secretary General Ban Ki-Moon, November 17, 2009) Approximately 60 percent of the chronically hungry are women, and one-fifth are under the age of five. (Source: World Food Program, 2012)

On a Mission to Feed the World’s Hungry

On food waste The 2011 Global Food Loss and Waste study, commissioned by the FAO, reports that approximately one-third of the food produced for human consumption is lost or wasted.

On October 16, the United Nations Food and Agriculture Organisation (FAO) celebrated the World Food Day at its headquarters in Rome. In his speech, FAO Director-General José Graziano da Silva reported that nearly 870 million men, women and children still go hungry every day despite years of efforts to combat hunger. “We cannot allow that in a world of plenty. We already produce enough food for every human being,” he told the audience

By Daniel Kwan

Small-scale farmers are expected to provide much of the extra food needed to feed a global population of more than 9 billion by 2050.

fficially, there are 868 million hungry people in the world today. That figure, although 132 million less than what the UN’s Food and Agriculture Organisation (FAO) originally estimated in 2010, is a disgrace considering how much food is produced but wasted every day. The “1 billion hungry people” message has such an effect that a lot of people today are still using it in the discussions of hunger. There are other staggering statistics that should make every one think twice before ordering food or throwing away the left over

(see box). Despite the revision (and the fact that there is enough food to feed every human being on earth), the world faces a shameful hungry problem. Meanwhile, experts generally agree that although there may be sufficient food today, the same will not be true when world’s population rises from 7 to 9 billion by 2050.

No rose-colored glasses Finding a solution to that gigantic problem – feeding the hungry – is what Jeffrey Klein does. As CEO and President of the Global Foodbanking

Network, Klein tackles that billiondollar question everyday. Formerly a banker with 30 years of experience managing investment and funds, Klein today spends all his time running a different kind of bank – a food bank. He was in Hong Kong in September to attend the Feeding the World: Asia’s prospects of plenty summit organized by The Economist. Considering the enormousness of the problem, we asked Klein if he would sometimes feel hopeless in his work. “The way I look at it is that every day is a step forward. They are daunting global issues – we are not even

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Photo courtesy: FAO, UN

talking about the carbon issues, scarcity of water, mineral degradation for arable soil or the lack of arable land – all of which will make feeding a 9 billion world [by 2050] extremely challenging and I can’t take that view,” he said. “But I acknowledge the significant challenges ahead.” “That’s why I’ve re-positioned my whole career to attack this problem,” he added. “There are no rose-colored glasses here.”

Reasons for hope Klein gave three reasons for his optimism. First. There is a fast growing

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awareness among countries about the seriousness of the problem. “For instance, there was no acknowledgment of [the issue of] hunger in the Middle East. The Arab Spring put that front and center on the world’s map,” Klein said. “When hungry people lose hope, they generate actions to change government and sometimes in a violent way,” he said. “Now, the Middle East has embraced the food banking system we have developed because there has been a cultural change [after the Arab Spring],” he added. According to him, GFN is launching a pilot with an American hospitality business to introduce food banking in the Middle East. “In two locations in the Middle East, we are going to do a pilot with an American hospitality business to take end-ofthe-day cooked products from their food and beverage operations – safely, carefully and expeditiously – directly to feeding organization,” he said. Second, Klein said the business community has become much more sensitive to the problem of hunger and responded positively by adopting better business practices to reduce food waste,

Jeffrey Klein

and encourage food donation and employee engagement. He said there is now much greater business participation compared with several years ago and that “has made me feel hopeful.” Third, ironically, Klein found hope in the problem. According to studies by the FAO, about one-third of the food produced was wasted – meaning they never made it to the stomach of the consumers. In order words, there

ENVIRONMENT

Undernourishment in the developing world Millions

Undernourishment in 2010–12, by region (millions)

1 000 900

40 980

901

885

800

852

700 600

Total = 868 million

Percentage undernourished

25 23.2

500

Latin America and the Caribbean South-Eastern Asia

1 6 16 25 49 65

20 18.3

14.9

16.8

15.5

400

0 1990-92

Oceania Caucasus and Central Asia Developed regions Western Asia and Northern Africa

