biz.hk Oct 2014

October 2014

DRIVEN WITHOUT COMPROMISE SARA YANG BOSCO

PRESIDENT EMERSON ELECTRIC ASIA-PACIFIC

SPECIAL SUPPLEMENT:

EARLY EDUCATION

WOMEN OF INFLUENCE CONFERENCE & AWARDS

11TH ANNUAL

November 14, 2014 CREATING VALUE FROM THE EVOLUTION OF LEADERSHIP

A GREAT

GATSBY CHRISTMAS GALA DINNER 2014 November 9, 2014 (Sunday) The Ballroom@The Mira

The American Chamber of Commerce in Hong Kong proudly presents the ϭϭƚŚ ŶŶƵĂů tŽŵĞŶ ŽĨ /ŶŇƵĞŶĐĞ ŽŶĨĞƌĞŶĐĞ Θ ǁĂƌĚƐ. :ŽŝŶ ƵƐ ĨŽƌ ƚŚŝƐ ƌĞŶŽǁŶĞĚ ƐŝŐŶĂƚƵƌĞ ĞǀĞŶƚ ĂŶĚ ŽŶĞ ŽĨ ,ŽŶŐ <ŽŶŐΖƐ ŵŽƐƚ ĞƐƚĂďůŝƐŚĞĚ ǁŽŵĞŶΖƐ ĐŽŶĨĞƌĞŶĐĞƐ ĂƐ ǁĞ ƚĂŬĞ Ă ĨƌĞƐŚ͕ ďƵƐŝŶĞƐƐͲĨŽĐƵƐĞĚ ůŽŽŬ Ăƚ ŚŽǁ ŽƵƌ ǁŽƌůĚ ŝƐ ĐŚĂŶŐŝŶŐ ĂůŽŶŐƐŝĚĞ ǁŽŵĞŶΖƐ ĐĂƌĞĞƌƐ ǁŝƚŚ Η ǀŽůƵƟŽŶΗ ĂƐ ƚŚŝƐ LJĞĂƌΖƐ ƚŚĞŵĞ͘ dŚŝƐ LJĞĂƌΖƐ ĐŽŶĨĞƌĞŶĐĞ ǁŝůů ĂůƐŽ ŝŶƚƌŽĚƵĐĞ ŝŶƚĞƌĂĐƟǀĞ ƐŽĐŝĂů media audience systems and for all to share their own "recipes" on how to use ƚĞĐŚŶŽůŽŐLJ ĂŶĚ ŽƚŚĞƌ ƚĞĐŚŶŝƋƵĞƐ ƚŽ ŵĂŬĞ ŽƵƌ ůŝǀĞƐ ƐŵĂƌƚĞƌ͘ /ƚ ǁŝůů ďĞ ĨŽůůŽǁĞĚ ďLJ ƚŚĞ ϭϭƚŚ ŶŶƵĂů tŽŵĞŶ ŽĨ /ŶŇƵĞŶĐĞ ǁĂƌĚƐ ϮϬϭϰ ƉƌĞƐĞŶƚĂƟŽŶ͘

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October 2014

Contents

Vol 46 No 10 Richard R Vuylsteke

Editor-in-Chief Kenny Lau

Managing Editor Blessing Waung

14

08

Publisher

38

30

COVER STORY

CHINA BUSINESS

ENERGY

CHARITABLE FOUNDATION

President of Emerson Asia-Pacific Sara Yang Bosco discusses the company’s role of providing technology and solutions to the region – and how her life journey from Indiana to Hong Kong had prepared her to take part in the growing markets of China

An AmCham delegation of 27 executives participate in a one-day trip to Shenzhen looking to establish closer economic ties with various Chinese government officials and business leaders

CEO of ASB Biodiesel Anthony Dixon describes how a non-toxic, biodegradable fuel can be a sustainable solution to the issues of pollution and environmental degradation in Hong Kong

Founder of Sunshine Action Sunny Mak is presented with the 2014 Ira Dan Kaye Community Service Award – in recognition of his outstanding service to the local community

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.

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AMCHAM NEWS AND VIEWS 04 HK’s Competition Law Needs Clear Guidelines What’s needed in Hong Kong’s attempt to allow market competition to further spur businesses “to be more efficient, innovative and responsive to consumer needs” is a competition law that is sensible and enforceable as well as guidelines that are comprehensive, detailed, and clear

07 New Business Contacts 74 executives joined AmCham’s business network last month

TRADE & INVESTMENT 18 A Taste of California Director of California State Trade and Expert Promotion (STEP) and Director of the California Center for International Trade Development (CITD) Jeff Williamson speaks about international trade and exports of US products from the Golden State

TAXATION 22 Streamlined Filing Compliance Procedures Carlo Gray of Buzzacott Expatriate Tax Services addresses a number of frequently asked questions about filing US tax returns as financial institutions implement policies and procedures required under FATCA

60 Mark Your Calendar

COVER STORY

ECONOMICS & FINANCE

34 Is Fed Intervention Effective?

Ask the ‘shadow’ rate

The US Federal Reserve’s attempts to boost economic growth through market intervention in recent years have prompted heated debate. How should we measure the efficacy of such monetary policy?

CHARITABLE FOUNDATION

38 A Shining Light of Hope

Founder of Sunshine Action Sunny Mak is presented with the 2014 Ira Dan Kaye Community Service Award – an annual award recognizing the outstanding service of an individual volunteer committed to serving the local community

COMMUNICATIONS & MARKETING

08 Driven without Compromise President of Emerson Asia-Pacific Sara Yang Bosco discusses the company’s role of providing technology and solutions to the region – and how her life journey from Indiana to Hong Kong had prepared her to take part in the growing markets of China

26 Acoustic Ambitions President of Sennheiser for Greater China Marc Vincent – who has a background as a professional disc jockey and sound engineer – elaborates on the firm’s ambition to be a music cultural force in Asia

ENERGY

CHINA BUSINESS

14 AmCham Delegation Visits Shenzhen An AmCham delegation of 27 executives participate in a one-day trip to Shenzhen looking to establish closer economic ties with various Chinese government officials and business leaders

biz.hk 10 • 2014

30 An Economically Viable Biodegradable Fuel CEO of ASB Biodiesel Anthony Dixon – an investment banker turned environmentalist entrepreneur – describes how a non-toxic, biodegradable fuel can be a sustainable solution to the issues of pollution and environmental degradation

biz.hk 10 • 2014

EARLY EDUCATION

44 Educational Nirvana

With a newly commissioned school campus in Sai Kung, Hong Kong Academy is well on its way to becoming a world-class educational institution

48 The Montessori Way of Learning Education experts at Discovery Montessori School elaborate on the organization’s progressive approach to early education and its ambition for students in Hong Kong

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biz.hk Editorial

Board of Governors Chairman

Peter Levesque

Vice Chairman

Walter Dias

Treasurer

Tom Burns

Executive Committee Evan Auyang, Sara Yang Bosco Belinda Lui, Alan Turley, Richard Weisman Governors Donald Austin, Brian Brenner, Ewan Copeland Janet De Silva, Rob Glucksman, Robert Grieves John (Jack) E Lange, Ryan Mai Catherine Simmons, Eric Szweda, Colin Tam Elizabeth L Thomson, Jennifer Van Dale Frank Wong, Eden Woon Ex-Officio Governor President

James Sun Richard R Vuylsteke

Chamber Committees AmCham Ball Apparel & Footwear China Business Communications & Marketing Corporate Social Responsibility Energy Entrepreneurs/SME Environment Financial Services

Walter Dias Colin Browne Seth Peterson Lili Zheng Charlie Pownall Oliver Rust Diana Tsui Rick Truscott Laurie Goldberg Jim Taylor Derek Berlin

Food & Beverage Hospitality & Tourism Human Capital

Veronica Sze Damien Lee Peter Liu

Information & Communications Technology Insurance & Healthcare

Rex Engelking

Owen Belman Hanif Kanji Intellectual Property Gabriela Kennedy Law Clara Ingen-Housz Pharmaceutical Stephen Leung Real Estate Charles Kelly Senior Financial Forum Philip Cheng Senior HR Forum Bianca Wong Sports & Entertainment Ian Stirling Taxation David Weisner Trade & Investment Barrett Bingley Transportation & Logistics Jared Zerbe Women of Influence Anne-Marie Balfe Anna-Marie C Slot Young Professionals Alison Carroll Michael Harrington

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T

he Hong Kong Competition Commission (HKCC) will publish a set of draft guidelines pursuant to the Ordinance (“Guidelines”) in the fall of this year. It is Hong Kong’s first broad experience with a competition law regime. It’s an attempt to strengthen market competition to further spur businesses “to be more efficient, innovative and responsive to consumer needs.”

