biz.hk Aug 2013

20 13 ’s

“W GU IN ID E ET & O DI NE ”

Journal of The American Chamber of Commerce in Hong Kong

www.amcham.org.hk

August 2013

GROWING INFLUENCE OF

THE CHINESE MIDDLE-CLASS CONSUMERS

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of Influence The American Chamber of Commerce in Hong Kong and the South China Morning Post proudly present the 10th Anniversary of the Women of Influence Awards. Once again we are seeking exceptional female executives who continue to make an outstanding contribution at the highest levels of Hong Kong's business world. In addition, we are excited to announce a new award category for 2013, “Leading Woman on Boards�. This new award will be presented to a woman who is currently sitting on the board of a company listed in Hong Kong or on an international exchange. The awards will be presented at the Women of Influence Conference and Awards 2013 on November 8, 2013 at the Four Seasons Hotel Hong Kong.

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1. Professional of the Year 2. Entrepreneur of the Year 3. Master in Charity 4. Leading Woman on Boards (NEW) 5. Champion for the Advancement of Women 6. Best Company for Women It only takes 10 minutes online: www.amcham.org.hk/woi Deadline: Wednesday, September 18, 2013

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August 2013 Vol 45 No 8

Contents

Richard R Vuylsteke

Editor-in-Chief Daniel Kwan

Managing Editor Kenny Lau

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08

Publisher

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24

COVER STORY

ICT

US POLITICS

TRADE & INVESTMENT

The phenomenal growth of the Chinese middle class leads to a wave of economic changes and social transformation both inside and outside of the country, indicated in a recent HKTDC study on their growing influence and spending behavior

Jack Lee, Corporate VP of Lenovo, talks about the past, present and future of the world’s largest PC maker and what it means to be a global brand of Chinese heritage

US Representative Charles Rangel of New York talks candidly about current political and economic issues in the US including the likelihood of a US tax code reform

The on-going negotiation among 12 countries on the Trans-Pacific Partnership (TPP), a proposed multilateral free trade agreement, and how it will affect market access

Advertising Sales Manager Regina Leung

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

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

Advertising office 1904 Bank of America Tower 12 Harcourt Rd, Central, Hong Kong Tel: (852) 2530 6900 Fax: (852) 2537 1682 Email: amcham@amcham.org.hk Website: www.amcham.org.hk Printed by Ease Max Ltd 2A Sum Lung Industrial Building 11 Sun Yip St, Chai Wan, Hong Kong (Green Production Overseas Group) Designed by Overa Creative Co Unit 1613, 16/F Workingbond Commercial Centre 162 Prince Edward Road West, Kowloon ©The American Chamber of Commerce in Hong Kong, 2013 Library of Congress: LC 98-645652 For comments, please send to biz.hk@amcham.org.hk

AMCHAM NEWS AND VIEWS 04 Editorial

CHINA BUSINESS 18 Huai’an City Kicks Off Mayor-Series Luncheons

AmCham reinforces its message that the current US tax system on Americans living and working overseas is hurting US interests and making it nearly impossible for expatriates to compete on a level playing field with other nationals

07 New Business Contacts 75 executives joined AmCham’s business network last month

41 Mark Your Calendar

HEALTHY LIVING 32 Being Mindful

Party Secretary of Huai’an City of Jiangsu Province Yao Xiaodong leads a delegation to Hong Kong and holds a joint business luncheon with AmCham

REAL ESTATE 20 Adding China Properties to Your Shopping Cart

Founder & Executive Director of the Center for Mindfulness at UCSD, Steven Hickman, visits Hong Kong with a cure for the city’s stressful and hectic lifestyle

INSURANCE & HEALTHCARE 36 Share the Healthy Secrets The story of Feisal Alibhai, from owing a multinational FMCG company to surviving stage-three cancer and founding Qineticare to help others safeguard against diseases

Christopher Dillon describes buying and owning property in China in his new book entitled Landed China, an all-you-need-to-know guide for foreigners and locals alike

COVER STORY 08 Growing Influence of the Chinese Middle-class Consumers The phenomenal growth of the Chinese middle class leads to a wave of economic changes and social transformation both inside and outside of the country

INFORMATION & COMMUNICATIONS TECHNOLOGY 14 A Global Brand of Chinese Heritage: Lenovo Jack Lee, Corporate VP and GM for Hong Kong, Macau, Taiwan and Korea at Lenovo, talks about the past, present and future of the world’s largest PC maker

NETWORKING

US POLITICS 24 Charles Rangel on Tax and Politics Representative Charles Rangel of New York talks candidly in an interview about current political and economic issues in the US including the likelihood of a US tax code reform

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AmCham Monthly Networking Drinks More than 170 guests gather for an evening event hosted by AmCham’s Sports & Entertainment Committee and Hospitality & Tourism Committee

TRADE & INVESTMENT 28 TPP a Reality by Year-end?

The on-going negotiation among 12 countries on the TransPacific Partnership (TPP), a proposed multilateral free trade agreement, and how it will affect market access

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

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COVER SPONSOR

biz.hk Editorial

Board of Governors Chairman James Sun Vice Chairman Peter Levesque Treasurer Tom Burns Executive Committee Evan Auyang, Janet De Silva, Anita Leung Philip Leung, Belinda Lui, Alan Turley Richard Weisman Governors Sara Yang Bosco, Brian Brenner, Ewan Copeland Walter Dias, Rob Glucksman, Toby Marion Thomas Nelson, Catherine Simmons Colin Tam, Elizabeth L Thomson Frank Wong, Eden Woon Ex-Officio Governor President

Robert Chipman Richard R Vuylsteke

Chamber Committees AmCham Ball Apparel & Footwear China Business Communications & Marketing

Rex Engelking Colin Browne Seth Peterson Lili Zheng Roxana Daver

Corporate Social Responsibility

Robert Grieves

Energy Entrepreneurs/SME Environment

Rick Truscott Donald Austin Courtney Davies Corey Franklin Brock Wilson Veronica Sze Damien Lee Peter Liu

Financial Services Food & Beverage Hospitality & Tourism Human Capital Information & Communications Technology Insurance & Healthcare

Rex Engelking

Owen Belman Hanif Kanji Intellectual Property Gabriela Kennedy Amy Lee Law Clara Ingen-Housz Pharmaceutical Stephen Leung Real Estate Neil Anderson Alan Seigrist Senior Financial Forum Alvin Miyasato Senior HR Forum Jacqueline Algar Sports & Entertainment Ian Stirling Taxation David Weisner Trade & Investment Patrick Wu Transportation & Logistics Jared Zerbe Women of Influence Anne-Marie Balfe Anna-Marie C Slot Young Professionals Alison Carroll

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A TAXING ISSUE

W

hat do people such as Campbell Sean Gordon, Holland Laura Elizabeth, and Nelson John Stuart have in common? They are, according to information published by the US Treasury, three of the 1,809 Americans who have chosen to “expatriate” – the IRS’s way of saying giving up US citizenship – in the first half of 2013. Although the Treasury data does not explain the reasons for expatriation and there can be many, the cumbersome US taxation system is generally said to be a key culprit and to blame for prompting more and more Americans to say “No” to Uncle Sam. According to Andrew Mitchel, an international tax attorney who practices in Centerbrook, Connecticut, and keeps track of the renunciation data, 1,130 names were on the expatriation list in the second quarter of 2013, up significantly from 679 in the first three months of this year. If the trend continues, 2013 can easily see a doubling of the previous high of 1,781 renunciations reported in 2011.

Coincidentally, the surge of renunciation has not gone unnoticed. In reporting the latest spike, The Wall Street Journal says this: “The increase in renunciations is one sign that

ordinary Americans who have lived and worked abroad for years, as well as green-card holders in the US and overseas, believe they are at growing risk because of the intensifying government pursuit of undeclared foreign assets.”

A few days later, Ken Moelis, a New York-based investment banker, wrote in the same newspaper: “Why are Australians and British – whose home populations and GDPs combined are approximately one-fourth as large as America’s – so often Hong Kong or Singapore residents, while most Americans are visitors?” He went on to explain that Americans (if they earn more than US$400,000) could pay as high as 39.6 percent of their income if they live in Hong Kong. This compares to just the 15 percent Hong Kong tax a British national needs to pay in the same situation.

“That financial disincentive may be the difference between establishing a real beachhead and working relationships in overseas economies or trying to make due with short-timers and business tourists,” Mr Moelis wrote.

The American Chamber of Commerce in Hong Kong has lobbied Washington for years to fix the way

biz.hk 8 • 2013

overseas Americans are taxed. In recent years, its lobbying efforts have expanded to stress that the US needs to simplify its tax code and reporting procedures. In order to comply with US tax requirements, Americans abroad – even if they are not wealthy and earn less than the taxable threshold – usually have to pay lawyers and accountants to file their tax returns and various compliance reports. Such filings are costly (possibly $1,000 a year or much more) and they really benefit nobody except the filers.

AmCham raised the issue (and will do it again and again) of US tax when a delegation of the US Congressional Black Caucus stopped by in Hong Kong in August. They heard the same message AmCham delivered in June during the Chamber’s annual Washington Doorknock trip. That message is clear: The current US tax system – specifically the Citizenship-Based Taxation, which means Americans are taxed by the US government no matter where they live – is hurting US interests and should be changed. The plea has not yet driven corrective action, but the message will be delivered at every opportunity. US tax policies make the United States less competitive overseas. Corrective action is needed.

biz.hk 8 • 2013

5

New

Business Contacts

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

The following people are new AmCham members: Adidas Sourcing Limited John McNamara Vice President, Sourcing Global Operations

Ernst & Young Christopher Finnerty Asia Pacific Tax Desk Leader

American Bureau of Shipping Richard Pride Division President & COO Kwok Wai Lee Vice President - Operations Michael Michaud General Manager

EXS Capital Jessica Cutrera Managing Director Heather McLeish Executive Director Eric Solberg CEO

Art Futures Group Jon Reade Managing Director

ExxonMobil Energy Ltd David Moore Chairman & Managing Director

Artlink Design Associates Ltd Debbie Tang Business Development

GE Capital Michael Hensinger Chief Commercial Officer, Structured Finance Jonathan Wainberg Managing Director and MNC Sales Leader, Structured Finance

Asco General Supplies (FE) Ltd Timothy Cotton Chief Operating Officer Blue Ocean Strategy Co Ltd John Ngai Managing Partner CBRE HK Ltd Sara Snyder Director, Head of Marketing & Communications, Asia Charles Schwab HK Ltd Elisa Lieu Vice President, Financial Consultant

Golien Ltd Helen Chan Business Operations Manager Grand Future Group Limited Xing Gang Chen Director Linda Tse International Trading Specialist Ying Ma Vice Manager

Over 500 pages in three major sections, including a complete guide to chamber services, corporate sponsors and AmCham Charitable Foundation. This directory lists over 1,800 members from over 700 companies and organizations.