Eastern Asia

167

0 1999-2001

2015

Sub-Saharan Africa

234

(right axis)

Southern Asia

304

2004-06 2007-09 2010-12

Number (left axis)

Prevalence

Source: FAO

is enough food to feed the hunger but people are denied nutritious food or simply starving due to problems such as poor production methods, bad retail practices and social conflicts. “A third of all that’s produced is wasted. That’s a staggering amount of food. So I look at that as extremely troubling – morally, ethically and economically. But it also makes me reasonably hopeful because what food banks do is work to recover that food,” he said. “It doesn’t mean that the food is bad or has been compromised in any kind of the nutritional way. It just means that the food cannot be sold in the commercial channel.” “For example, it’s a sandwich that a coffee shop is going to throw away at 4 o’clock in the morning. It shouldn’t be thrown away. We are working to have that recovered and consumed,” he said.

Full cost of waste For food banking to work, Klein said two issues are critical. Education of consumers is vital. At present, majority of consumers have not priced in the full cost of waste. Consumers simply have no idea of the full value of what they have abandoned in their wastebaskets. “In much of the world, people are

saying, ‘I don’t want that sandwich and I am going to throw it into the wastebasket because it’s not that expensive and inconvenient.’ A lot of education needs to happen,” he stressed. Another key to successful food banking is adoption by the community. A food bank can only work if it can be integrated with the local community. “What we tell organizations around the world … is that you need to get the people from government, corporate community, local NGOs and feeding organizations around the table – they are the doers in the community. You want them at the table to make this happen,” he said. “These people usually work on a voluntary basis … we say that’s the hardest thing you do because you have to teach the culture of philanthropy at the individual level in your country. In many countries, it doesn’t exist.” On a global level, Klein said the absence of legal protection and tax benefits is hammering efforts to promote food banking. There are few countries in the world that have adopted legislations similar to the Good Samaritan Food Donation Act in the US which would protect donors from civil and criminal liability should the product donated in good faith later cause harm to the needy recipient. Moreover, incentives such as tax breaks are also not common.

Hunger in the US Closer at home, Klein said the hunger problem in the US has been aggravated by the economic downturn. Although the Global Foodbanking Network is not directly involved in food banking in the US, Klein said GFN’s partners such as Feeding America faces an incredible challenge in finding more food, and storing and transporting them to those who are in need. Officially, about one in six Americans or 50 million people in the US today have a hunger problem and many American families now rely on the food stamp programs to meet their nutritional needs. Unlike in past difficult times, they now take much longer to graduate from the food stamp programs, according to Klein. “Grappling with this issue in the US now is a real challenge,” he said. “A lot of the statistics are moving in the wrong direction.” All that hasn’t made Klein depressed or desperate. The CEO said he hasn’t lost hope. “The first dent is – let’s waste less. When one was to throw something out, let’s try to put it in the freezer, share it with somebody, or take a doggy bag at the restaurant. Let’s price each piece of food. This is a massive cultural and educational challenge,” he said.

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Captain of The Trash Contingent Captain Charles Moore of California is no ordinary ship captain. Formerly a cabinet maker, Moore has spent the last 16 years to raise awareness about plastic pollution in ocean. Author of a new book, Plastic Ocean, Moore recently visited Hong Kong (which had its own plastic pellet spill scare near Lantau Island in August). We caught up with him last month to learn more about the “trash contingent” in the ocean, and why we all need to be concerned about it

By Daniel Kwan

n Hong Kong, most people talk about air pollution, noise, or even light pollution. Plastic pollution? Not until the pellet scare in August, most people probably see that more as a scare tactic by greenies to push their own environmental agenda instead of a real life-threatening concern. But Captain Charles Moore says no. Plastic pollution is killing more animal lives than any other pollution, he says. Are you exaggerating the problem? we asked him directly. “Unfortunately, if we are erring in any direction, we are erring on the conservative side. When we say that animals are dying in the ocean, it’s very hard for us to produce evidence of the numb fishes that are dying because we are not going to see them. They are going to be consumed [by their predators] right away,” he

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explains. “We are seeing the death of so many animals in the ocean because of consuming plastics or they’ve got tangled up in plastics. I believe more animals are dying today from plastic pollution than they are dying from climate change. In terms of actual lives that are being extinguished by a problem, the bigger problem on our planet right now is plastic pollution.”