The economy of Hong Kong is renowned as one of the freest in the world, but as HKCC points out, it is not free from behavior that is anti-competitive. Conduct such as price fixing and bid rigging not only result in fewer consumer choices and distorted prices, but also make Hong Kong a less attractive place in a highly competitive world.

The key here is a fair and level playing field for businesses. What’s needed is a competition law that is sensible and enforceable as well as guidelines that are comprehensive, detailed, and clear. In doing so, it should not substantially increase the cost of doing business in Hong Kong. Care should be taken to limit regulations to the strict minimum and to simplify existing rules to facilitate implementation.

Moreover, the public needs to be educated about the meaning of the Ordinance, specifically focusing on serious (so-called “hard-core”) anti-competitive conduct, meaning mainly price fixing, market sharing, output restriction, and bid rigging. The Guidelines are expected to be an important educational tool that should provide increased legal certainty. This can be achieved by maximizing clarity in the Guidelines and striving for full transparency on enforcement priorities.

biz.hk 10 • 2014

HONG KONG’S COMPETITION LAW

NEEDS CLEAR GUIDELINES To provide better clarity, multiple examples should be included to demonstrate what is lawful and unlawful. Background information should help in the interpretation of the Guidelines. This is necessary because a general competition law is new to Hong Kong and because the Guidelines will be made available in two languages – English and Chinese – which could potentially lead to uncertainties.

The Guidelines need to be sufficiently detailed, particularly regarding how complaints should be made, how HKCC will launch and conduct investigations, and how it expects to receive applications for and exercise its power to grant individual or block exemptions. Otherwise, more confusion rather than less may dominate in the marketplace.

The Guidelines need to make procedural safeguards available to companies when under investigation – including the rights to confidentiality, to be heard, and to be informed.

Likewise, if no guidelines are scheduled under the Ordinance for warning notices or leniency applications, then relevant issues and clarifications should be provided by way of policy statements.

biz.hk 10 • 2014

So far there has only been a tentative, non-binding timeline for the entry into force of the Ordinance. But a clear timetable for the adoption of the Guidelines – and the subsequent coming into force of the substantive provisions of the Ordinance as well as any step in between – ought to be set out as soon as possible.

Businesses are eager to be compliant by the time the Ordinance comes into effect, but in some cases the commercial and operational changes that may be required could take time to design and implement. Having a clear and reliable timetable to undertake such changes is necessary to ensure compliance.

Transparency on enforcement priorities will be critical. A policy statement, for example, indicating that HKCC will in the first instance dedicate its resources primarily to combat hard-core conduct would be highly beneficial. It would also be helpful to set out how it will balance Hong Kong specificities and international precedents.

The bottom line: The better the rationale behind enforcement priorities is articulated, the better it is for the business community to understand and adapt to the new law.

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AMCHAM AMCHAM Means Means Business Business

Members Directory

New

Business Contacts The following people are new AmCham members: AIA Group Peter Crewe CEO, Group Corporate Solutions

w w w. a m c h a m . o r g . h k www.amcham.org.hk

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

AIG Insurance Hong Kong Ltd Emma Duncombe Director, Executive Recruitment Asia Pacific

Ansell (Hong Kong) Limited Peter Dobbelsteijn SVP EMEA/APAC

Arkadin Global Collaboration Services Harry Shiever Managing Director, Online Business

Asia Pacific RT (HK) Ltd Mark Pitman Chief Executive Officer

Association of Executive Search Consultants

Over 500 500 pages pages in in three three major major sections, sections, including including aa complete complete guide guide to to chamber chamber services, services, Over corporate sponsors sponsors and AmCham Charitable 1,700 corporate Charitable Foundation.

Foundation.This Thisdirectory directorylists listsabout over 1,800 members from from over about700 700companies companiesand andorganizations. organizations. members ISBN 978-962-7422-18-1 ISBN 978-962-7422-20-4

LC 98-645651 LC 98-645651 NON-MEMBER PRICE Local Delivery HK$1500 Overseas Delivery US$195 Shipping costs: Local HK$45 (per copy) US/International HK$50 (per copy)

Microsoft Hong Kong Ltd

Sovereign Trust (Hong Kong) Ltd

Caroline Davis Analyst Alvin Yam Executive Director Pristine Remolona Associate

Alan Chan National Technology Officer Eimund Loo National Anti-Privacy Lead

Ashley Nelson Business Development Manager Jade Wong Senior Associate John Moran Senior Associate Joe Cheung Managing Director

IAM Legacy Limited Enzio Von Pfeil

jba consulting engineers Dave Choi Senior Project Manager

Jones Lang LaSalle Michael Klibaner Head of Research, Greater China Colin Jones Negotiator, Markets, HK Annie Wang National Director, Integrated Facilities Management, HK

Moleskine Asia Ltd Daniele Ronchi Key Account Manager Alessandro Fasoli Managing Director

Nielsen Hong Kong Yvonne Lum Vice President, Consumer Insights, Hong Kong

Oracle Systems Hong Kong Ltd Alice Lin Vice President - Finance, Asia Pacific

Orangefield Group

Paul Smith Managing Director, Asia Pacific

Anthony Lee Director, Business Development

Gillian Chan Director, Business Development Karen Cheung Business Development Manager Quinten Kah Business Development Manager Donald Tsang Associate Director Callan Anderson General Manager Vincent Bremmer Managing Director

China Telecom Global Limited

Kreab Gavin Anderson (Hong Kong) Ltd

Poseidon Group, The

Patrick Rooney Managing Director, Asia-Pacific and the Middle-East

Calvin Klein Asia Pacific Elizabeth Edmiston EVP - GTM & Retail Operations, Calvin Klein, Asia Pacific

CFA Institute

MEMBER PRICE HK$800 HK$104

EXS Capital

Yan Ou Executive Vice President

CIGNA Worldwide Life Insurance Company Ltd Sylvia Evans Head of Brand Communications Ben Furneaux Head of Strategy & Business Development

CLP Power Hong Kong Ltd Geert Peeters Group Director & Chief Financial Officer, CLP Holdings Ltd

Deacons Robert Woll Partner

Kiabi International Supply Services Ltd Irene Sun Merchandising Director

Kincannon & Reed Singapore Pte Ltd Lelia Lim-Loges Managing Director, Asia Pacific

KPMG

Tommy Patterson Associate Director, Public Affairs Sophie Sophaon Associate Director Walter Jennings Managing Partner

LinkedIn Jessica Lau Corporate Solutions Manager

Links International Annie Cheung General Manager, Recruitment

MasterCard Asia/Pacific (Hong Kong) Ltd

Heather McLeish Global Head, Business Development

Ralph Lauren Asia Pacific Limited Gordon Lo Vice President

Regus HK Management Ltd Jenny Hui Coaching General Manager

SGS Hong Kong Ltd Ian Leybourne Deputy Director - Footwear & Leather Services, Global Softlines

Sloane Asia - Asia Pacific Office

Edelman Public Relations Worldwide (HK)