CLS Communication HK Ltd Mei Lee Business Development Manager Frank Wong Senior Business Development Manager

Hallmark Cards (HK) Ltd Lisa Beel Global Procurement Manager - Hallmark International & Greetings Subsidiaries Elizabeth Ward Managing Director - Asia Pacific

ISBN 978-962-7422-18-1

CMA Industrial Development Foundation Limited Arthur Lam General Manager of Business Development

Hill & Associates Ltd Steven Chon Vice President, Business Development, Hong Kong, Country Manager, Korea

COACH Hong Kong Limited Sandra Preyale SVP, Human Resources Yann Bozec General Manager Coach Asia

Hong Kong University of Science & Technology Sean Ferguson Associate Dean of Master's Programs, Director of MBA Programs

CSI Leasing (HK) Ltd Kevin McLaughlin Business Development Manager

Human Factors Consulting, Inc Charlie Atkinson President

Deutsche Bank AG, Hong Kong Branch Nancy So Managing Director

InterContinental Grand Stanford HK Sharon Tam Director of Sales & Marketing

Dick's Sporting Goods International Ltd Kathleen Trainor Vice President/Managing Director

jba consulting engineers Ella Liu Marketing Assistant - Asia Pacific Gilbert Lennox-King Business Development Manager Derek Sands COO - Asia Pacific Dwayne Miller CEO

LC 98-645651

eBay Hong Kong Steven Liew Associate General Counsel, eBay Inc. Asia Pacific Government Relations Li Jun Jia Director, Government Relations Jamie Shen Government Affairs Eli Lilly Asia, Inc Eunice Kim Senior Director of Corporate Affairs & Market Access John Kuckelman General Counsel Howard Lin Ethics & Compliance Officer Jannie Oosthuizen President Libby Driscoll Chief Marketing Officer Emerson Electric Asia-Pacific Por Lau General Manager, Emerson Network Power

Jimmie K S Wong & Partners Jimmie Wong Principal Partner K&L Gates David Johnson Registered Foreign Lawyer Kingdee International Software Group (HK) Ltd Edward Lau Deputy General Manager, Asia Pacific KPMG Melissa Asaf Senior Manager, US Corporate Tax Leancor LLC Andrew Tan Director

Lewis Communications Limited Cheris Lee Account Manager Andrea Friedman Senior Account Executive LGS Hong Kong Limited Anita Lo Director of Sourcing Maersk Hong Kong Ltd David Kennedy Jr Head of Field Sales and Trade Lane Management, Damco HK Ltd Manifest Marketing Limited Bryan Scot Van Dale Managing Director MetLife Michael Chiu Director - FP&A Modern Terminals Limited Vivian Tso Chief Financial Officer Molson Coors Brewing Company Matthew Hook Senior Director, Supply Chain Asia Pacific Motorola Solutions Asia Pacific Limited Stanley Cheung Country President Oakley Inc Stan Burton GM Supply Chain Asia AFA Otis Elevator Co (HK) Ltd Anisa Yu Director, Hong Kong, Macau and Taiwan Pitney Bowes Hong Kong Limited Chappy Satoh Managing Director Rediscovered (Cayman) Limited Michael Davies Vice President, Real Estate Robin Chappelle Director of Sales Andrzej Cetnarski Founder, Chairman, CEO Regus HK Management Ltd Frank van Bemmel Commercial Director - Hong Kong Richard Ivey School of Business (Asia) Chris Chan Regional Director & Professor in Residence, Executive Development Stanton Chase International (Greater China) Mark Willett Search Director Stryker Pacific Ltd / Asia Pacific Division Geoff Miller Vice President, Chief Financial Officer Telstra International Group Darby Doll Senior Advisor Tiffany & Co Erica Kerner VP - Marketing, Asia Pacific Yew Chung Education Foundation Limited Wai Yee Cheng Assistant Director

View our other members at: http://www.amcham.org.hk/index.php/AmChamMembers.html biz.hk 8 • 2013

7

COVER STORY

T

he latest result of a research by the Hong Kong Trade Development Council on Chinese middle-class consumers doesn’t really surprise Pansy Yau, its Deputy Director of Research (Greater China). Instead, the findings are more a confirmation of a well-known fact.

Nevertheless, it is still a mind-boggling conclusion: China’s middle-class consumers are virtually unstoppable.

The HKTDC study, published in July, is a continuation of a series of studies carried out by the trade promotion agency since 2003. In 2009, HKTDC researchers already found that Mainland middle-class consumers were growing fast. Today, they are multiplying by the millions. For western brands and retailers, the China market is no longer optional but critical. “Bearing in mind the current economic environment in the US and Europe, the China market is a must for companies looking for growth,” says Yau.

Growing Influence of the Chinese Middle-class Consumers

Tall figures The figures are truly staggering. In 2009, Mainland middle-class consumers on average earned RMB3,941 (roughly US$577 using 2009 exchange rate) a month. In just three years, the monthly income of an average Chinese middle-class consumer has reached RMB6,439 – up a whopping 64 percent.

In terms of household income, the increase is equally impressive: 36 percent. (see chart) The HKTDC findings closely match similar studies by other research institutes and consultancy companies. In an often quoted report titled Mapping China’s Middle Class in 2010, McKinsey found that China’s middle class consumers not only earn more, their size is growing at an explosive rate. Based on extensive surveys conducted across China, McKinsey researchers projected that by 2020, 75 percent of China’s urban consumers will earn RMB60,000 to 229,000 (US$9,000 to $34,000) a year.

“In purchasing-power-parity terms, that range is between the average income

The phenomenal growth of the Chinese middle class is bringing sweeping economic change and social transformation to the country and to the world. A recent study published by the Hong Kong Trade Development Council sheds new light on the growing influence and spending behavior of Chinese middle-class consumers. Daniel Kwan reports

Photo: Thinkstock

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of Brazil and Italy. Just four percent of urban Chinese households were within it in 2000 – but 68 percent were in 2012,” the McKinsey report says.

Such breathtaking growth – in both spending power and size – clearly has a strong impact on business. It is now clear that China is both the “factory of the world” and the “market of the

fourth-tier cities.

The geographical spread is also confirmed in the HKTDC study, which finds that although a gap exists between top-tier and lower-tier cities in terms of spending power, consumers in third-tier cities such as Changzhou (which borders Nanjing in Jiangsu Province to the west) are not

Average monthly personal income

2009

2012

3,941 RMB

6,439 RMB

CHINA’S RAPIDLY GROWING MIDDLE-CLASS CONSUMERS Average monthly household income

2009

2012

9,888 RMB

13,484 RMB

world.” Brands, retailers, and a host of other related businesses not just source from China but also are competing to open shops and branches across the country. In fact, foreign brands which a decade ago used to target only first-tier Chinese cities like Beijing and Shanghai are now branching out into second-, third-, and even

far behind. Moreover, the study notes that in spite of the rapid development of inter-city transport such as highspeed trains, the majority of Chinese middle-class consumers are shopping locally. This means that the retailing environment and quality of services in second- and third-tier cities in China are improving rapidly, so retailers and

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Pansy Yau

brands need to go the extra mile to reach them.

“Most local consumers can find almost everything in their city and they don’t need to travel to the top-tier cities to shop. So for businesses that want to reach out to a larger number of consumers, I don’t think you can target the regional centers. You have to go further down to the lower-tier cities,” Yau says. (for more details of the HKTDC survey, see summary on Page 12)

Bricks and mortar, social media Oliver Rust, Managing Director of Nielsen Hong Kong, is another frontrow observer of the rapidly changing consumption market in China. Rust, who was based in Shanghai for a total of nine years before he was relocated back to Hong Kong in 2009, says surveys on Chinese consumers by Nielsen indicate three new trends.

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Conducted in April, the Nelsen surveys interviewed over 870 people who lived in first- to third-tier cities.

The first of these trends is a clear rise of female consumers and their influence. Mainland women are not only increasing their wealth at a rapid pace, they also increasingly make purchase decisions for themselves, their spouses, and their families.

On certain product categories for men like skin-care products, Chinese female consumers now decide to buy or not to buy even though they are not the ultimate endusers.

The second observation that may have special relevance for financial products is that Chinese consumers focus much more on “individual” wealth accumulation compared with “family” or the “we” as in previous generations. “Now, it is becoming much more individualistic as ‘I’,” Rust says.

The third point is that Chinese consumers are seeking information in ways that are not available just a few years ago. A key channel that Chinese consumers rely on for information is obviously the social media that has grown by leaps and bounds in the past decade. Chinese web networks like Weibo and WeChat are having an immense influence on consumers and how they tweet and share their experiences.

“From a marketing point, how do you engage the consumers on that platform to make them aware of your products and then move that relationship from being aware of your products to another location – be it social networking sites or the host sites – so that you can actually build the relationship? This is highly critical,” Rust says.

“The fundamental shift here is to go from just understanding who your customer is, to who’s buying your products. I make that specific distinction because they can be two very

different sets of customers,” he adds.

Just like in the brick and mortar world, adaptation is the key in China’s e-commerce marketplace. Western brands need to think twice in “transplanting” their host market platforms when they enter the China market.