An ocean he had never known Moore has the credentials to prove that he knows what he’s talking about. After a yacht race to Hawaii in 1997 and on his return voyage, Captain Moore veered from the usual sea route and saw an ocean he had never known.

“Every time I came on deck to survey the horizon, I saw a soap bottle, bottle cap or a shard of plastic waste bobbing by. Here I was in the middle of the ocean and there was nowhere I could go to avoid the plastic.” Since then, Moore has devoted his energy to studying, researching and tackling the problem of plastic pollution in ocean. After years of advocacy and education, people have begun to take the cabinet-maker-turned-ocean scientist more seriously. At the same time, more people have joined the mission to find a cure to the problem. But Moore is clear-minded about it. “There is no feasible way to clean up the garbage pact in the ocean,” he says referring to the gyre of marine litters in the ocean. “Although there is constantly people fantasizing about ways to do it.”

SPORTS & ENTERTAINMENT

What went wrong What went wrong? Moore believes much has to do with how we are consuming plastics. The obsession of a “throw-away” lifestyle by consumers and the fact that the problem is largely invisible - despite its enormousnes are to blame. “Plastic is facilitating the ‘individual’ marketplace. In the ‘individual’ marketplace, everything is just for the individual. This package is just for you, and you have your own brand of make-up, your own brand of candy, or your favorite soda.” “Plastic faciliates this [marketplace] by being infinitely moldable. The word ‘plastic’ means infinitely moldable. It can be made into any shapes or colors. Every brand is facilitated by plastic packaging. Yet being persistent, plastic is not biodegradable and we have no take-back infrastructure. There is no really valuable way to make that [packaging] recycable.” “That’s why the ocean is now a ‘plastic soup’. We are at the beginning of a plastic age. We only have consumer plastics for 50 years or half-a-century. If we have already turned the ocean into a plastic soup killing hundreds of thousands of mammals and birds, and millions of fishes, what it is going to be like in another 50 years if we continue with this profileration?” If plastic pollution is making the ocean sick now, Captain Moore says, the rest of the geography is also at risk. “The reason of me being on this tour going around the Pacific Rim - is to raise awareness that the trajectory of consumer society has a very bad side effect. The side effect is the trashing of the ocean environment. The ocean being the first and it’s just the harbinger. The next step is the land and we are starting to see the side effect [of that] in camals and cows.”

He sees hope Interestingly, Moore says he sees hope in China in leading the battle against plastic pollution. Unlike other

Captain Charles Moore on board on his research vessel Algalita with trash recovered from Photos courtesy: Algalita Marine Research Institute the ocean

societies which have fallen to the lure of consumption, China which has a history of emphasizing the public good can choose to say no, he believes. “China is a contradiction because it is a people’s republic. If they want to, they can put people before profits. So I have hope that China’s great history that focused on people’s republic will re-assert itself and they will start thinking about people before profits.” “China has the roots of a social organization that it will be able to be the future of humanity. But it must re-assert its roots in believing in its people in such a way that it wants to liberate the average persons rather than to make concession to every corporations that want to make a new product.”