Rennis Li Head of Product, Global Commercial Payments, N&SEA

Bob Grove CEO, North Asia

Mayer Brown JSM

Societe Generale

Edwards Wildman Man-Chiu Lee Partner Lorne McDougall Partner

Estee Lauder (HK) Ltd Vicki Au Managing Director

Mark Uhrynuk Partner, Mayer Brown LLP Elaine Lo Asia Chair & Senior Partner

Mead Johnson Nutrition (Hong Kong) Ltd Linda Yan External Affairs Director, Hong Kong & Taiwan

Jessica Chiu Director

Socrate Lao Chief of Staff to CEO, Strategy & Corporate Development Pascal Sefrin Regional Head of Clients Coverage, Asia Pacific Hikaru Ogata Chief Executive Officer, Global Banking & Investor Solutions, Asia Pacific

Spacious.hk Asif Ghafoor CEO/ Founder

Steve Vickers & Associates Limited Christopher Pockette Vice President, Operations Jan Maynard Director of Operations Steve Vickers CEO

Stroz Friedberg

Walt Disney Co (Asia Pacific) Ltd

Anthony Fung Vice President

UTC Building & Industrial Systems Ian Lau Director - New Equipment & HK CLC, Otis Hong Kong Titus Yu Managing Director, CCS HK, Macau, BIS Taiwan

John Hsu Vice President & General Manager, Hong Kong & Taiwan Luke Kang Managing Director, Greater China

Westmark Partners Christopher Sullivan President

Withers Laurence Ho Registered Foreign Lawyer (New York, Massachusetts)

Zebra Strategic Outsource Solution Ltd Victor Chang Director Peter Pang Business Development Manager Connie Ren General Manager

View our other members at:

http://www.amcham.org.hk/component/amcham_users/?view=memberlist

3753 1208

biz.hk 10 â&#x20AC;˘ 2014

7

COVER STORY

Sara Yang Bosco

Driven without Compromise Currently listed as number 121 on the Fortune 500 list of US corporations, Emerson’s diversified business scope spans everything from intelligent control systems to food waste disposers. President of Emerson Electric Asia-Pacific Sara Yang Bosco discusses the company’s role of providing technology and solutions to the region through commercialization of invention – and how her life journey from Indiana to Hong Kong had prepared her to take part in the growing markets of China

By Blessing Waung

Photos: Silver Image

8

biz.hk 10 • 2014

biz.hk 10 • 2014

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I

n the region for which she is responsible, there are many infrastructure and energy challenges that have never existed before, but Sara Yang Bosco echoes the tagline of her company Emerson, “Consider It Solved.”

Currently listed as number 121 on the Fortune 500 list of US corporations, Emerson’s diversified business scope spans everything from intelligent control systems to food waste

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disposers. The company is well recognized for its constancy and commercialization of invention – and was named by Thomson Reuters in 2013 as one of “Top 100 Global Innovators.”

Emerson is one of the few publicly traded companies that have had 57 years of increased dividends, with net earnings of US$3.54 per share in 2013.

In that same year, 24 percent of Emerson’s overall global sales were from Asia.

China: a strategic market Some of Emerson’s key customers globally are other brand name American companies including Amazon, AT&T, Cisco and Walmart, but so are fast-growing Mainland Chinese corporations such as China Mobile and China Telecom. In fact, China is its second largest market after the United States, with 24 manufacturing facilities

biz.hk 10 • 2014

and more than 17,000 employees spread across the country.

The company first entered the Chinese market in the late 1970s through a technology transfer and established a wholly foreign owned enterprise known as Emerson Electric (Shenzhen) Co Ltd in the early 1990s at the invitation of former Chinese Premier Zhu Rongji, who was then Mayor of Shanghai and is today lauded for being the mastermind behind the development of the Pudong Special Economic Zone.

biz.hk 10 • 2014

For decades, Emerson has worked very closely with the Chinese government in a relationship that goes far beyond mere commercialization of technology. Chairman and CEO David N Farr – who once served as President for Emerson Asia-Pacific based in Hong Kong in the 1990s – has been an economic advisor for the governor of Jiangsu Province since 2005.

Meanwhile, President and COO Edward L Monser is one of the economic advisors to the Guangdong governor; and former President of Emerson Climate Technologies for Asia Scott Barbour has m=et with Premier Li Keqiang.

“Chinese government leaders value our opinion. That gives us a voice,” says Bosco, who is currently President for Emerson Electric Asia-Pacific.

“How we use that voice in promoting what China is trying to get done as well as promoting our mission and providing cutting-edge solutions to customers is really our responsibility.”

“We pay a lot of attention to where the government wants to take the country, and you can see that through the five-year plans,” she says. “It means that they will support their own local industries in those policies they want to promote.”

“That gives us a sense of direction in terms of where China is going, and where our customers in China are looking to do,” she adds. “With that in mind, we then look at how Emerson can make an impact on those specific things.”

Today, there are very few companies within China – foreign or domestic – that have 24 manufacturing sites, another 22 engineering and development centers, more than 17,000 employees, and key personnel on two provincial advisory councils, Bosco points out.

From Indiana to Hong Kong Bosco officially joined the company as General Counsel for Asia-Pacific back in 2005 and was responsible for a range of legal affairs in mergers and

acquisitions, compliance and various corporate matters. However, it was more than a decade ago when she first became an external legal counsel for Emerson when she was an associate and later a partner at Baker and McKenzie and then at Perkins Coie in Hong Kong.

“I was actually on the team that made a pitch to Emerson to provide our legal services as an outside firm,” Bosco notes. “And, I was the main lawyer responsible for all of Emerson’s investment work in China, from 1994 until I joined them.”

“When I got to Emerson and took on the new role as a general counsel, I discovered all this work I didn’t get to see as an outside lawyer,” she recalls smilingly. “Emerson hired me because I had been their main counsel for 11 years, and thus had developed a strong level of trust.”

“It is certainly something you can’t do overnight; it takes time and investment on both sides to build up a working relationship,” she says. “That is a true and tried way for Emerson to bring people inside. There must be a very high degree of trust.”

Like many American-born Chinese, Bosco comes from a family in which her parents left China only to pursue studies in the US, with an intention to return to China.

“By a fluke of geopolitics, I ended up being born and raised in the Midwest of the United States, but with fairly traditional Chinese immigrant parents,” she says. “As a result, there was always a connection with China.”

Living in South Bend, Indiana, Bosco was one of five children in her family. Though her parents spoke a bit of Chinese at home, as soon as she and her siblings started school, English became their primary language every day. Among her siblings, she is the only one based in Asia, with the rest of her family back in the US. “There were very few Chinese Americans in my school when I was growing up,” she describes. “And, as soon as you started school, you became an American, culturally, language- and perspective-wise.” Nonetheless, she

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had a vast interest in delving more into the Chinese language while in high school, which was far from the norm in those days.

“No high schools were teaching Mandarin Chinese then, so I had to take classes at a local university,” Bosco says. “I knew I wanted to go to the University of Notre Dame, which had just started an abroad program in Taiwan. The program required two years of language training to be eligible. In those days, you couldn’t even go to China.”

Life-changing experiences In Taiwan for a full year of study, when it was still under martial law, Bosco chose to step out of her comfort zone and immersed herself in the language, while learning about her own adaptability and ability to handle other people’s perceptions of her. It was ultimately an experience from which she feels to have achieved a high degree of success.

“Looking back, I believe I had a very successful year because I learned not only a language but also more about myself and how I could adapt to circumstances that I couldn’t control,” Bosco says. Consequently, she found herself yearning to find a way back to Asia and traveled to Mainland China for the first time after her first year of law school.

“The Cultural Revolution had ended at the time,” she points out.

“China was just starting to open up, and groups of tourists had not yet begun to travel to China. I actually went on a ‘visiting relatives’ visa because I still had an aunt and uncle in Shanghai.”