“In the e-commerce world you can’t just take the platform that you have somewhere else and dump it in China … You have to adapt the products, adapt the positioning, the messaging, and the marketing to the consumers,” Rust says.

“If you are an international manufacturer and you want to compete in the marketplace ... my advice is to be sure to do your research.”

The bottom line is really about going back to the basics: Understand your customers. As examples, take Chinese e-commerce market leaders like Taobao, T-Mall, and yihaodian.

Rust says Chinese e-shoppers prefer their “messiness” where the display of products sometimes can be a bit disorderly and random compared with the neat and tidy presentation that has been a hallmark of western e-retailers like Amazon. “You need to understand that ‘messiness’ works in China,” he says.

From analyzing Chinese middleclass consumers’ tastes and behavior, Yau says HKTDC researchers find that they have become increasingly sophisticated and demanding.

Although they continue to favor international brands, a significant portion has expressed interest in trying out trendy and novel items. Niche brands increasingly appeal to middle-class

biz.hk 8 • 2013

consumers who put more emphasis on inner qualities, character, and sales services.

Hong Kong’s edge Meanwhile, the HKTDC research confirms that Mainland’s middle-class consumers continue to look to Hong Kong as trend-setting. That is particularly true in fashion and consumer electronics. According to the survey, 50 percent of the respondents say that their “outfits/lifestyles/pastimes” are influenced by Hong Kong trends.

“This actually gives Hong Kong brands and manufactures an edge in entering the China market because Mainland consumers do see Hong Kong as the trend leader,” says Yau. In order to overcome the geographical challenge in China, businesses need to choose their target markets carefully. This is especially true for SMEs. For foreign companies that are new to China, Yau urges them to find a Hong Kong partner before taking the plunge considering the complexity of doing business in the Mainland market.

“Basically for SMEs, it is unrealistic for them to set up a countrywide sales network,” Yau says. “They must concentrate their resources. For example, we always say that for SMEs in Hong Kong – if you want to target the China market – you better go to the Pearl River Delta first because these people understand Hong Kong better and it would be easier for retailers and brands if they can reach the frontline shops and be able to manage the operation there, take care of the final fulfillment, inventory control, and so forth.”

even outsmarted – their western counterparts.

“If you are an international manufacturer and you want to compete in the marketplace, you are competing against other international companies and against more sophisticated local companies. If you want to win in that environment, my advice is to be sure to do your research,” Rust says.

Given the sheer size of the country and differences among the regions, it’s imperative for businesses to be selective and focused. Yau stresses that a well thought-out strategy based

on good market research is essential for businesses to compete in China today. In that regard, the HKTDC is undoubtedly a useful resource for market information in China.

Rust echoes Yau’s point: “For any international brands that have moved into China without doing research, the failure rate triples that of doing it successfully with research. What we also see is that the chance of a product succeeding in China is reducing.

Therefore the need for information for success is even more critical today than it ever has been.”

Oliver Rust

Do your homework Unlike a decade ago, western brands today are not just competing among themselves for Chinese consumers but also with a growing array of local Chinese brands that not only enjoy home turf advantage but also have learned and copied from – or

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A short clip produced by the HKTDC on the middle-class survey is available on http://youtu.be/TkX72Epzrno. - Editor’s note

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y r a m m Su

KEY FINDINGS OF HKTDC’S SURVEY ON CHINESE MIDDLE-CLASS CONSUMERS Among branded products, middle-class consumers have a penchant for imported brands and joint-venture brands. 52% of the respondents agree that “I prefer imported products to domestic products even though the price is higher” while 60% agree that “I prefer joint-venture products to domestic products even though both are produced on the mainland”.

The mainland middle class shows a stronger disdain for fakes, which is a favorable factor for Hong Kong companies trying to build up their own brand name or introduce suitable foreign brands into the market.

The middle class is still as enthusiastic about international brand name products as ever. 81 % of respondents have bought international brands in the past year, while 37% have bought luxury products costing more than their monthly personal income. Among the different types of international brand name products purchased in the past year, garments rank first based on mention rates (74%), followed by footwear (57%), electronic products (41%), and handbags/wallets/luggage (40%).

Social networks have a definite influence on consumption. 58% of the respondents agree that “I would make use of instant-messaging software or social networks to share my good or not-so-good experience in consumption” while 63% agree that “I believe in products recommended by people I follow on Weibo and WeChat and am interested in giving them a try".

Mainland middle-class consumers generally have positive perceptions of Hong Kong, including its reputation as a fashion capital and strict government oversight. 84% of the respondents agree that “Hong Kong is the place of origin of fashion trends and the trendsetter”; while 50% of the respondents say that “my outfits/lifestyle/pastimes are influenced by Hong Kong trends”.

Source: Hong Kong Trade Development Council.

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INFORMATION & COMMUNICATIONS TECHNOLOGY

J

ack Lee still remembers vividly a cartoon illustration that he saw in a Chinese newspaper more than eight years ago: a snake with an elephant digesting in its stomach. It was not exactly the famous drawing from The Little Prince, but a variation of it that made a mockery of Lenovo’s bold move to acquire technology giant IBM's personal computer business in late 2004.

“The message was that Lenovo had bitten off more than it could chew.

Obviously the elephant was IBM,” recalls Lee, who was at the time with Microsoft as deputy general manager. “[The acquisition was] absolutely a shocker. I was absolutely skeptical myself.”

Skepticism, confidence Jack Lee

A Global Brand with Chinese Heritage: Lenovo It has often been said that there are really only a handful of Chinese brands that are truly global companies. Lenovo, currently the world’s biggest PC maker, is certainly one of the few. How did Lenovo get to where it is? Jack Lee, Corporate Vice President of Lenovo Group, and General Manager of Hong Kong, Macau, Taiwan and Korea, shares with Shirley Lau Lenovo’s past, present and future

Lee was not alone in his skepticism. When it was announced in December 2004 that Lenovo would buy IBM's PC unit for US$1.75 billion, many industry analysts cast doubt over the Chinese company’s ability to rise to become a global player. “I still remember that HBS (Harvard Business School) did a business case on Lenovo,” Lee says. “The conclusion was that the acquisition would not be a success. Lenovo has proved them wrong years later.”

Indeed, fast-forward to 2013 and many eyebrows are being raised at Lenovo’s latest success. For the first time, the company has become the biggest PC maker in the world, with PC shipments in the first fiscal quarter of 2013 outperforming the industry for the 17th quarter in a row. Lenovo is now also the world’s third largest supplier of smart-connected devices, including smartphone, tablet and PC products, following Samsung and Apple. In mid-August, the group announced that its latest quarterly gross revenue was up 10 percent yearon-year to US$8.8 billion.

Unlike the IBM deal, the latest business development has not surprised Lee, now corporate vice president and general manager of

Lenovo overseeing the Hong Kong, Macau, Taiwan and Korea markets. He could see that coming long before he joined Lenovo, which he says has grown to become a “PC-plus company that has a passion for innovation and technology”.

“Yes, I was at first skeptical, but once I got to talk to [Lenovo’s then chairman Yang Yuanqing], learn about his plan to develop the business and feel his determination, the more confidence I had in the success of the company. And that was eight years ago,” he says.

Protect-and-attack The key to Lenovo’s success, according to Lee, is attributable in no small part to its “protect-and-attack” strategy, embraced by Yang, who became chief executive officer of the company in 2009.

“It is a clear and simple strategy,” Lee says. “We protect certain part of our business – the ThinkPad business in which we’ve always had a big clientele. Then we take the profit and the momentum we’ve gained there to invest in areas that we need to attack, which is retail and consumer at which we are not as strong as our ThinkPad heritage. We also take the returns we have made in China to invest in countries that we traditionally have not been strong. So we protect our business in China and attack [markets] like the Middle East, Africa, Europe and even America.”

The company’s “end-to-end business model” also matters a great deal. “We are in control of our design, manufacturing, sales and after-sales delivery. In this way, you have complete control of everything from the design to the cost. If you are not involved like this, it means you’re outsourcing to different folks. That’d be a very different game.”

Global player It is practically part of the job of a company vice president to wax lyrical about the company’s achievements in a

press interview. But then, Lee has no qualms talking about the constraints and concerns facing Lenovo either. He readily admits that the PC is “not a very creative industry” compared with car design for Mini Cooper and BMW and therefore it takes a lot of convincing to lure creative people to work for Lenovo. He is matter-of-factly when he says Lenovo “will never have the kind of budget” that Apple and Samsung have for advertising. He also says he had conflicting feelings when he learned of Lenovo’s number one position in the PC market a few months ago. “I thought I should be doing cartwheels, but I genuinely had mixed emotions. Yes, we are number one, but we are number one in an industry that is declining!” he exclaims.

“I think myself is an example. I have my Chinese roots. I am very, very much Chinese, but I also have been to many places.

I’d like to make sure my folks get [the concept of] globalization.”

This sort of openness and willingness to touch on the less bright side of things is perhaps not what you would expect of a top executive from a company of mainland Chinese origin.

But then Lenovo does not position itself as a typical Chinese firm. It aspires to be “a global brand with Chinese heritage”, as Lee says. This is why it follows a localization strategy, whereby a significant amount of locals are hired to run Lenovo’s offices in different parts of the world.

Photo: Brian Production Ltd

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“We really invest in getting Egyptians to run the business in Egypt and French people in France,” says Lee, who was previously based in Dubai before joining the Hong Kong office in October 2012. Yang, who spoke little English at the time of the IBM acquisition, even moved his family to the US following the deal to deepen his appreciation of American culture.

Another factor behind Lenovo’s success that has eluded other big Chinese companies, according to Lee, lies in its proactive approach to acquisition of foreign companies as a form of long-term investment. In 2011, the brand bought German computer company Medion to bolster its profile in Europe. The same year, it entered a joint venture with NEC to sell PCs in Japan. In 2012, it bought CCE, Brazil’s largest computer firm, in order to expand its share in what it regards as a high growth market. It is also opening factories in markets including the US. “If you look at our revenue, you’ll see we’re different from other Chinese brands in that 60 percent of our revenue comes from outside China. This may be a shocker to some people and it in itself is the definition of going global. You cannot call yourself going global and only have 10 to 15 percent of your revenue coming from outside of China,” Lee says.