About his own future, Moore says after spending the last 16 years studying the trash in the ocean, he hasn’t had enough of it yet. “My next step is to study this habitat that we’ve created in the ocean. Formerly it was just blue water, now there is ‘stuff’ and that stuff is acting like a coastline. It has no solidity but it got tide pools and coral reefs. I have actually seen coral growing in the middle of the ocean with coral reef fish living in it.” “My goal in 2014 is to live in this new habitat and I can take coastal ecologists out there and tell the world that we’ve got the last unexploited ‘contingent’ on earth and that’s the one that I am exploring - the trash contingent,” he says.

biz.hk 10 • 2012

AMCHAM GOLF OPEN TOURNAMENT

AmCham Sports & Entertainment Committee co-chair Ian Stirling, left, and chair Raymond Roessel

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The Seventh AmCham Golf Open took place this year on October 15 at the Discovery Bay Golf Club. It was a day full of buffets and fun golfing in sunny weather. Golf enthusiasts participated in the annual event in teams of four and supported AmCham’s Charitable Foundation through the sales of mulligan. Special thanks go to all sponsors for their generous support: American Airlines, Asian Tigers Mobility, Ernst & Young, Maxwell’s Clothiers, Modern Terminals Limited, Playmore International Limited, SinoGo Limited and W R Grace (Hong Kong) Limited.

EAGLE SPONSORS

Team winner Rustom Jokhi, Susan Marceau, Sandeep Sethi and Andrew Stanley

1st Runner-up

BIRDIE AND TRANSPORTATION SPONSOR

BIRDIE SPONSORS

GOLF SHIRTS SPONSOR

LUCKY DRAW PRIZE SPONSOR

Bradley Punu, Brad Kirk and Mike Hosokawa

2nd Runner-up Adam Grose, David Hogan, Andy Lai and Edward Ma

biz.hk 10 • 2012

REAL ESTATE

Mitigating High Occupancy Costs in Hong Kong’s Ever Challenging Office Market Lower margin business sectors, such as the insurance industry, are turning to alternative office strategies in order to satisfy their space requirements

By Rhodri James

ong Kong is often referred to as being Asia’s premier World City and one of the best locations on the global stage for doing business, and many studies and surveys are cited to back up these claims. It was awarded the highest level of globalization among the world’s 60 largest economies for the second consecutive year in 2011 by the Economist Intelligence Unit together with Ernst & Young, and it has been ranked as the “World’s Freest Economy” by the Heritage Foundation and The Wall Street Journal for the past 17 years. These are only two of the awards that InvestHK can call upon to promote Hong Kong as being open for business. CBRE also carried out a study on office occupier’s global footprint in 2011 and, perhaps unsurprisingly, Hong Kong had the greatest presence of global office occupiers. Another CBRE study on global office occupancy

costs also places Hong Kong at the top of the list of the most expensive office locations. These two results are no doubt related. Hong Kong office rents are expensive because more occupiers want to be here. A definition of economics that points to the allocation of scarce resources, in this case office space, is a key driver of rents in Hong Kong.

Decentralized options The supply of new space is the pressure release valve that helps control office rental levels. However, in Hong Kong the pressure continues to build and drive up rents. The opposite effect can be seen in a downturn as we are currently witnessing, where job cuts lead to reduced occupier demand and excess supply, therefore easing pressure and allowing rents to fall. Rest assured that when global turbulences

Photo: Thinkstock

ease then rents in Hong Kong will rise once again. However, it would be wrong to focus solely on the traditional core CBD around Central. Alternative non-core and decentralized office hubs have developed in recent years to provide occupiers, theoretically, with a range of options. For example, rents in Kowloon East are 70 percent below average rents in Central. However, these decentralized areas have become a victim of their own success, or indeed of an inefficient land supply policy. Cheaper rents have attracted occupiers from more central locations and vacant space has therefore steadily dwindled in decentralized areas. Over the last year, some landlords in the core CBD have struggled to re-let space and vacancy has therefore risen. It is worth considering that at the peak of the market in summer 2011 over 35 percent of all vacant space was located in Kowloon East and just 15 percent in

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Central. This situation has now been turned on its head as one third of all available office space can now be found in Central. Furthermore, in Hong Kong there are currently 21 buildings each with vacant space in excess of 25,000 square feet. Of this total, 18 can be found on Hong Kong Island, where rents are significantly higher than on the Kowloon side. While increased availability of office space is necessary for an economy to thrive and grow, problems arise when the space is not suitable for occupier requirements at a particular moment in time. As many of you are no doubt aware, large corporations have become very cost conscious. Demand has therefore shifted to more cost efficient areas while vacancy, particularly contiguous space vacancy, has risen in the most expensive locations. A measure of the acute nature of the problem is the fact that only three buildings in Hong Kong have 25,000 square feet available at a

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rent of less than HK$50 square feet/month. This may not be an issue for some high margin occupiers who are less cost sensitive. Hedge funds, fund managers and private equity firms will therefore continue to pay higher rents in Central. However, other lower margin, large occupiers are facing some considerable challenges in order to meet their space requirements.