Bosco stayed with her aunt whom her father did not see for over 30 years during the Communist and Cultural revolutions. She also lived with a professor – a childhood friend of her father – at the Central Conservatory of Music in Beijing, who was preparing to send her first group of graduate students to the United States.

“What I did that summer was basically tutor her graduate students

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who had already been accepted into US music programs in English – something they desperately needed,” Bosco notes. “Speaking English was a new experience for everybody in China, and students were just starting to take the TOEFL (a standardized test of English language proficiency for non-native speakers).”

Bosco spent three summer months at the conservatory surrounded by music. “On my first day walking onto campus, there was a classical music concert going on that was standing room only, and it was something new as people did not have access to Western classical music. A whole world had just opened up to them.”

“I think China is trying to build a nation and a society. To do that, they have to push certain aspects, including scrutiny on antitrust issues, political reform, state owned enterprise reform as well as currency reform.”

That summer, she also traveled throughout northern China for piano workshops, and was able to see the way China’s perspectives were beginning to widen.

“At that time you had to be very conservative,” Bosco says. “I had long hair and had to wear it in braids. I looked just like anybody and bought a Mao jacket because that’s what every-body was still wearing. A little bit of color was just starting to appear.” And she was able to blend in with the crowd, yet still see the country with her American upbringing and perspective.

As a professional After finishing law school, Bosco went on to take the bar exam in New York, while simultaneously working two part-time jobs in New York City, a training experience which had prepared her for her current role as a business executive. Focusing on asylum law and dealing with heavy policy-making, she was exposed in her job to years-long extradition cases in federal courts, while later working at a criminal law firm representing Chinese gangs.

“They’d come in, and of course, they spoke Mandarin. Here I am, the law clerk speaking to these guys running Chinatown,” she laughs. “I had this experience working on criminal law matters. It was a real grounding in the American legal system.”

After a year, she moved to Taiwan because of her husband’s academic research. Her husband is currently an associate professor and head of the graduate department of Anthropology at The Chinese University of Hong Kong. “Anything dealing with China, my family asks him,” she says. “He’s the expert, a real China scholar.” The pair – children of immigrants and of college professors – met during their freshmen year in high school.

Back in Taiwan, she worked for a local law firm and met many people who remain friends and colleagues to this day. “Everybody who was doing anything law-related in Taiwan in the 80s eventually ended up working in the Mainland,” she says. “The language – even the system – is not that different. There’s a lot in common in terms of the legal and government structures.”

Bosco and her husband later moved back to New York for a few whirlwind years before coming to Hong Kong, where she was able to transition into the management role of Emerson Electric Asia-Pacific, despite a background mostly as a legal counsel.

She believes this was aided by her tendency to go beyond the parameters of her role to achieve results and that

biz.hk 10 • 2014

she was recognized for her potential to become a leader.

“I have a fairly good understanding of how China directionally wants to work, what they are trying to do and how that ties back to what we see on a day-to-day basis,” Bosco says. “There is a lot of focus now on multinational corporations in China.”

“I think China is trying to build a nation and a society. President Xi Jinping has talked about the new Chinese dream. That means it is still being formulated,” she says.

“To do that, they have to push certain aspects, including scrutiny on antitrust issues, political reform, state owned enterprise reform as well as currency reform. All these things are trying to mold it into what it’s going to look like in the end.”

Committed to Asia As for how multinational corporations such as Emerson will fit into this puzzle, Bosco says that they are there to help. “We’re kind of the collateral in a sense. We have something to contribute to Chinese consumers, which will tie into the continuing development of China as a nation.”

“For example, we do a lot of work on the infrastructure space. Our customers are operators of data centers, refining plants and power plants,” she says. “These are things that determine how one may be able to live one’s life.”

“We see ourselves as a part of that foundation very much needed in order to build a society,” she adds. “We believe we have a role to play, and China has recognized that role.”

“It’s Never Been Done Before” – one of Emerson’s most visible advertising campaigns in Hong Kong and globally – is indicative of the company’s nature in game-changing, forward-moving innovation such as creating an “unending source of electrical power for a city” from food waste.

Emerson has to hold true to the statement of aspiration in the Asia-Pacific arena, Bosco says.

“Emerson Asia-Pacific is by no means a China-only company,” she says. “Hong Kong is well positioned geographically in the region, and it serves as an international hub where there’s talent, technology, access to the Internet and a free press – all vital to a global business center.”

biz.hk 10 • 2014

IT'S NEVER

BEEN DONE

BEFORE BROADBAND

Emerson Provides Critical Technology Support for Delivery of Broadband Service Across Australia

PETROCHEMICALS Brazil's Largest Petrochemical Facility Will Operate With Emerson Technology

WATER QUALITY

Emerson Technology Helps A City Better Maintain Its Drinking Water System

DATA CENTERS

Emerson Shows Data Centers How to Take the Heat Out of Energy Costs

LIQUEFIED NATURAL GAS

Emerson Technology Helps Qatargas Boost Liquefied Natural Gas Production to Meet World Demand for Clean, Reliable Energy

OFFSHORE OIL

PEMEX Improves Safety and Extends Production of Oil Field With Emerson Technology

EXTREME OIL

Emerson Helps LUKOIL Tap New Opportunity in One of the World’s Harshest Environments

ELECTRICITY

Breakthrough Garbage Disposals Help Milwaukee Convert More Food Waste Into Electricity

SHIPPING

Emerson Technology Enhances Food Preservation Around the World

HEAT

Emerson Heat Pump Technology Heats a City Using Frigid North Sea Water With Zero Global Warming Impact

HEAT PUMPS

Emerson Heat Pump Technology Is Helping China Reduce Coal Use

13

CHINA BUSINESS

AmCham Delegation Visits Shenzhen Led by former Chairman James Sun and President Richard Vuylsteke, an AmCham delegation of 27 executives participate in a one-day trip to Shenzhen looking to establish closer economic ties with various Chinese government officials and business leaders

By Blessing Waung

S

henzhen is now one of the four first-tier cities in China and is a significant player in an array of business sectors including finance, high-tech, transportation and logistics. With an economic relationship with Hong Kong for more than 30 years, numerous business opportunities lie ahead for the city as China continues to grow.

With a vision to strengthen

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relationships with the municipal government and businesses in the area, AmCham Hong Kong visited Shenzhen on a delegation at the end of August. Led by former Chairman James Sun and President Richard Vuylsteke, a group of 27 executives participated in a one-day trip across the border looking to establish closer economic ties with various Chinese government officials and business leaders.

In the morning The day began with a visit to the Shenzhen Industrial Museum, a ninestory building dedicated to displaying Shenzhen’s industrial achievements, for a perspective of the vast development of the special economic zone.

While there, delegates saw firsthand the latest offerings of Chinese tech companies such as Skyworth, a Hong Kong-listed company headquartered in Shenzhen’s Nanshan High Tech Industrial Park which is also known as “China’s Silicon Valley.”

Technologies showcased at the museum include 3-D video glasses and ultra-highdefinition LCD screens. In a pavilion dedicated to strategic emerging industries, many prototypes of products are on display to show the possibilities in the creation of smart cities of the future, including smart systems for emergency dispatch,

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fire fighting and prevention as well as other mission critical capabilities, in addition to using cloud technology for everything from storage to banking and even a cloud rice cooker.

The delegation then headed to the Shenzhen Civic Center for meetings with Shenzhen Vice Mayor Tang Jie and Deputy Director General for Shenzhen of the China Council for the Promotion of International Trade (CCPIT) Huang Shifang. Vice Mayor Tang opened the conversation by

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giving participants some background information – and other stunning factoids – about Shenzhen’s economic growth since its inception in 1980.

“Over the past three decades, Shenzhen grew on an average of more than 26 percent annually,” Vice Mayor Tang noted in the meeting. “In simpler terms, back when we first started opening up, Shenzhen’s GDP per capita was around US$200. That was about 60 percent of the national average at the time.”