“Two to three years ago, our Chinato-worldwide revenue ratio was probably 70 to 30 percent. Today, it is 40 to 60 and we continue to evolve that.”

father of two young twins, he has a strong family value. He sees Lenovo as “a venue to provide stability for family” and therefore it is a part of his family. He places importance on being a good role model for his staff members, as he believes in “being the parent

way, people will open up. It’s very fun,” Lee says.

The “young and fun atmosphere” Lee tries to create in the office is part of his effort to build Lenovo as a premium young global brand with Chinese heritage. “We’re well on our

One part of this plan has involved consolidating different Lenovo advertising campaigns into one major campaign that began two years ago.

“That was important because everyone knows what ThinkPad is but not everyone knew what Lenovo was,” Lee

But it is a concern, too, in view of the downward trend of the PC market.

According to consultancy Gartner, worldwide PC shipments in the second quarter of 2013 dropped 10.9 percent year-on-year to 76 million units. This marks the fifth quarter in

of my work family”. Lee also makes an effort to bond with everyone in the office. “I do bonding by eating. I buy junk food for every corner of the office.

It gives me a reason to go to those corners, talk to my folks and eat with them. Who likes to go to lunch with the boss? But when you do bonding this

way. I would like to see this happen within the next 12 to 18 months. Our business is all about speed and velocity. We have the right strategy in the right place and the right people. We have the sexy products that come with it. We just need to reach out to the folks.”

says. Apparently the campaign has paid off. “I still remember that two years ago when I was in the Middle East promoting Lenovo, people were going ‘Lenova, Leno … who?’. But now it’s very different. I think being the number one [PC vendor] really helps.”

a row of declining shipments, which is the longest period of decline in the PC market’s history.

Young and fun Born in Singapore to Chinese parents and educated in Vancouver, Lee sees himself as somewhat the embodiment of Lenovo’s global image. “I think myself is an example. I have my Chinese roots. I am very, very much Chinese, but I also have been to many places. I’d like to make sure my folks get [the concept of] globalization.”

Over the past two decades, work has taken Lee to live in places including Japan, India, Beijing, and Dubai. A

16

biz.hk 8 • 2013

biz.hk 8 • 2013

A new sandbox Lee is aware of the problem but is optimistic. He says: “The PC industry

is declining but it’s not going to be dead. It’s just like five years ago when people were saying the desktop was going to be dead and everyone would switch to laptop. Anybody who tells you PC is going to die is ridiculous. It’s just that the growth is not as explosive as the tablet and smartphone markets. I think PC will stay flat or decline in the next three to five years, but it will always have this sales base of about 300 million-plus units.”

“That’s why we’re looking at a new space: combining PC, tablet and smartphone. We’re branching out to do more tablets, to look at smartphones and to look at the cloud applications. We’re playing in a different sandbox now … We have innovative and sexy products. We sold 40 million smartphones in China last year and I’ll bring it to Hong Kong in October. We are selling truckloads of notebooks, including things like this,” Lee says as he picks up a Yoga lying before him. It is a laptop that flips 360 degrees and cleverly converts into a tablet. “The tagline we use is ‘the PC-plus era’. I would like Lenovo to be number one [in the tablet and smartphone market] in five years, beating Apple and Samsung.”

This ambition is partly grounded on the phenomenal penetration of IT gadgets into every level of human life today, and Lee believes the growth potential of the industry will remain immense in the years to come. “The four screens that are TV, smartphone, notebook and tablets will be very connected with the cloud. They are no longer a luxury. They are a part of our daily life, a necessity. I think they will be so ingrained in our life that we will no longer think about them,” he says.

“What we do is to sell tools that help people accomplish things in their day-to-day life, such as staying close to their family by taking family pictures on a smartphone. This morning I missed my twins so much. I downloaded a picture on SkyDrive and made it my computer screensaver.

This is some of the things you do with these gadgets,” he says with a satisfied smile.

17

CHINA BUSINESS

Huai’an City Kicks off Mayor-Series Luncheons

P

arty Secretary of Huai’an City of Jiangsu Province, Yao Xiaodong, recently led a delegation to Hong Kong and held Yao Xiaodong a joint business luncheon with AmCham. More than 60 AmCham leaders and members attended the informationfilled luncheon at the Renaissance Habourview Hotel in Wan Chai.

In his opening speech, Yao extended a warm welcome to AmCham members and made a strong case for business and investment in Huai’an – one of the fastest growing second tier cities in east China. At present, more than 850 Hong Kong enterprises have established presence in Huai’an, with a combined registered investment totaling US$10 billion.

Huai’an is one of the booming investment destinations in Jiangsu Province. A number of multinationals such as Foxconn from Taiwan have set up manufacturing bases there in recent years to take advantage of the city’s abundant pool of welleducated and skilled manpower resources as well as geographical proximity to major consumer markets in China.

Yao explained that Huai’an would be an excellent choice for foreign investors Hanif Kanji who are considering moving their production inland from areas such as Guangdong but at the same time remaining close to the international markets. A strategic location, Huai’an is about an hour of train ride to cities like Nanjing and Shanghai.

“As far as industrialization is concerned, many coastal cities may have reached a relatively high level already,” Yao told the luncheon guests. “Huai’an is still at an early stage and therefore we have a lot of room to grow.”

During the luncheon, Hanif Kanji, Chief Executive Officer of Sinophi Healthcare Partners Limited, told of his own experience of investing in Huai’an, confirming the city – which has a population of 5.4 million – is “investor friendly” with “very supportive” government departments. Sinophi has signed an agreement with Huai’an First People’s Hospital to provide hospital management service to the 20 million people in and around Huai’an. Dr Kanji is also Chairman of AmCham’s Insurance and Healthcare Committee.

“I want to especially thank Secretary Yao who has been very supportive to us,” Dr Kanji said. “Your support makes a big difference to our work and we want to thank you for that.”

The luncheon with Secretary Yao of Huai’an City is the first of AmCham’s Yao Xiaodong presents a Chinese painting “Face to Face with Chinese Mayor” series. Preparations are underway for the next to AmCham President Richard Vuylsteke. session as more are scheduled for the coming months.

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biz.hk 8 • 2013

REAL ESTATE

Adding China Properties to Your Shopping Cart China’s real estate market used to be closed to foreigners. As more foreigners live and work in the country, owning property in the mainland has become possible and even desirable for some.

Hong Kong entrepreneur and author, Christopher Dillon, talks to Kenny Lau about his new book, Landed China, an all-you-need-to-know guide for foreigners interested in buying property in China

Christopher Dillon (Photo by Idalina Silva Photography)

How it works Modern apartments in Shekou, a port city very near Hong Kong and conveniently linked (Photos courtesy of Christopher Dillion) with ferry service.

W

hen Canadians Janet De Silva and Yves Therien moved to Beijing from Hong Kong in 2005, they made a big decision. They bought a home in a country where purchases by expatriates are rare, even among long-term residents.

“We looked into renting, but many of the places just weren’t to our taste.

And it was difficult to get landlords to renovate,” De Silva recalls. “We decided to buy a house because we needed a place for our own use, where we could host friends and colleagues.”

De Silva and her husband are part of a growing trend in China, notes Christopher Dillon, an award-

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winning writer who has lived in Hong Kong for more than 20 years. Dillon is the author of the new book, Landed China, an all-you-need-to-know guide to buying property in China.

“Some expatriates in China choose to stay, especially if they meet the love of their life,” Dillon says.

“China is also making it easier for expats to become permanent residents. If you intend to stay or start a family, the next thing is to buy a place to live.”

The market The good news from a buyer’s perspective is that China’s constitution was amended in 2004 to protect

the right of private property ownership and there are plenty of homes for sale.

The bad news is that prices are high, particularly in tier-1 cities — Beijing, Shanghai, Guangzhou and Shenzhen — and there are restrictions on home ownership for expatriates.

“The first thing to understand is that real estate in China is expensive,” Dillon says. “Prime homes in Beijing or Shanghai, especially near good schools, will cost as much or more as properties in Manhattan, Mayfair or the Peak right here in Hong Kong.”

“Second, China is not a homogenous market. Beijing is no more representative of China than Manhattan is of the US,” he adds. “Tier-1

biz.hk 8 • 2013

cities are more expensive than secondary or tertiary cities because they have the largest, most liquid real estate markets, and more opportunities.”

Home prices in China have risen drastically, with prices for a new home in Beijing or Shanghai more than doubling in seven years. This has prompted the central government to implement market-cooling measures to counter the threat of a bubble.

There are competing interests at work in China’s real estate market, Dillon points out.

“The central government wants to maintain social stability and affordability in the real estate market. Local governments generate revenue through land sales and developers want to increase sales.

biz.hk 8 • 2013

Finally, you’ve got homeowners, who want prices to rise.”

However, there are several factors that will support property prices, particularly in large cities. This includes a rapidly growing urban population, which is estimated to increase by 300 million people by 2030, and a lack of attractive investment alternatives in the domestic market, which makes real estate one of the better options.

“The threat of a bubble is real,” Dillon believes. “But if you are an end-user who plans to live in China for the medium- or long-term and have a reasonably secure income and a manageable debt load, you should be fine.”

“It’s important that expat buyers understand how the market works,” he suggests. For example, China’s urban land is owned by the state, while rural land is owned by collectives. When you buy property, you own the structure and the right to use the land through a fixed term lease — 70 years for residential property, 50 years for industrial and 40 years for commercial — or the balance of the lease for a pre-owned property.

China imposes a number of restrictions on foreign ownership.

Regulations introduced in 2006 specify that expatriates must have lived in China legally for at least a year before they can make a purchase and may only own one home for personal use. A foreign company may buy a property only for its own use.