Insurance sector The insurance sector is a good example of this, not only because it is a more cost sensitive business but also because it is one of few sectors which continue to expand and is currently struggling to find suitable, available space. The situation is exacerbated by the fact that, given the shift in demand, rents continue to rise in decentralized areas, such as in Kowloon East where the insurance sector has a heavy presence.

Operating off low margins, one must be able to build a long term business plan in order to cater for contingencies. Again, this is a challenge in Hong Kong due to the volatile nature of the rental cycle. Annual rental growth in Hong Kong is usually greater than +10 percent in an upswing and lower than -10 percent during a downturn. In fact, the market registers levels outside this range over 80 percent of the time. The corresponding figure for both London and New York is less than 70 percent and 55 percent respectively. The shorter lease term structure of three years on average therefore leaves occupiers exposed to potentially significant changes in rents. Moreover, long term security of tenure is also uncertain. To overcome these issues occupiers are broadening their horizons to locate in areas not traditionally associated with Grade A offices. Furthermore, we now see more companies actively considering the purchase of office space for own use. This provides not only security of tenure but also stability in regard to occupancy costs. Looking ahead, should global economic conditions improve we are likely to see many occupiers move from a risk-off to a risk-on situation and seek to expand their business in Hong Kong. Given the convergence of rental levels between core and decentralized areas, together with the availability of space in the CBD, we are likely to see a renewed focus on Central. However, vacancy should remain low across all areas as new supply of office space is forecast to be weak. Although uncertainty may persist over the coming months, the absence of a consistent mechanism to ease pressure in the market should provide support for rental levels going forward. Rhodri James is the Executive Director of CBRE Hong Kong Office Services – Editor’s note

HUMAN CAPITAL

Multinational Leadership Migration to Growth Markets By Seth Peterson

he accelerating trend for multinationals (MNCs) to move top executives, divisions, and even global corporate headquarters to growth regions, lured by potential in infrastructure, industrial, and consumer sectors, has wide-ranging implications. Clearly, the move to Asia is giving these senior global executives firsthand perspective, especially given the growing importance of the growth regions to the company’s sales and profits. And there’s the public relations dimension, demonstrating to governments, customers, and other key stakeholders the importance the company places on these regions. But it is the opportunity – and the imperative – to put leadership closer to the action and decentralize decision making that interests us most as leadership advisors. This task is not without significant challenges. Foremost is the need to ensure there are enough of the right types of leaders on the ground. It’s all about impact. Given the cost of sending a senior expatriate, it must be someone with the ability and authority to make impact – set direction, make decisions, take action on-site, and most importantly, to develop the company’s culture and people. Global leaders are thin on the ground, just when they are needed most. Nurturing talent and localizing leadership has always been a priority for the best organizations. GE chief executive and global chairman Jeff Immelt

says: "Building strong leaders is a strategic imperative, and when times are easy, leadership may be taken for granted. And when the world is turbulent, you appreciate great people.” In today’s turbulent global economy, the story now is the relocation of top executives – in some cases the CEO and the leadership team – and corporate headquarters or divisions. John Rice, CEO of GE’s Global Growth Organization, decamped to Hong Kong at the beginning of 2011 as part of the company’s effort to elevate the stature of its non-US business. Rice is passionate about his mission to shift the company’s leadership center of gravity away from the east coast US. Where previously 70 percent of GE’s corporate officers – the most senior operators running the businesses – were located on the East Coast of the US, that figure today is approaching 60 percent.