“Back then, Shenzhen’s GDP was only 5 percent of what Hong Kong had,” he said. “In 2013, it exceeded that of Taiwan, reaching US$22,000, or about 55 percent of that of Hong Kong today. Shenzhen’s economy last year had already reached 87 percent of the size of Hong Kong’s economy. When we first opened up, it was less than half a percent.”

In the meeting with the AmCham delegation, Vice Mayor Tang cited several key objectives for economic growth in the area: first, the importance of the proposed market orientation, the legal system and the internationalization of Shenzhen; second, sustainable growth and high-quality all-around development; and third, forming a “bay area economy.”

It is a long-term vision for which

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AmCham’s China Affairs Department will seek to facilitate through collaborations for closer relationships between Shenzhen and Hong Kong.

In the afternoon At midday, AmCham delegates had a chance to network over lunch with Nanshan District Deputy Head Ji Zhen, who also celebrated his birthday at the occasion.

One of the delegation’s capstone events was a visit to Nanshan District.

With an area of 182 km² and a population of 1.08 million, it is home to the Shenzhen High Tech Industrial Park and is well recognized as the most dynamic hub of technology innovation in South China. There are more than 100 listed companies registered in the district, including China Merchants Bank, Pingan, ZTE, TCL, CIMC, and Mindray.

In Nanshan District, the delegation was invited for a tour of the Shenzhen headquarters of Tencent, an Internet company led by billionaire Pony Ma, where members were briefed on the latest innovations, including the hugely popular WeChat forum, and participated in demonstrations of the company’s various apps for mobile devices.

Despite Whatsapp being the most popular messaging forum among users in Hong Kong, participants were

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impressed with WeChat’s ability to be connected to desktop computers and with the functionality of a network of walkie-talkies.

According to a tour guide on site, the average age of Tencent’s employees is 27 – a reflection of a generation of young, tech-savvy talent in place to move forward with innovation. In addition to being one of the China’s top Internet companies in China, Tencent has recently received approval to establish its private banking subsidiary in Qianhai – a move indicative of China’s progress in financial reform.

The last stop of the trip was a visit to Qianhai, home of the ShenzhenHong Kong Modern Service Industry Cooperation Zone, where delegates sat down for a roundtable discussion with Qianhai Authority Deputy Director Tang Zhijiang and a briefing on the status of urban development in the district.

Before returning to Hong Kong, delegation members watched a panoramic video detailing the urban planning for Qianhai, including the blueprint for future development in a city that will allow residents to have access to green space within a 330-foot radius and provide access to public transportation within 660 feet.

In addition to a vision for a green style of living, Qianhai will also put a

large focus on developing a highquality healthcare system up to par with Hong Kong, as well as an education system of international standards, according to the presentation. The construction of Qianhai is scheduled for completion by 2020.

Further collaboration Shortly after the delegation trip, AmCham Chairman Peter Levesque invited Dr Witman Hung, Managing Director of Qianhai International Liaison Services Ltd, to the Chamber to talk more about the latest development of the cooperation zone, including a number of cross-border initiatives pertaining to sectors such as

biz.hk 10 • 2014

financial services, transportation and logistics.

Going forward, AmCham will continue to work closely with CCPIT Shenzhen, as well as Invest Shenzhen and Qianhai liaisons. The Chamber will host a delegation to Guangzhou later this month and organize the annual Doorknock trip to Beijing, scheduled for November. Participating members will be meeting with senior Chinese officials and US Embassy/Consulate representatives to have a discussion on an array of business topics.

There are also two delegations tentatively scheduled for early 2015 to meet with government officials and business executives in Zhuhai and Macau.

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AmCham Delegation • James Sun, Managing Director, Charles Schwab HK Ltd • Richard Vuylsteke, President, AmCham Hong Kong • Seth Peterson, Partner, Heidrick & Struggles • Lili Zheng, Co-leader and US Tax Managing Director, Deloitte AP ICE Ltd • Devin Ehrig, Vice President, The Winterbotam Trust Company (HK) Ltd • Max Burger, Chairman, Golien • Colin Chan, Vice President & General Manager, Datapipe Asia Limited • Ricky Ng, Executive Director, Head of Commercial Banking, United Overseas Bank Limited • David Chao, First Vice President, Foreign Direct Investment Advisory, United Overseas Bank Limited • Penny Chen, Director, KPMG • Joe Cheung, Managing Director, Sovereign Trust (Hong Kong) Limited • Fabian Knopf, Senior Associate & Co-Head of German Desk, International Business Advisory, Dezan Shira & Associates • Kersti Krepp, Vice President, Asia Pacific, Polar Air Cargo • Lou Lam, Executive Committee Member, Hong Kong Road Safety Association • Dicky Shek, General Manager, Arkadin (HK) Limited • Chris Tsang, Executive Director (School Development & MSc Programs), HKUST • Michelle To, Assistant Manager, MBA Student Development, HKUST • Robert Woll, Partner, Deacons • Edward Yau, Greater China Representative, The Port of Long Beach USA • Lawrence Yeung, Managing Associate, Bird & Bird • Kenny Yu, BDD, Cognizant • Wei Yue, Senior Counselor, APCO Worldwide • Maggie Zhou, Vice President, Santander Bank

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TRADE & INVESTMENT

California, perhaps the most famous American wine exporter worldwide, is particularly eager to boost trade with Hong Kong, which is a well known as a place for the wine trade because of its “zero wine duty” policy, as well as for consumers with a discerning palate and appetite for importing fine wines. In 2013, US wine exports rose 16.4 percent from the previous year to a record US$1.55 billion.

In May of this year, the California Wine Trade Association was launched during Hong Kong’s Vinexpo trade fair in order to provide those in the Asian market better access to Californian wines. This includes services such as a Hong Kong mailing address and access to trade events.

Food and agricultural products are California’s third largest export items to Hong Kong, with more than US$1.5 billion worth of products into the city in 2013 alone. US agricultural exports have had steady double-digit rates of growth since 2008.

Jeff Williamson

A Taste of California Director of California State Trade and Expert Promotion (STEP) and Director of the California Center for International Trade Development (CITD) Jeff Williamson – who was in Hong Kong for the 25th HK Food Expo held earlier at the HKCEC – speaks to biz.hk about international trade and exports of US products from the Golden State

By Blessing Waung

18

Consumption

D

irector of California State Trade and Expert Promotion (STEP) and Director of the California Center for International Trade Development (CITD) Jeff Williamson was in Hong Kong in mid-August for the 25th HK Food Expo held at the HKCEC. This year, more than 460,000 visitors attended, marking a 12 percent increase from last year’s attendance.

By setting up a booth at the Food Expo, CITD’s main goal was to

promote the Golden State’s international trade and competitiveness, supporting US exporters in finding more business opportunities in the Asia Pacific region.

California STEP leverages an extensive network of state, federal, private and non-profit trade promotion organizations to help small US businesses export more, particularly through bringing their marketing efforts to trade shows abroad. The program, funded partly by a grant through the US Small Business Administration, provides small businesses an opportunity to sell their products overseas in ways that they might not otherwise be able to do themselves.

“On each one of these trips, we focus on getting companies that are new

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to market,” Williamson says. “We want to focus on small companies, providing an incentive for them to participate.”

US products The export promotion programs in which CITD participates each year have focuses on a range of sectors: Information & Telecommunications Technologies, Green Technologies, Food and Agricultural Products, California Lifestyle Products, Water Technologies, Scientific Instrumentation, Transportation Equipment, and Industrial Machinery.

At the fair, exhibitors from California displayed products ranging from organic food and health supplements to fortified wine. There were more

biz.hk 10 • 2014

offbeat products as well, including vitamins in the form of jelly beans and chia squeeze bottles.