“These are national rules. There are also local regulations that vary by city,” Dillon points out. “More desirable cities generally have stricter requirements.”

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THE AMERICAN CHAMBER OF COMMERCE IN HONG KONG FAST FACTS Community AmCham celebrates over 40 years of promoting business and fostering greater trade ties and community service in Hong Kong.

Activities Members can access roughly 400 programs, seminars, and conferences each year featuring top business and government leaders, industry experts and professional facilitators who address timely and relevant business issues.

Members Over 1,800 members (40 different nationalities) from over 800 organizations, including multinational firms, small and medium enterprises, entrepreneurs, and non-profit organizations.

New homes in China, like this Shenzhen townhouse, are usually sold as bare shells.

Even if you meet the requirements, buying isn't for everyone. “You should think twice if you might be re-assigned to a different city on short notice,” he adds. “You don’t want to sell into a depressed or falling market.

A forced sale is rarely a good thing.”

It is generally not a problem for an expat homeowner to sell a property.

But repatriating the proceeds can take a bit more work. China’s capital controls allow individuals to transfer US$50,000 per year, and you will need to demonstrate that the source of the funds is legitimate and that all taxes have been paid.

“China is not the same as Hong Kong in terms of property flipping,” Dillon says. “Hong Kong is a deep, liquid market where it is easy to get in and out; China is certainly less so.

You have to approach China on its own terms and assume nothing.”

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Committees Our members can join and access up to 28 different committees covering industry sectors, professional service sectors, and special segments of the membership.

Good experience In their search for a home in Beijing, De Silva and her husband Therien discovered a two-story, four-bedroom home in a small, gated community in an area known for prestigious international schools.

They sought advice from an architect on the design, quotation process, contractors and material sourcing.

“It was in a stunning community, which had a beautiful landscape in a park-like setting with a fabulous clubhouse,” De Silva says. “But, in buying a new home, while the exterior and gardens are finished, the interior is a bare shell. It meant we had to completely fit out everything.”

The project was a challenge, as the contractor had little experience with Western fittings. “We had to be on top

on the project every single week,” she says. “It took multiple attempts to get a few things right,” including a curved staircase and a wine cellar in the basement.

“We were very happy once we moved in and felt very fortunate to have had someone with tremendous architectural experience to help us through the construction process,” she adds.

“We lived there for a couple of years and then upon relocating back to Hong Kong we leased it for a couple of years and then sold it later,” she adds. “It proved to be a really good lifestyle decision for us.”

biz.hk 8 • 2013

BENEFITS Business Networking Visiblity and Corporate Exposure Information Advocacy WHY JOIN AMCHAM? "As a non-American, I have joined the AmCham in every country I have been posted because it is consistently the biggest and most active Chamber of Commerce and the strongest, best organized lobbying force in most countries, therefore able to attract a large number of members of very diverse horizons and able to organize a wide variety of events, attracting very often high profile speakers and therefore large attendance."

REQUEST MORE INFORMATION Membership Department: membership@amcham.org.hk / 2530 6900 www.amcham.org.hk

US POLITICS

Businesses will tell you that not only are they concerned about the high corporate tax rate but also they need to have an infrastructure that would allow them to be competitive. Now, it has been made clear by the Speaker that the bill has to be revenue neutral.

These are things that only the leadership can overcome. So to get back to your question, I will always be advocating that the nation needs tax reform and that is almost a part of our national security since our economy is so tied up to [our] competitiveness.

Having said all of that, there are hurdles that we have to overcome – but not by me – but by the leadership.

Congressman Charles Rangel on Tax and Politics Each summer AmCham Hong Kong sends a delegation to Washington DC for its signature Doorknock visit with US government officials. But sometimes the Doorknock comes to Hong Kong.

One such occasion happened early in August when 10 members of the Congressional Black Caucus met with AmCham HK members for a conversation over lunch. Among the delegates was its founding chairman, Rep Charles B. Rangel, a long-time congressman and former chairman of the Ways and Means Committee.

Rangel is no stranger to controversy, but the 83-year-old Democratic leader from New York City is probably best known for his Harlem connections, outspokenness, and years of effort to modernize the US’s tax code. During his visit, biz.hk asked him about tax reform, trade, and his longevity in politics

biz.hk: Is reform of the US tax code possible given the gridlock in Congress?

Rangel: Because I am a big advocate of tax reform and because I participated in the Tax Reform Act of 1986, I’ve always felt that there were so many provisions that are no longer necessary in the tax code – the preferential treatments that are now actually

24

loopholes, so there is a lot of revenue to be lost. Also, the fact that we have the highest corporate tax in the world has adversely affected our competitiveness. But I want to be as positive as possible.

I don’t see how you can do something of this magnitude unless it is bipartisan. So the positive signal is seeing Republican [Ways and Means

“You are never going to have Rangel say he is pessimistic about tax reform.

That’s

like

saying Rangel doesn’t respect the [American] flag.”

Charles Rangel

Committee] Chairman David Camp meeting with Democratic leadership Max Baucus, and them saying that they are going to have a bill.

Constitutionally speaking the bill has to emanate from the House. But there are ways that we can change that tradition and have the Senate come and we [in the House] amend the Bill and send it back.

biz.hk 8 • 2013

But I get the impression from the leadership in the House that they won’t be actually listening to the inputs from the Democrats. We would be given an opportunity to listen but not to legislate. And then I don’t see clearly where the House leadership has actually given David Camp the authority to make economic decision in tax reform. In 1986 when Ronald Reagan

biz.hk 8 • 2013

was President, Tip O’Neal was the Speaker and he allowed Dan Rostenkowski to deal with the Administration.

But I can’t perceive and have not heard Speaker [John] Boehner say it is up to David Camp to bring to the floor a tax reform bill.

The administration wants to have a bill that produces revenue and allows us to invest in infrastructure.

biz.hk: Does Congress get the message that America needs a tax reform, despite the current partisanship?

Rangel: It’s all up to the people in terms of how you interpret it. I was telling business people that you want repatriation of income overseas and be able to put [the income] into dividends, but the person in the street doesn’t see how that’s going to benefit them.

However, if you were to say, ‘We want reform of the system and we want the money to come back – or even tax free – but [the money will be] dedicated to infrastructure and education, then people will say that makes

25

hell a lot of sense … but don’t just talk about giving the corporate tax breaks, with the disparities that we have, and the middle class sliding into the lower poverty levels.

I tell business that it’s good to have a middle class. It is good for America and good for business. The middle class has a level [of income] they can spend, but the poor has no money to spend. biz.hk: Are you pessimistic about reform of the US tax code?

Rangel: You are never going to have Rangel say he is pessimistic about tax reform. That’s like saying Rangel doesn’t respect the [American] flag. If we want our country to be all that she can be, we have to reform the tax system. And we have to bring about some types of equity to reduce disparity between the very wealthy and very poor. And we have to invest in our education. biz.hk: Should the US give up the Citizenship-Based Taxation system and switch to Territorial-Based Taxation system which most economies have adopted?

Rangel: First of all, it’s going to be a hybrid. It’s going to be territorial and also going to make certain that we get revenues in the US and we’ll dramatically reduce the tax rate. The only thing that we are talking about now is an economic formula to reach that goal.

What’s the possibility for that to happen? I can’t answer that – I wish I could. Would I say the division between Democrats and Republicans are so wide that we never could come together in tax reform? I will not say that because I am hopeful and optimistic. I could not answer you as to how we overcome the differences. I can’t answer that. I don’t know how. biz.hk: Do you agree that the US Congress seems to have become so dysfunctional that no real reform can be achieved?

Rangel: It’s a philosophical question and a subjective one. The US

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biz.hk 8 • 2013

Congress is elected by the people.

When they are not following their constituents, then they only have in the House a two-year contract. Unfortunately, [we have issues like] the traditional Democrats versus Republicans, and apportionment and re-districting. The major problem is that whether you are liberal or conservative, and if someone who’re more liberal or conservative than you are, you have to go to the extreme to get re-elected. It’s those extremes and getting re-elected that cause good people to say, ‘I would like to go along with you, but I’ve got this problem back home.’

America is falling apart that way. If businesses were to say, ‘forget about [being] Republican or Democrat, forget about [President Barack] Obama, or [House Speaker John] Boehner, this is what we need for a strong America, then they would tell the members of Congress, ‘Listen, I know you have difficulties, but unless you come up with a budget, I am afraid I won’t be able to support you. I have been with you for years. But if the people aren’t working and they are not buying, I am going to be out of business. I may be a good Republican but I can’t afford to be out of business.’

There is another area to this issue.

We have as a part of a nation’s image ‘In God We Trust’. That means that God trusts us to take care of the poor, the children, the aged, the sick, the uneducated, the unemployed, and the homeless. So that means God could be supportive of social security, Medicare, and affordable care. Who’s supposed to do this? Not Democrats or Republicans – but the church leaders, Jewish leaders, Buddhist leaders, Mormons, and Muslims. But I don’t hear anything from them.

They talk about same sex marriage, and they talk about the women can’t abort. If the Evangelist would follow Jesus and the business people would follow equity, then members of Congress have two years to explain why they are voting against them.

And I have faith that it can happen

biz.hk 8 • 2013

– that America can say enough is enough. If they can get together, Congress will change. biz.hk: Would you comment on trade with Asia? A lot of people have expressed concern that trade with Asia would hurt the US economy.

Rangel: Trade has dramatically increased every year and every decade.

There is every reason to believe that the Trans-Pacific Partnership, once it is passed, is going to increase trade faster.

“What’s the possibility for that to happen? I can’t answer that – I wish I could. Would I say the division between the Democrats and Republicans are so wide that we never

could

come

together in tax reform? I will not say that because I am hopeful and optimistic.

I

could

not

answer you as to how do we overcome the differences. I can’t answer that. I don’t know how.”