The migration trend This migration trend crosses all business sectors. Examples of recent moves include: • United States conglomerate GE (Global Growth & Operations division, or essentially everything outside the US, to Hong Kong; X-ray unit, to Beijing) • US-based Procter & Gamble (Skin, cosmetics and personal-care division, to Singapore) • Machine and engine manufacturer Caterpillar (Group President for Construction Industries & Growth

Markets, to Hong Kong, from Peoria, Illinois, to capitalize on the nearly 30 percent of total sales that were generated in the Asia Pacific region) • Japan's Nissan (Infiniti luxury automobile division global headquarters, to Hong Kong after evaluating cities including London) • France's Schneider Electric (Global leadership but not head office moved from Paris to Hong Kong) • Holland's DSM Engineering Plastics (Global headquarters, to Singapore) Rolls-Royce (Marine • Britain's headquarters to Singapore, to capture the increase in commercial shipping from Asia) • British accountancy firm KPMG (Global chairman based in Hong Kong rather than London or New York)

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As a result of the massive and ongoing expansion and the shortage of international leaders in growth markets, our clients are asking about:

Location China has become the most important growth market in the world, not just for sourcing or manufacturing, and selling, but increasingly for research and development (R&D) and innovation. For Tim Conlon, COO, Printed Circuit Board and Electro-Mechanical Assembly EMS, Viasystems, the move to Hong Kong was a no-brainer. “The majority of our operations are here (China), and it was no contest for Hong Kong — lower cost than Shanghai due

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to tax, and closer proximity than Singapore.” For the construction, mining, and power equipment powerhouse Caterpillar, the Asia Pacific region had become a larger part of the total business, and second largest in terms of headcount. According to Rich Lavin, Caterpillar Construction Industries & Growth Markets Group President, “China was growing month-by-month in importance, and it was felt that someone from the executive office needed to be here. When we set up our largest business (Construction Industries) in China, it sent a message to the governments and other stakeholders that we place such importance on our business in the region.” Anil Gupta, a strategy professor at University of Maryland and INSEAD and author of Getting China and India Right says: “By 2025, Asia will account for half of the world’s gross domestic product (GDP). Thus, the migration of top leaders to Asia will continue. However, leaders with regional or global responsibilities are more likely to be based in Hong Kong or Singapore than in mainland China or India. They need to focus on the entire region and the world objectively and not get overly focused on China or India.” Hong Kong and Singapore are the most common locations for global headquarters to-date, chosen for their amenities, ease of travel, and to facilitate a regional perspective. For regional or global executives, locating inside key markets like China or India, there’s a risk of getting too consumed in the local market.

The business structure Many of our clients grapple with finding the optimal structure, including the role of corporate versus business unit, the question is: “How can I pull together an umbrella corporate strategy so everyone’s pulling toward a corporate agenda while driving divisional objectives?” In our experience there is no one

size fits all, and in the growth regions periodic reviews and adjustments may be needed to align with growth and market dynamics, etc. A strong global leader from corporate can help with this agenda – by living and breathing the local dynamics they will have insight into what’s needed, and have the authority to implement it. And corporate must be an enabler. Corporate functional leaders in the growth regions must be the best, no longer focused primarily on government relations. These leaders must have operating exposure and understand how they can support the businesses to grow and meet/exceed the company’s goals and objectives.

Role of global leader As we see it, the role of the multinational leader in growth regions is clear: to lead not just the business at its current scale, but at what its potential could be in three to five years. In Rice’s words: “We do a lot of development, but the bar goes up…We can’t just have people that are good enough to do the job today. Everybody’s got to have another couple of gears.” He cites the examples of healthcare in certain growth markets where the potential for the company may be more than double its current size. Unlike the executive's "home ground" agenda which in many cases may be to demonstrate leadership and grow a division of the business while concurrently building a strong career path at headquarters, the growth agenda is different: • Decentralize decision making to the local leader to enable faster response time to customers and the market. This means having leaders with the right competencies, and for those who haven’t come up through corporate management programs, ensuring they are effectively integrated and enculturated in the company’s core practices and values, etc. to provide a framework or platform from which they can lead. • Lead by example, and humility • Look carefully at the organizational

design and the cultural "fit" of the different personalities • Create an environment where highpotentials are free to flourish • Take time to mentor team members individually, with side-by-side, not top-down, coaching (and engage external coaches as required) Such a role requires a leader to have the courage to engage on equal terms, practice active listening that will unlock the secrets of the local markets, and sometimes promote people a little early to allow them to learn from experience. While some have in the past maintained the Twitter-esque view that "leaders have followers," we prefer to say that "leaders create other leaders."