After bringing these small companies to exhibit their line of products, Williamson says his office will examine in an analysis what the direct business outcomes are and see how many of them are successful in linking with new customers.

Currently, Hong Kong is California’s sixth largest export destination, with nearly US$8 billion worth of goods exported in 2013. By far, as evidenced by the extreme queues at the Apple stores around the city, the top category of exports was computer and electronic products, accounting for 44 percent of the total exports at nearly US$3.4 billion.

Equally important is the market in Mainland China, which is California’s third largest export destination, with more than US$16 billion of US exports. It is also the state’s number one source of tourists.

“As we can see from what’s happening, there is a shift in the locus of where consumption is occurring,” Williamson says. “Consumption is king. When it comes to the Asia Pacific region, we’re looking at tremendous consumption growth over the next several years. Already, we estimate that consumption in China will continue to grow to match that in the US, and pretty soon it will be double.”

“We have so many innovative US companies that when they start looking at market potential, we want to encourage them to do significant investigation into these emerging markets,” he adds. “We want them to understand what the potential is, so that they can expand and compete globally. If they’re not here in the region, I don’t think

19

will only get the whole picture when they can actually see how their products and services are used in the context of this environment, how buyers are responding and how the environment actually operates. It’s an educational journey for a small business.”

Challenges The challenge for small businesses is how to manage risks across borders and from a long distance. “Our major job is getting people to the market,” Williamson says. “They have tacit knowledge about their products and services that we don’t have, and they know what their customer looks like and what drives their business. What they also need is to come to the market and see for themselves.”

they’re reaching their full potential.”Many companies, when in the initial stages of product development, are still focusing on the domestic market, Williamson points out.

However, part of the CITD’s goal is to change this perspective to help US businesses succeed in overseas markets.

“We need to start looking at a model whereby at the product inception stage, people have the Asian customer in mind,” he says. “They need to have them in mind while they’re designing the product, instead of as an afterthought.”

To facilitate this, Williamson and the CITD are trying to provide incentive for small business owners to fly overseas and understand the landscape – and the consumers – in Asia for themselves. “All these perspective shifts come when somebody has the sensory experience of being here,” Williamson says.

“They can read about it and they can study it on the Internet, but they

20

“Equally important is the market in Mainland China, which is California’s third largest export destination, with more than US$16 billion of US exports. It is also the state’s number one source of tourists.”

It is no easy task in getting small US businesses to see the importance of expanding in the international marketplace. At the Food Expo, for instance, the California booth was surrounded on three sides by a large number of Korean businesses trying to establish a consumer base here, while the Mexican booth towered over them on the remaining side.

Williamson acknowledges that US businesses have a lower rate of participation in other trade fairs as well than those of other countries, including the China Medical Equipment Fair, which is the second largest of its kind. “We still don’t have the participation rate that our European counterparts have.”

“It’s a perspective that, for example, German companies figured out a long time ago. When they looked at the rest of the world’s consumption and realized how little market share they had, they simply went after global markets,” he points out.

“They’ve had a global perspective since the very beginning, and they’ve had one of the highest global participation rates from small companies in the world,” he adds. “They are exporting almost as much as the United States, with one third the amount of people.”

Prospects Williamson hopes that CITD will help businesses in California understand a longer-term scope of global consumption and the direction in which they must take their companies to remain competitive on the world stage.

“If they don’t reach markets abroad, I just don’t think they’ll be able to compete globally,” he stresses.

“They can’t do that just by sitting at home and being what we call opportunistic participants who only respond as inquiries come in. I see that disappearing because people have to be much more proactive.”

Nonetheless, there are many successful cases among US business owners whom Williamson has accompanied on trips to markets overseas.

One such company is KPI Ultrasound Machines, which made an appearance at the China Medical Equipment Fair with CITD. “They exchanged business cards with 200 interested parties and didn’t know what to do with them at first,” Williamson recalls. “They eventually set up an office here in Asia and sold half a million dollars worth of ultrasound machines in the course of nine months.”

And, it is only one of the many cases of success facilitated by CITD; others include Californian wineries having sold 5,000 cases of their fine product.

Williamson believes that there will be many more of such stories to be told.

biz.hk 10 • 2014

Amy Hochderffer, left, and Mike Poindexter of California-based Poindexter Nut Company, in Hong Kong for the HK Food Expo

An American Homegrown Product in Asia

By Blessing Waung

W

hat started as a roadside walnut stand three generations ago is now one of the five largest walnut processors in the world, exporting an American homegrown product to 46 countries worldwide.

Poindexter Nut Company, based outside of Fresno in Northern California, has farms covering 900 acres of land and a processing plant that takes up 20 acres in the Golden State.

Mike Poindexter, who first joined his family company as a salesman in 1993, was in Hong Kong earlier participating in the California International Trade Booth at the HK Food Expo. As CEO of the company, he is looking to preserve his family’s legacy beyond his time and expand into international

biz.hk 10 • 2014

markets, particularly in the Asia Pacific region, with a high quality product.

Already, his children are learning Mandarin Chinese and by the time they take over to lead the company, Poindexter hopes it will be one of the two largest walnut companies in the world.

According to Poindexter, the nut industry in California alone is a business of US$8 billion per year, and this is just from walnuts, almonds and pistachios. His company each year exports 28 million pounds of nuts, with some of the largest markets being China, Hong Kong, Taiwan, Japan and South Korea.

Walnuts are famously seen as a type of “brain food” among Chinese consumers, who liken the nut’s shape to cerebrum and believe eating them will increase smarts. However, imported

walnuts carry a 40 percent tariff in China – a tax prohibitively high that serves to protect domestic production.

Yet, demand for walnuts in China is far greater than what the domestic supply can provide. Therefore, prices keep going higher in a market where consumers are given less choice.

California can produce walnuts more cheaply than in China, Poindexter notes. Agriculture is industrialized to such an extent that it’s “the best in the world” in a place with great weather and mature soils. “We are trying to get deeper into the Chinese market,” he says. “I’d like to ship our product with our brand into Mainland China. We’re currently going through importers that take all branding off because they can’t have American branding.”

Poindexter emphasizes the importance of letting consumers know that the product is grown, processed and packaged in California. “When you take away the brand, some people will not put as much value on keeping the quality up as much as possible,” he says. “We have the best quality going into the market, and we’d like to keep our name on that, all the way through to the end user.”

Exhibiting his product in Hong Kong for the first time, Poindexter hopes to find institutional users from the food and beverage industry as well as the vast spectrum of walnut consumers. It is an important promotional campaign because “not everything can go in a one pound bag with your logo slapped on it,” he says.

“A couple of young ladies saw our booth, ran right up to the jar of walnuts, and had their picture taken next to it.

We could tell who the star of the booth was, and it was the product,” he adds.

“When you have a product that people love and think wonderfully about, part of our job is done for us.”

People in the business of agriculture in California understand the benefits of exporting worldwide in today’s global economy, Poindexter says. Though his company has doubled in volume in the past five years, he continues to find a way to capture the market in China in order to drive growth.

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TAXATION

significant at times – can be waived under certain conditions.

Streamlined Filing Compliance Procedures: An Update on Filing US Tax Returns

biz.hk: What are the information reporting requirements, and the penalties for not reporting?

Gray: In addition to the regular tax return commonly known as Form 1040, US persons who have assets outside the US must disclose them annually on Form 114 (Foreign Bank Account Report, or FBAR) and Form 8938 (subject to certain thresholds). There are separate forms for reporting interests in foreign partnerships and companies, trusts, and certain pensions.

While these additional reporting forms are informational and do not have tax liabilities associated with them, the potential penalties for non-disclosure can be severe. For example, the civil penalty for each foreign account not reported on an FBAR is US$10,000, with many other information reports carrying similar penalties for failure to disclose.