The problem we have is to see how technology can catch up with trade so that people are not going to lose jobs and make certain that they are part of the economic progress that this country makes. But trade just makes good sense as long as it is providing jobs as well as profits. I don’t think there is anyone who complains about the

relationship that the US has with China. It is a communist country, but we trade with China. If we trade with China, we can trade with anyone. biz.hk: Is it too soon for the Administration to come to Congress for TPP? Rangel: It’s too early. The Congress needs to be convinced that TPP is good for American jobs. It’s labour against management. The management has to do a better job in talking about jobs. biz.hk: So business people need to get into the game and explain to the American people why TPP is important for the US? Rangel: If people believe that trade and jobs go together, everyone will trade. If they believe that trade takes away jobs, then they are against trade. biz.hk: If you had a magic wand and you can solve one problem, what would that be?

Rangel: I don’t know how to put it in one word. But it would be for all of the members in Congress to have as their primary responsibility the security of the USA and the ability to make certain that everyone has an equal opportunity to share in this prosperity. If this were to happen, then all the other problems that we have – immigration, joblessness, discrimination – would be minimized because of a feeling that we love America, love Americans, love our citizens, love our way of life. And we want to help other people and to teach them to become democratic, but also to respect them and hope that they respect us too. biz.hk: You have been a Congressman for 42 years. What keeps you going?

Will you seek re-election again?

Rangel: Public service. When I was 18, I was in the service (US Army). When I was 30, I was a US prosecutor. When I was 35, I was a New York state legislator. In 1970, I was a member of Congress. So I never had a job. I have always been in public service. Will I seek re-election again? Only God knows.

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TRADE & INVESTMENT

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egotiations are now in the final stages – a moment critical to meeting the year-end deadline set two years ago. As delegates closed the 18th round of negotiations earlier in Kota Kinabalu of Malaysia, all eyes are now on the next round scheduled to take place this month in Brunei.

Discussions covered a wide range of issues: market access, rules of origin, technical trade barriers, investment, intellectual property rights, financial services, e-commerce, and transparency in governance. The US Trade Representative Office says “agreements” have been reached on some technical issues of the legal texts and negotiators have “developed a detailed plan for closing remaining issues and completing their work.”

Textile and apparel is a central issue in the negotiations with Vietnam. US textile industry groups have lobbied Washington for strong textile provisions in TPP, including the ‘yarn forward’ rule and long tariff phase-outs, cautioning it would potentially put hundreds of thousands of US textile jobs at risk. In May, Assistant USTR for Textiles Gail Strickler put forward a proposal to derogate from the yarn-forward rule of origin, including a “temporary” list of short supply items not made in TPP countries to be sourced from any country including Mainland China. The apparel made from these items would be allowed in the US market under preferential tariff arrangements.

Legal expert Elise Shibles of Sandler, Travis & Rosenberg, P.A., an attendee in the TPP negotiation in Malaysia, during a stopover in Hong Kong, briefed AmCham members on the issues in an interview with biz.hk:

TPP A REALITY

BY YEAR-END? On July 23rd, Japan was officially welcomed as the 12th country joining in the negotiations of the Trans-Pacific Partnership (TPP), a proposed multilateral free trade agreement. With Japan’s entry, TPP member countries and territories collectively currently account for nearly 40 percent of global GDP and about one-third of all world trade.

Photo: GettyImages

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biz.hk 8 • 2013

biz.hk: Can you tell us about the negotiations earlier in Malaysia, especially on the textile and apparel front?

Shibles: I did not see a lot of progress on textile. There seems to be a lot of continuing discussions on the shortsupply [list] but not on productspecific rules or market access. It appears that the big issues are being

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pushed aside and some technical work is being done in a very narrow sense.

In theory, the technical work could and should make other issues easier, but I agree, it (what’s happened in Malaysia) doesn’t send a message that [a deal can be closed] in the next round. biz.hk: What will we likely see in Brunei where Japan will participate as a full member? Is an announcement on TPP at the APEC in October likely?

Shibles: My expectation is that the dynamics in Brunei in August will change a little bit in terms of the relationship between the US, Japan and Vietnam. A lot of countries will be investigating what the opportunities are there with Japan and that may move the focus from Vietnam.

I think what they’re going to have to do in Brunei is to find what would be a successful announcement at the APEC meeting, and does that announcement need to be before everything’s done, or can it be something less than that and still be a successful goalpost announcement.

exports. It’s not easy to say that there will be a broad-stroke big winner here.

What we will see is some duty reduction immediately [if TPP is concluded], maybe 30-50 percent off the Most Favored Nation (MFN) rate.

So the opportunity is in those things that have really high tariff rates.

For example, some apparel items have a duty rate of 32 percent, so a reduction in landed cost to 16 percent may give you enough of a cost benefit.

But then is it worth it for you [to invest] – can you meet the rule of origin, do you just have to do cut and sew, or do you have to meet the yarn-forward rule, and if so, are these materials available?

If available, are these materials cost efficient to you? Companies will have do their own costs and benefits analysis.

biz.hk: What are the critical issues in the textile negotiation now?

Shibles: Flexibility, rules of origin, and length of time for the duty phase-out are all key issues. Right now, a short-supply list is the only flexibility [from the US]. In terms of the duty phase-outs, the US has been negotiating with each country bilaterally, and only few details have been released. But I understand that a lot of goods are expected to have a 10 to 15-year phase-outs. To put this in context, most of our existing free trade agreements, apparel has gone [duty] free immediately.

biz.hk: With TPP, does it mean that some apparel companies may have to rethink their “China-plus-One” strategy?

Shibles: People are already getting out of China for apparel because frankly it’s become too expensive. I have clients in China who said they could only put their high-end goods there and invest in other countries for less expensive products. People are already leaving China for the lower-end products.

If you’ve got a product that will not meet the yarn-forward rule of origin anytime in the next five to 10 years, then TPP may not offer the best investment opportunities because you simply won’t benefit from it. Then the question becomes, what are the other aspects of your costs and benefits – in tax, land, resources and infrastructure? Are these options available to you?

biz.hk: Does it mean that real free trade – zero tariffs across the board – will not happen in two to three years after TPP is concluded? On the apparel side, what are the benefits for companies to invest in countries like Vietnam now?

Shibles: Some items will have zero tariffs, but they probably won’t be the most meaningful things that Vietnam

biz.hk: Hailed as the most important developing country in the TPP negotiation, will Vietnam become a template for other developing countries in future TPP negotiations?

Shibles: Some new commitments are being discussed in TPP: sanitary and phyto-sanitary issues, e-commerce, state-owned enterprises, and trade secret protections. Most have not been

29

part of any [previous US] free trade agreements and are new types of commitments. Vietnam can be an interesting model on those topics, because of a broad range of countries involved in TPP – from developing to developed countries – and they are all working towards these commitments. biz.hk: Will President Barack Obama ask for Trade Promotion Authority in order to push for TPP? Shibles: There’s a pretty good chance that the President will ask for it. It will be a political battle, but the climate is pretty good for TPA to pass. And I think that helps move trade agreements through Congress because it reduces the length of time and changes, and the amount of work that has to be done in reviewing text. I am not aware of a US FTA that passed outside of Trade Promotion Authority in the last decade. It could be a messy proposition but it’s not impossible. biz.hk: Will the gridlock in Congress slow down the process for TPA? Shibles: The key is to introduce it in a time that is right in the [US] election cycle, and there’s probably more support for it than people think. The Administration is pretty smart about when to introduce legislation. It took a long time to get the Panama, Korea and Columbia Free Trade Agreement passed, but the Administration didn’t introduce them until it knew it could come up with a vote relatively quickly and that they had good support for it.

The Administration will work on mustering the votes that it needs and the support that it needs before it introduces TPA, or seeks to introduce it at all. So much work is done before there’s a formal introduction of it. biz.hk: On Japan, what are the major issues? What are the chances of a TPP deal before year-end?

Shibles: For Japan, agriculture is the key. Japan has some restrictions on leather footwear, but that’s another issue. I think there’s a less-than-50percent chance that we’ll have a deal by the end of this year. Much depends on

30

whether Japan is ready to agree to where everything is. Japan coming in makes a big difference. It also depends on if the US and Vietnam are making any final tradeoffs. biz.hk: Can you share with us what it’s like in trade negotiation?

Shibles: Governments have their own representatives, and usually there is more than one representative for each discipline. The US brings in people from the State Department, Commerce, Trade Representative, Customs – all different aspects of governments. Other countries bring in people from different ministries too.

The host country is the one that leads the discussion at the table, and it can often set and drive the agenda on areas it wants to discuss. Then there are the opposing views, with support for their position. You will get to a point where you have an agreement but with certain items bracketed for further discussion.

During the meeting you keep narrowing down on parts of the agreement text and make tradeoffs within and among brackets of commitments. Say, if one commitment on ‘De Minimis’ foreign inputs ranges from seven to 10 percent, you will have some discussion over that and will get to a point where a 10-percent ‘De Minimis’ is accepted when another bracket on another issue is done the same way in exchange.

Each technical group negotiates to eliminate those brackets and come to a consolidated agreed text.

There are all these different negotiating tables: textiles, agriculture, market access, and e-commerce – they are all separate chapters and tables.

And for issues they have difficulty working out, chief negotiators would get involved to work on a deal.

Sometimes the technical experts cannot reach a deal because they simply don’t have the authority or they’re just too far apart, or they have to elevate it to a different level when it comes down to making certain trade-offs and priorities.

The chief negotiators are usually down the hall in another room. Some-

Elise Shibles

times, they’ll say ‘we’re at this point where this is a deal on the table, yes or no?’ or they’ll say ‘we’re still so far apart, we’re not going to make a deal right now and we need to talk about it at a higher level.’ biz.hk: What’s your advice to an average exporter not so familiar with TPP negotiation which is often very technical?