Obstacles to recruitment, development and deployment In our experience, factors that derail global bosses and their employers in Asia relate mainly to culture and family. Even returnee Asian leaders have trouble adapting after time away, and family disruption is not to be under-estimated. While GE's Jeff Immelt claims to have little sympathy for executives who are reluctant to relocate – “in 30 years I have moved with my family nine times” – the solution is often a matter of timing regarding children's schooling, and educating incoming executives on local issues and wider career benefits. One PRC returnee executive, seasoned in western capitalism and the latest management practices, told us: "When you arrive back home, you've got to be objectively mindful and respectful of the people around you – they are the incumbents. You need to work out how to harness their competencies with the skills you have developed elsewhere." The issue of Asian leadership is further complicated by a culture which does not promote the cult of the individual that we see in Western corporations. From a young age, Asian

children are taught to be “seen but not heard.” They dare not question or challenge authority, and they are not encouraged to make mistakes. Here, there is a right way and a wrong way to do things, and workers must wait for the bosses to give instructions. They also tend to pay deference to the highest authority in the chain of command. In such an environment, the best way forward is to develop a manager into a leader, and help them build their brand as a boss. Asians tend to follow the leader – so as the manager becomes a leader, the best people will tend to follow the new leader. Western leaders also need to understand that an Asia sojourn is now a vital part of their experience as a global leader. If they can lead well in the world's biggest and fastest-growing markets, their future prospects will be bolstered.

Closing the leadership gap Developing the leadership pipeline continues as a top objective, and challenge, for these companies, and is critical to their long term success. It’s no easy task in these remote locations, far from headquarters, to develop local leaders who understand the company, and have global perspectives. Adding to the challenge is the fact that talent in certain regions such as China, may not be open to international assignments, believing they’re already where all the action is. But those MNC executives, expats or local, expecting to advance their corporate careers must plan for this. In Lavin’s view, “No-one in China who expects to be a senior leader should expect to spend their entire career there. They must be willing to gain experience and perspective outside China to ensure leaders have as much diverse experience as possible.” The global economic balance of power is shifting to Asia and it would be a mistake for MNCs to believe the intellectual property that powers their expansion will continue to be generated

in their home country. As China and India become not only the largest markets on earth but also sources of innovation, the game continues to change. Identifying and developing on-the-ground talent through expert assessment of potential leaders is critical at this phase of development. External consultants, who bring a local and global perspective, will be invaluable. These consultants will be experienced in examining organizational structures and different cultural and work practices. They will also assist with mapping the external market. Companies growing regionally and globally are aware that their leaders need to be committed to growing the businesses, not just passing through. High-potential local executives on the way up are similarly weary of such sojourners and wary of western management-speak. "Walking the talk" and leaving behind something of value that is sustainable, is essential. While talent in the region will always be a combination of “build and buy,” the balance is now tilting to internal development, backed up by exemplar, sustainable and committed leadership from outside as needed.

Mark Your Calendar Nov

The Changing Face of Hong Kong Fashion Retail Dr Peter Lau, Chairman and Chief Executive, Giordano Int’l Ltd Hong Kong is as one of the world's premier shopping destinations for luxury fashion apparel. It is obvious that Hong Kong is experiencing a dramatic shift in its retail landscape, where a substantial expansion of stylish but affordable apparel stores as 'Fast Fashion' competes with haute couture for the city's brand image. How will these trends change the way locals and visitors think of Hong Kong, and how will it affect the fashion customers' shopping behavior? Dr Peter Lau will share his perspective on the current state of local fashion retailing. Dr Peter Lau has been Chairman and Chief Executive of Giordano Group since 1994, developing Giordano to become one of the best known and established apparel retailers in the Asia Pacific region. He had over 12 years of management and accounting experience in the private and public sectors in Canada before joining the Group in 1987. While in Canada, Dr Lau obtained B Com, MBA and two accredited accounting memberships. Since returning to Hong Kong, Dr. Lau has also attained a DBA degree and Master in Buddhist Studies from local universities.