As financial institutions are scrambling to implement policies and procedures required under the US Foreign Account Tax Compliance Act (FATCA), there is also a significant impact on many US citizens and Green Card holders residing outside the US who may not have realized until recently that they have historic tax return and/or information reporting requirements. Carlo Gray of Buzzacott Expatriate Tax Services addresses a number of frequently asked questions about filing US tax returns

biz.hk: Who needs to file a US Tax Return?

Gray: All US citizens who meet the income threshold – which depends on personal circumstances but in 2014 it could be as low as US$3,950 – must file a US tax return each year, even if they do not live in the US during that year. The US is unusual in that it taxes non-resident citizens on their worldwide income; many US individuals living outside the US either do not realize that they need to file at all, or think that they

22

should only report US source income.

Certain non-US citizens also have filing requirements if they live in the US, have a US green card or if they have business interests in the US. Luckily, since September 1, 2012 there has been a recognized procedure for people with inadvertent arrears to rectify matters, and the US Internal Revenue Service (IRS) has very recently widened the scope of this with updated Streamlined Filing Compliance Procedures.

biz.hk: What options are available for US persons who realize they have historic reporting requirements?

Gray: Historic reporting obligations should be rectified as soon as practical once the individual realizes that there is a problem. There are different options available depending on the circumstances, and in many cases it is best to consult a US lawyer for the most appropriate course of action. However, the recently updated Streamlined Filing Compliance Procedures are really helpful for the majority of people. biz.hk: Who can benefit from this new IRS program?

Gray: The expansion of the rules for the Streamlined Filing Compliance Procedures is particularly helpful for US citizens and green card holders living in places like Hong Kong, where personal tax rates are relatively low when compared to the US. Many US persons living in low tax jurisdictions like Hong Kong find that they have residual US tax liabilities each year even after claiming reliefs and

biz.hk 10 • 2014

allowances available to US taxpayers living overseas.

Consequently, any income inadvertently omitted from a US return may produce an additional tax liability with associated penalties and interest. The new IRS program is particularly beneficial for those US persons living in low tax jurisdictions whose failure to report all income, pay all tax or submit all required returns was due to non-wilful conduct because the tax geared penalties – which can be

biz.hk 10 • 2014

biz.hk: What is the new Streamlined program, and who qualifies?

Gray: The recent changes expand the previous streamlined program to allow more people to qualify for submission because it does not restrict straightforward applications to individuals with very low tax liabilities, but instead concentrates on whether behavior is willful or not.

Furthermore, for the first time, certain individuals who have not lived outside the US since 2010 or who are actually residing in the US can also

benefit. Broadly speaking, US persons who meet the non-residency requirement and who have unreported income from a foreign account (and who may have also not filed informational returns in respect of foreign accounts) may qualify under the new program.

A certification form is required where the individual confirms the various eligibility criteria and that the previous non-reporting was non-willful. biz.hk: What is the non-residency requirement?

Gray: US citizens and green card holders qualify for the offshore program if, for any one of the three most recent years for which the US tax return due date (including any extensions filed) has passed, the individual does not have a US abode and was physically present outside the US for at least 330 full days. biz.hk: What is “non-willful” conduct?

Gray: The IRS defines non-willful conduct as “conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.” Careful consideration should be given to all relevant facts and circumstances to determine whether conduct is non-wilful and can be certified as such.

Any behavior that cannot be described as non-willful must therefore be willful, and the IRS Offshore Voluntary Disclosure Program (OVDP) remains available to avoid criminal prosecution and/or substantial monetary penalties. However, a lawyer should always be consulted in such cases. biz.hk: What are the penalties under the new Streamlined Program?

Gray: US persons who meet the non-residency requirement and are eligible to file under the offshore program will not be subject to failureto-file and failure-to-pay penalties, accuracy-related penalties, information return penalties or FBAR penalties. Late payment interest is however charged on any tax due.

23

zŽƵƌ ƐƵƉƉŽƌƚ ŝƐ ŽƵƌ ƐƵĐĐĞƐƐ͊ biz.hk: How does someone become compliant under the new Streamlined Program?

Gray: US persons who qualify for the offshore program must file tax returns, or amended tax returns where incomplete or inaccurate tax returns have been previously filed, and submit payment for the tax due (including interest) for the most recent three years for which the due date (including extensions) has passed. This includes all required information returns, for example, for foreign trusts, foreign companies, foreign partnerships and foreign financial assets.

Ordinarily, an individual would need to file 6 prior year returns; so, the Streamlined Program provides reduced reporting obligations. In addition, complete and accurate Foreign Bank Account Reports should be submitted for the most recent 6 years for which the due date has passed. biz.hk: What if only information reports have been missed, but all income has been reported?

Gray: In this case, there is a separate procedure that can be followed outside of the streamlined procedure. US persons in this situation can file delinquent information returns with a statement of all facts establishing reasonable cause for the failure to file in order to mitigate penalties.

The statute of limitations for Foreign Bank Account Reports is 6 years, but other information returns do not have the same statute of limitations. Depending on the length of time a foreign entity has been in existence, taxpayers may need to file a number of years’ information returns in order to become compliant. biz.hk: How can Buzzacott Expatriate Tax Services help?

Gray: We have a team of US tax specialists with a deep understanding of how US tax laws and regulations affect individuals living outside the US. We have significant experience in bringing US taxpayers up to date with their US tax reporting.

The American Chamber of Commerce Charitable Foundation is the philanthropic arm of AmCham Hong Kong to contribute to the community leveraging from its influence within the international business community in Hong Kong.

'ŝǀŝŶŐ ďĂĐŬ ƚŽ ƚŚĞ ĐŽŵŵƵŶŝƚLJ is a vital value of AmCham. This is made possible through donations from AmCham members and non-members, and two annual fundraising events – AmCham Ball and the Charitable Foundation Dinner.

Carlo Gray is a partner at Buzzacott Expatriate Tax Services and is a key representative of the firm in Hong Kong. He has years of experience in managing both the US and UK tax affairs of high net worth individuals, especially among business owners, senior executives and partners in LLPs, with a particular niche in the financial services field.

Gray also works with closely with law firms to advise on the tax consequences of the transfer or sale of assets as a result of divorce in which one or both parties are US citizens, Green Card holders or longterm residents.

Carlo graduated from The London School of Economics in 1996 and joined Coopers and Lybrand in London in 1997. He spent 10 years at the firm – which became known as PwC following a merger of C&L and PriceWaterhouse in 1998 – where he trained as a UK and US tax specialist. He is a fellow of The Association of Taxation Technicians in the UK and an Enrolled Agent in the US. During his tenure at PwC, Gray was also a senior manager for PwC’s Human Resource Services in London, specializing in international mobility within the financial services industry, and was jointly responsible for the engagement of more than 300 American expatriates who had moved to London as well as consulting services for two global US investment banks.

Buzzacott has recently established a presence in Hong Kong to advise individuals living in Asia amid an increase of US and UK regulatory tax requirements.

Gray and his colleague, Ishali Patel, are based locally in Hong Kong and are supported by a team of more than 50 professionals specializing in expatriate tax services in London.

Our Aim:

Our Annual Program: x Lyn Edinger U.S. Scholarships – For secondary school graduates in Hong Kong to pursue studies at a U.S. university x Scholar Awards ʹ For MBA students enrolled in Hong Kong universities acknowledging their academic achievements and leadership and community services x Prize Book Awards – For secondary school students recognizing their academic and extracurricular achievements x Ira Dan Kaye Community Service Award – For committed volunteers honoring their generous community service and giving a donation to the charity of the person’s choice x AWA Awards – A partnership with the American Women’s Association (AWA) to provide financial assistance to smaller and lesser known charities in Hong Kong

To raise funds for educational, training and other charitable projects which have a long-reaching and beneficial effect on the recipients.