Shibles: They need to know their sourcing pattern enough to know what works and what doesn’t work for them, and they need to communicate that to their members of Congress, the US administration, Department of Commerce and Trade Representative’s Office. They also need to work either through their own resources or their trade associations to get themselves familiar with the specifics. Free trade doesn’t necessarily mean duty-free or substantial transformation, and it often means a higher level of content. It’s a matter of keeping informed and connecting what’s on the table with what your sourcing and production are.

biz.hk 8 • 2013

HEALTHY LIVING

BEING MINDFUL

By Michelle Ko

D

r Steven D. Hickman, founder and executive director of the Center for Mindfulness at the University of California, San Diego (UCSD), visits Hong Kong with a cure for the city’s stressful and hectic lifestyle. On his way to setting up the Center’s Asia headquarters, Dr Hickman talks about a healthier way of living—the practice of mindfulness.

What is Mindfulness?

“The way I tend to define mindfulness is that it’s ‘moment-to-moment, non-judgmental awareness’,” says Dr Hickman. “Just to unpack that a little bit—‘moment to moment’ recognizes that this moment is all we have, and even though we have amazing human brains that can go off into the future and think back into the past, this is the only place that we can really be.”

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He further explains that “nonjudgmental” is to rule out defining an experience by ways like good or bad, and resisting it or grasping towards goals based on fleeting judgments that we do not realize are unsound. So in its essence, mindfulness means being aware of oneself in the present moment, noticing one’s actions from movements to breath and emotions.

A key part of practicing mindfulness is through meditation, which trains one’s ability to focus and experience things with greater clarity. “It’s [mindfulness] a practice that’s a way of being and it’s cultivated through meditation. So that’s the difference between mindfulness and meditation; meditation is the intentional cultivation of

being mindful, it’s the practice of leading yourself to the present moment.”

But Dr Hickman points out that mindfulness is different from mere concentration. “They’re actually sort of two sides of the same coin. I would say that concentration or focus is a very narrow direction of attention, and mindfulness, a flip side to that, is to open awareness to everything that’s arising. So that’s practically learning to

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be able to narrow or widen your attention that comes from practicing meditation or practicing your focus through concentrative meditation.”

Way to mindfulness “I like to think that mindfulness is for everyone. We’re all human beings and there’s no one of us that couldn’t do with a greater dose of awareness, of

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being a little more present in our lives,” says Dr Hickman. “Some people have limitations, they may have psychiatric problems or they might have cognitive impairments that make it very difficult, so those people will have a hard time benefitting from it. But for a healthy human being, I can’t think of anyone for whom mindfulness wouldn’t be beneficial.”

And for the attentive reader who pours over a good book with an open heart, or the passionate cyclist whose wheels span difficult terrains in search of challenge, mindfulness can be within grasp too. Dr Hickman believes there is more than one way to mindfulness: “I would say that you can do any of those things mindfully, and in a way

that is practicing mindfulness … It’s not quite the same thing as purposefully cultivating mindfulness in the form of meditation or yoga or some other contemplative practices, there’s a fine line.

“That’s not to say that one’s better than the other, and we don’t really know, there’s no really solid research that says it only works when you’re meditating but it doesn’t work when you’re reading or cycling.

“What we do know is that doing it in the form of meditation and mindful movement, say the mindful walking approach, like we do in MBSR (Mindfulness-based Stress Reduction) program, we know from research that it is effective, that that changes the brain and provides health benefits.”

The gains of being mindful In a modern lifestyle that puts so much emphasis on efficiency and

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rationalization, Dr Hickman believes we too often fall into a pattern of reacting without realizing that better options of living are at hand. “I would say that even underneath all of that modern activity and business and pressure and stress, there’s another part of us that is aware of all this activity and it’s the part that is monitoring our experience,” he says.

“That is a kind of inner wisdom that we all have as human beings to be aware of what’s going on with us and what we can handle and what we can’t.

But sometimes we turn that off, we just do more and more and more because that’s asked of us.”

It is by being more aware of and thus re-discovering the choices we have that we start changing for the better. “So that’s one change: you’re aware that you do have choices and what choices you make. And then the other part of it is you have a choice as to what relationship you bring to things you have to do … if you can have a different relationship with things that you have to do, you can do that with more harmony, ease and satisfaction.”

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A long-time clinician, Dr Hickman recalls the words of one of his patients who had chronic pain: ‘“I’ve been fighting with my pain for 15 years, and what I learned in the practice of mindfulness was that I could dance with it.’

So he’s talking about shifting his relationship with something he can’t change so that there was a little more ease, a little more flexibility. “ But mindfulness stops short of helping an individual make decisions; the foundation of mindfulness is based on the belief that “we have this wonderful capacity as human beings, to make choices for ourselves, to take care of ourselves, to do the right thing and to access these inner qualities”.

On helping individuals realize their options and capacity, mindfulness does not dictate decision making, nor does it assign a certain meaning or way of living to those who practice it.

“You could use the example of, let’s just say you tend to over-eat. So we feel like if you’re fully mindful of your experience of food and eating, you’ll actually see that over-eating is just a choice or a pattern that can be worked with and if you can be more mindful, you can make better choices on your own. We don’t have to tell you what the way is, we all have it already.

What usually happens is all of the habits get in the way.”

In fact, studies on the benefits of mindfulness, especially on stress reduction, have yielded encouraging results. With regard to the immune system, Dr Hickman cites a study that shows that people who participate in an eight-week MBSR class fare better in immunity tests than those on the

waiting list for the class.

Other studies focus on how the brain works in the process of meditation, suggesting that there is increased thickening of the cortex in certain areas of the brain among long-time meditators. It is also observed that people who have practiced meditation for eight weeks show thickening in the insular, which manages sensory awareness. Moreover, these people show a shift in brain activity from the prefrontal area of the brain that has to do with negative emotions to areas that govern positive emotions.

Dr Hickman also points to a new direction of research that is expanding quickly: the reversal of cellular aging.

While genes shrink as they age, this process is observed to be halted and even reversed among people who meditate. Smiling at the research currently done at University of California, San Francisco, Dr Hickman says, “It’s got a lot of work to do yet, but it’s very promising.”

Mindfulness at work While most of the programs that UCSD runs are for individuals, spanning from the MBSR program to specialized classes like mindful self compassion and mindful eating, Dr Hickman believes mindfulness should find its way into the workplace. “What we’ve found so far is that when we look at how to bring this into a workplace, we have to be very flexible and customize based on the needs. Sometimes a company may want to offer this as a fringe benefit for their employees, so that might just be offering a MBSR class. Other times, they want to create, and that’s what we would prefer, a mindful environment in their workplace, which really requires a little more creativity to put together programs that might involve leaders in one way and the workers in another way, consulting the processes that might help them facilitate a more mindful workplace.”

When put into a corporate setting, mindfulness can help foster problem

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solving skills and greater creativity, says Dr Hickman, not to mention the heightened concentration that results from training in meditation. Some studies have also found that mindfulness helps reduce stress and medical costs, producing a happier and healthier workforce that interacts better with customers, thus increasing customer loyalty.

Where it’s going With interest in mindfulness growing quickly among individuals and companies, Dr Hickman and his colleagues want to make sure “what’s being done is of good quality”. There are currently no standards for teaching or practicing mindfulness, the only certification in the field being standards to becoming MBSR teachers as administered by the University of Massachusetts, where the program started. The UCSD Center for Mindfulness is working to set up a center in Hong Kong and establish official pathways for one to become a teacher in mindfulness.

“So right now the standard would be looking for someone who has had some formal training of mindfulness, whether it’s through UMass or through our centre or other places, people who’s been teaching this for a while. And the number one most important quality that anybody should have if you’re going have them in your workplace teaching people, is that they need to be practicing themselves.”

Finding the ways the US mindfulness model can work in Hong Kong and Asia, Dr Hickman stresses the importance of being creative. Instead of offering the usual eight-week MBSR program, his Center is exploring options like holding two or three-day intensive sessions and then having weekly follow-ups via the web. Other local programs with an element of mindfulness may also be incorporated into the original program.

As Dr Hickman puts it, “it’s about finding ways to do that, identifying resources and growing resources to provide support”.

biz.hk 8 • 2013

Profile: Dr Steven D. Hickman Dr Steven Hickman is primarily a clinician working within the Neuropsychiatry and Behavioral Medicine Service at UCSD, with his work focusing on the psychological aspects of medical illness. He is involved in the clinical research of Mindfulness-based Stress Reduction, and explores effects of mindfulness in junction with pain and serious medical illness like cancer. He graduated from the California School of Professional Psychology (CSPP), San Diego Campus, and became a faculty member in the Department of Psychiatry in 2002. Dr Hickman practices mindfulness and meditation himself.

How Mindfulness changed Dr Hickman: • He becomes more aware of his decisions. He reflects on the time before he took up mindfulness that when things were going well for him, it was because he was “more present and aware and making better choices”.

• He learns to “respond rather than react”, meaning that he sees his reactivity and can pause and choose to respond in better ways. For example, being a husband and a father, family members sometimes push his hot buttons. “More often than not, I can see that touch, pause, and choose a better response than if I just got caught up in it … For me, that’s wonderful. It means we all have that inside us, we just couldn’t access it at that moment. And mindfulness allows us to, in that moment, actually access wider response.”

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INSURANCE & HEALTHCARE

T

he usual response when someone discovers something truly valuable is to keep it under lock and key.

Don’t tell anybody. Why share the secrets? But Feisal Alibhai is no ordinary guy.

Feisal is CEO and founder of Qineticare – a new Hong Kong-based company dedicated to providing its members professional health care services whenever and wherever they may need them. A globetrotter himself until 2004 when he was diagnosed with cancer, Feisal started Qineticare because he wanted to share his life-changing experience with people who – like him – wouldn’t know what they could miss until they’ve lost them. “The minute you don’t have health, money or whatever it is that you have becomes absolutely irrelevant,” he says. “Trust me, I’ve experienced it myself.”

A lopsided lifestyle

SHARE THE HEALTHY SECRETS

By Daniel Kwan

Feisal Alibhai

36

biz.hk 8 • 2013

biz.hk 8 • 2013

Feisal used to travel six months per year for work. Back then, his company was one of the biggest FMCG distributors in Eastern Europe and Africa. In 1992, he moved to Hong Kong and set up a buying office for his garment and textile business. As a precautionary measure, he had the best doctors available in case if he would– in his own words – come back from one of his work trips to countries like Congo, Angola, Mozambique and Sudan with “some funny diseases.”