Moving Toward a Consumption Society:

Nov The New 5 Year Plan and its Impact on Recruiting

Senior Executives in China

Vanessa Moriel, Managing Director, AIMS International The 12th Five-Year Plan (FYP) ratified in March 2011 set the tone for a restructuring of the Chinese economy away from major investment projects and toward increased national consumption. These reforms are changing the conditions under which foreign businesses operate inside China, creating difficulties but also opening up new opportunities. Throughout her international career in Europe, Asia and the Americas, Vanessa Moriel has helped a number of firms in the Retail & Luxury, Automotive and Industrial sectors to build strong teams. For more than a decade, she has been conducting executive searches in Asia and the Greater China region helping some of the world’s largest multinationals extend or turn around their operations. Vanessa lived in Asia for over 12 years and spent almost seven years in Shanghai where she founded Human Capital Partners (HCP), an executive search company, in 2004. HCP quickly became one of the leading players for searches in Retail & Luxury, Automotive and Industrial sectors in China. In 2007, HCP integrated AIMS international, the world's largest executive search organization. In 2008, she became the Asia-Pacific Board Member for AIMS International and moved to Hong Kong.

Building the World's Leading Airline:

Nov United's Response to a Changed Airline Industry

28 Seth Peterson is a Principal with Heidrick & Struggles in Hong Kong. He specializes in senior executive roles in the Industrial Practice in Asia Pacific, with a focus on the Greater China market. He is also a member of the Consumer Markets Practice in APAC. Seth can be reached at speterson@heidrick.com

Jeff Smisek, President and CEO, United Continental Holdings, Inc Jeff Smisek will discuss the challenges and opportunities the airline industry is facing today, and how United is adapting to meet these changing industry conditions as well as the importance of the Asia/Pacific market to United's global network. Together with their regional partners, United operates a total of approximately 5,675 flights a day to 372 airports on six continents. Jeff Smisek is President and CEO of United Continental Holdings, Inc and a member of the Board of Directors. He was previously Chairman, President and Chief Executive Officer of Continental Airlines, Inc. He joined Continental in 1995 as Senior Vice President and General Counsel and in 2004 became President and was elected to the company’s board of directors before becoming President and Chief Operating Officer in September 2008 and assumimg the role of Chairman, President and CEO in January 2010. Smisek graduated from Princeton University, AB summa cum laude in economics in 1976, and Harvard Law School, JD magna cum laude in 1982. He serves on the board of directors of the Baker Institute, the Museum of Science and Industry and National Oilwell Varco, Inc. He was also named Aviation Week’s Person of the Year for 2010.

For information, see website: www.amcham.org.hk

biz.hk 10 • 2012

2012 Nov

Tel: (852) 2530 6900

Fax: (852) 2810 1289

Venue: Venue: Renaissance Harbour View Hotel Oasis Room (8/F) 1 Harbour Road, Wanchai, Hong Kong Time: 12:00 - 2:00pm Fee(s): Member Fee: HK$520 Non Member Fee: HK$620 Corporate Table Fee: (10-12pax): HK$6,300

Venue: AmCham Office 1904 Bank of America Tower 12 Harcourt Road, Central Time: 12:00 - 2:00pm (sandwiches & beverages) Fee(s): Member Fee: HK$250 Non Member Fee: HK$350 MEDIA WELCOME

Venue: Conrad Hong Kong Granville Room (Lower Lobby) Pacific Place 88 Queensway, HK Time: 11:45 - 1:30pm Fee(s): Member Fee: HK$520 Non Member Fee: HK$620 Corporate Table Fee: (10-12pax): HK$6,300

Email: kalau@amcham.org.hk

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