The day came in September 2004 when he was examined by his doctors.

After a series of PET-CT and biopsies, doctors confirmed stagethree lung cancer. Instead of going to places like the US for treatment, he chose to stay.

Feisal believes that it was a wellinformed decision. Looking back and now running Qineticare, Feisal says he is even more convinced today that Hong Kong offers some of the best medical services in the world. When he was diagnosed with cancer on a

37

Tuesday afternoon in 2004, he was able to check in hospital the next day, and started his chemo two days later.

“From day one to day five – I’ve gone from x-ray to chemotherapy. Try pulling it off anywhere else [in the world] and I wish you good luck,” he says.

“Hong Kong is one of the best … but most in Hong Kong instead put their focus on the financial sector, the legal and tax system, or the speed at which things happen. But Hong Kong’s excellence in so many areas is also reflected in the health care system.”

“We have an amazing health care system and doctors [in Hong Kong] that we – I think – take for granted.

We need to shed a much better light on what we have. Of course, we are not the medical tourist destination. We are not on the map like Thailand, the US, or India. That’s why I think people don’t appreciate it.”

After 20 rounds of chemos, Feisal fully recovered, and was forever changed from the experience. “The unfortunate reality is that you don’t think about (your health) until you lose it. I went through a process where I had lost the taste of food for weeks.

Now imagine this happens to you for a lifetime,” he notes.

Share the secrets After recovery, Feisal sold his business in Eastern Europe and Africa (except Angola), and began connecting his friends and family to doctors in Hong Kong, who he highly rated. He also took his experience to Dubai in 2007. Now, he makes that accessibility available through Qineticare.

According to Feisal, members of Qineticare go through an “on-boarding” exercise that includes collecting the medical history of the individuals and their family, and a wellness assessment as well as coaching for lifestyle changes.

As Feisal explains, the company puts together a “dream team” of doctors and specialists around an

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individual for “pro-active healthcare services.” Qineticare conducts a peer survey to identify the best doctors available. In addition, it partners with International SOS to provide its members overseas and afterhours coverage. More importantly, it discovers through its partnership that its list of doctors actually closely matches that of International SOS. “For a new kid on the block like us, versus a billion-dollar-company in the US, it was very reassuring. Trust me, they’ve (International SOS) done their homework and have a systematic selection [of doctors],” he says.

“We are providing options but we are not recommending [doctors] because we are not clinics or hospital.

We cannot give you referrals. It’s your choice,” Feisal stresses.

Despite being a “new kid on the block,” Qineticare is exploring opportunities in Mainland China where the demand of quality healthcare is growing fast. Discussions are underway

but Hong Kong will remain the company’s core focus in the near terms.

“China is obviously on the map and we are in talks with different partners who cater to the high net worth and affluent in the country for prevention and lifestyles. We’ll see how we can provide them access to Hong Kong’s medical services and elsewhere in the world in terms of priority access to the best,” he explains.

Although Qineticare is young and has yet to make a profit, Feisal said it has established a foundation to provide for the poor in Hong Kong as his way of “giving back.”

“We initially started with basic necessities and we’ll eventually go into prevention and medical education. Obviously, we are now in the red so the money that will go into the foundation will come from my existing companies. This is my way of giving back,” he says.

HOW TO CHOOSE YOUR INSURER? Apart from helping its members with access to high-quality and pro-active health care and well-being services, Qineticare also assists them in selecting their insurance providers. Qineticare CEO Feisal Alibhai says many people often overlook even the basics in choosing their insurers:

biz.hk: Can you brief us on your service in the insurance side?

Feisal: We’ll connect you with some of the largest and reputable brokers in Hong Kong who will bid for your

business. They will review your policy and explain to you what you have and don’t have [in your policy] so that you understand it clearly.

We put our members directly in

biz.hk 8 • 2013

contact with the brokers. Unless the members wish to have us stayed on in ‘cc’, they are in direct contact. We have a very clear understanding [of the discussions] and most members would ask us, ‘this is the final story, please advice.’ In the insurance side, I am personally involved because this is a fairly big decision. biz.hk: What are the key factors to consider in selecting insurers?

Feisal: I would say that there are four factors individuals should look at.

First, the quality of insurers. Second, people should carefully check the coverage of chronic illnesses. For example, they need to understand if their coverage has limits on

biz.hk 8 • 2013

reimbursement.

Third, the individual needs to ask if the insurance is based on community-rating or experiencerating. Community-rating spreads the cost of healthcare equally over a community with all those who are insured under the same policy or type of policy and paying the same price.

On the other hand, experience-rating is used to estimate how much a specific individual or group will have to spend on medical care. This rating is based on how much a person has already spent, what conditions are already present and what risks a person has. One specific insured person’s claim affects the whole group.

The fourth is whether the policy is

renewable and if the renewal is dependent on age and any medical conditions.

These are really basic issues but a lot of people don’t know. For example, is your insurance renewable for your lifetime? biz.hk: Does Qineticare receive any commissions from brokers?

Feisal: We don’t take any commissions. Our agreement with brokers is that half of the commissions go back to the members. We act as an objective third-party to introduce you and save you money as the brokers agree with us to share 50 percent of the commission with our members, something most people don’t even ask for.

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NETWORKING

2013 Sep

Mark Your Calendar Further Liberalization of Tax Information Exchange -

AMCHAM MONTHLY NETWORKING DRINKS

Sep what does it mean for businesses in Hong Kong?

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Tracy Ho, Tax Managing Partner, Hong Kong & Macau, Ernst & Young Kathy Kun, Senior Manager, National Tax Centre, Ernst & Young This seminar will provide an overview of a new law recently enacted to allow Hong Kong to enter into standard tax information exchange agreements (TIEAs) and to enhance the scope of information that can be exchanged under comprehensive avoidance of double taxation agreements (CDTAs).

The new law will enable Hong Kong to comply with the latest international standard on tax transparency and to maintain its reputation as an international business and financial center. But how would it affect businesses in Hong Kong?

Tracy Ho has 20 years of experience in providing tax-related advice to multinational corporations with pan-Asian operations, on a range of matters, including inbound and outbound investments. She has been voted one of the Leading Tax Advisers in Hong Kong

by Legal Media Group's Guide to the World's Leading Tax Advisers consecutively since 2007.

Kathy Kun is Senior Manager of the Technical Team, Ernst & Young Tax Services Ltd, and is heavily involved in the preparation of the firm's tax publications. She also serves in a technical role for developing and updating internal tax training materials, as well as conducting internal tax training courses, while also providing technical support and research for client engagements.

More than 170 guests gathered for a very successful AmCham Monthly Networking Drinks at the American Club (Exchange Square Two) on Monday, August 5.

Hosted by AmCham’s Sports & Entertainment Committee as well as Hospitality and Tourism Committee, it provided executives and professionals a premium opportunity to “mix and mingle” with others in a relaxed atmosphere after a day of hardwork.

Special thanks to exclusive event sponsor 1010 and lucky draw sponsors Asia Pacific Properties, Orangefield ICS and Santa Fe for a “wonderful” evening.

Sep

12

Annual AmCham SME Forum: Overtaking the Crowd Peter Liu, MD, Asianet Consultants (HK) Ltd Jennifer Van Dale, Partner, Gall Jeremy Andrulis, GM, Hong Kong & Taiwan, Aon Hewitt Alvin Miyasato, Regional Program Director, Finance Learning & Leadership Development, Intel Semiconductor (US) Limited Alan Perkins, Chief Technology Officer, Rackspace Asia Pacific Linda Garrett, Managing Director, Garrett Global Consulting Come and join us for the second annual AmCham SME Forum, a half-day seminar designed to provide you and your business practical lessons and experiences.

Session 1: Top Talent People - on finding and managing talent in a competitive environment Session 2: Leaping Ahead Using Cloud IT Systems - with specific strategies and tools for different aspects of a business Session 3: Elevator Pitch – The Most Important Public Speaking You Will Ever Do a lecture combined with practical exercises on communication skills

Venue: AmCham Office 1904 Bank of America Tower 12 Harcourt Road, Central Time: 8:30-9:45am (Light breakfast included) Fee(s): Member Fee: HK$150 Non Member Fee: HK$280

Venue: Ivey Business School Rm S321, Level 3, Phase 1 HK Convention & Exhibition Centre 1 Harbour Road, Wanchai, Hong Kong Time: 2:00 – 6:00pm Speakers/Panel discussions (refreshment included) 6:00 – 7:00pm Cocktail Reception Fee(s): Member Fee: HK$550 Non Member Fee: HK$750 MEDIA WELCOME

Briefing Session on Amended Trade

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

Sep Descriptions Ordinance

18

Po-chuen Lam, Head, Consumer Protection Bureau (3), HK Customs & Excise Department Hoo-lam Lo, Head, Trade Descriptions (Service) Division 3, HK Customs & Excise Department The Trade Descriptions Ordinance (Cap 362), which came into effect in July, extends the coverage of prohibiting false trade descriptions in respect of services made in consumer transactions and deterring specified unfair trade practices. Topics for discussion will include: •Enforcement strategy - three-pronged approach •New prohibitions of the amended Trade Descriptions Ordinance •New enforcement regime - compliance-based mechanism Po-chuen Lam joined HK Customs and Excise Department in 1981 and has over 32 years of service and a wealth of experience in trade mark and trade description investigation, textile fraud and strategic trade investigation, prosecution and administration duties.

Hoo-lam Lo joined the department as an Assistant Industry Officer in 1980. He is currently head of the Trade Descriptions (Service) Division 3, which provides support to the enforcement of the amended Ordinance for better consumer protection against unfair trade practices.

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

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biz.hk 8 • 2013

Tel: (852) 2530 6900

Fax: (852) 2810 1289

Time: 12:00 - 2:00pm (Sandwiches and beverages included) Fee(s): Member Fee: HK$250 Non Member Fee: HK$380

Email: kalau@amcham.org.hk

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