“By recognizing the important work done with our students and families, the Ira Dan Kaye Community Service Award has brought the issue of special education needs (SEN) for our community into the spotlight and public conscience. The receipt of this award has fueled our passion to serve students and others with SEN.” Dr. Jeremy Greenberg, Director of The Children’s Institute, Recipient of the 2013 Ira Dan Kaye Community Service Award

dŚĂŶŬ LJŽƵ͊ tĞ ĚŽ ŝƚ ǁŝƚŚ ƚŚĞ ŚĞůƉ ŽĨ ĨƌŝĞŶĚƐ ůŝŬĞ LJŽƵ͊

Pledge Card ƶ HK$1,000

ƶ HK$2,000

YOUR DETAILS Name: __________________________________________________ Title: __________________________________________________ E-mail: __________________________________________________

ƶ HK$5,000

ƶ Other amount: HK$ ___________

Contact no.: _______________________________________________ Company: _______________________________________________

PAYMENT METHOD By crossed check payable to "The American Chamber of Commerce Charitable Foundation", or ƶ By credit card (Please choose appropriate) ƶ ƶ Master Card ƶ VISA ƶ American Express Credit card number: _____________________________________ Expiry date (mm/yy): ___________________________________ Cardholder’s name (in full): ______________________________________________________________________________________ Signature: ____________________________________________________________________________________________________ Please send a receipt to the following email / postal address*: ƶ ______________________________________________________________________________________________________________ Please return the completed card to: Ms. Ming-Lai Cheung, Charitable Foundation Secretariat, The American Chamber of Commerce in Hong Kong, 1904 Bank of America Tower, 12 Harcourt Road, Hong Kong (E-mail: mcheung@amcham.org.hk/ Tel: +852 2530 6927)

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biz.hk 10 • 2014

*The American Chamber of Commerce Charitable Foundation is an approved charity and tax exemptions for donations may be made under section 88 of the Hong Kong Inland Revenue Ordinance.

COMMUNICATIONS & MARKETING

Acoustic Ambitions Audio electronics giant Sennheiser launches record label Sennheiser Media, underscoring the firm’s ambition to be a music cultural force in Asia. President for Greater China Marc Vincent – who has a background as a professional disc jockey and sound engineer – elaborates on this latest development and his experience with top entertainment talent, in addition to explaining the art of creating a total musical experience

By Nan-Hie In

S

ince being in the most populous nation for the last eight years, President of Sennheiser Greater China Marc Vincent has experienced a shift in the standard of music events, for the better.

“It’s funny the way it started,” Vincent recalls. “I used to go knock on the door of festivals and say: ‘We can bring technology that will change the experience for people.’” He would insist that utilizing Sennheiser’s latest audio technologies at the event would translate to sound akin to a music studio experience, but for 25,000 people.

However, few organizers bought his idea at the time, but “we proved it was possible,” he says. “Now all these festivals are knocking on our door asking us to help them with our expertise.”

The audio giant is involved in behemoth music events in the region such as rock festival Clockenflap in Hong Kong and jazz extravaganza JZ Festival in Shanghai. Being ensconced in the music community is a great for the company to showcase its wares, not only for spectators but also for professional clients including sound engineers, music talent, management executives and producers.

The raving feedbacks from these events keep coming, especially from

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the top echelon of the entertainment world, including Larry Graham (who is a legendary funk musician from Los Angeles, a member of the band Sly & the Family Stone and the sound engineer of funk icon Prince) at the MIDI Music Festival in Beijing this year. It was a signature musical experience renowned of Sennheiser’s stateof-the-art mixing consoles and microphones.

Sound perfection The secret recipe for the latest 9000-series professional microphone system lies in its digital technology, which boasts 1-to-1 non-compressed audio data transmission that is designed to conserve the integrity of sound waves out of the singer’s voice that an audience can receive with astute clarity, Vincent points out.

In simplest terms, sound transported through a microphone system, particularly with traditional analogue systems, is often prone to fidelity loss since the distant journey from the devices to the audience is often marred by many processes (such as data conversions) that could lead to inaccuracy of data. It is precisely what Sennheiser’s wireless microphones are designed – and tested – to avoid for an uncolored reproduction of sound.

Marc Vincent

In a nutshell, Sennheiser’s microphones – embedded with high-tech capsules – capture and record the sound into a digital stream of uncompressed audio and data. They go through minimal conversions because the carrier of transmission is digital, allowing the entire equipment system to channel audio signals without degradation.

The technology is the reason for crystal clear sound at the MIDI Music Festival, as if performing vocalists

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were singing right next to Vincent and Larry. “We looked at each other and went ‘Wow!’ It was certainly a goose bumps experience,” Vincent recalls.

For almost 70 years, Sennheiser has been an audio specialist elevating the acoustic experience for consumers and industry professionals alike, with innovative technologies developed over years of dedicated research. Such efforts have made the firm a major force in the entertainment world. In fact, Sennheiser is the de facto stand

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ard for musicals.

From Phantom of the Opera to Cats and other major musicals staged in New York and London, Sennheiser’s wireless technology has been the workhorse of choice. Countless accolades for its audio inventions, including an Oscar in 1987 and a Grammy in 1999, are indicative of the innumerable impact on the way people enjoy a performance in a theater, a movie in a cinema and a live show of music around the globe.

All about audio The company has recently taken a new step: it launched Sennheiser Media, a record label that includes artist management and music production. The latest venture is the result of a combination of ideal factors, including all the necessary tools for a recording studio – the best studio headphones, microphones and monitor loudspeakers, Vincent says.

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Intriguingly, Vincent himself has always been in close proximity to entertainment talent long before his tenure at Sennheiser. Growing up in Montréal, he started as a DJ at a young age in the 1970s disco era and later became a sound engineer working for world-famous film directors and producers, including George Lucas for whom he installed a 5.1 audio system of mixing consoles in a sound studio at a ranch near San Rafael, California.

For many years, Vincent has directly worked for film gurus, being a part of a highly special group of audio-visual masters, like seven-time Oscar winner Gary Rydstrom who was the brainchild of special sound effects for James Cameron's sci-fi epic Terminator 2, in which many can recall the sound of liquid-chrome machine killer, played

by Robert Patrick, passing through metal bars and transforming into different shapes. All it took was a microphone, a latex tube and yogurt, Vincent points out.

In China “We have everything to equip a recording studio, with high quality equipment that are used everywhere at a professional and commercial level around the world, but we were the only ones not using our own technology for the purpose of music production,” Vincent says, noting a platform as a vehicle to promote its brand and products whilst fulfilling clients’ needs with their merchandise.

The company is perpetually surrounded with the best in the business, he adds. “We are literally always surrounded by talent. That includes musicians we are supporting at all these festivals and concerts as well as some highly regarded sound engineers and producers. All the ingredients were there, allowing us to get into the content side of the business.”

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Today, it is more than world-class audio equipment, and Vincent is searching for blockbuster music stars in China whilst his team tinkers away in the studio to produce quality content for artists.

Vincent is perplexed by the lack of globally known musicians from China, besides a number of well-recognized performing artists such as pianist Lang Lang. “For a leading economy, how is that possible?” he asks. “There is definitely talent out there, but we have to search deeply to find talent like Chinese jazz piano prodigy A Bu whom we have recently signed.”

Meanwhile, Vincent is pushing hard to improve the standard of musical events across China, although it will take some time to reach certain milestones. The high-quality audio equipment available now has certainly made a difference but there is a gap in

the availability of sound engineers for modern music in China – which is attributed to a difference in cultural music.

Since traditional Chinese music features very few low frequencies, many local sound engineers in China are inexperienced in handling bass, Vincent notes. “When they don’t know how to control low frequencies in the audio spectrum, they are very reluctant to put it any in the mixing process. It’s sometimes why rock concerts in China are without a high volume of bass, often creating a somewhat bizarre experience.”

“Low frequencies or bass are an important part of a total musical experience because they help jam everything together and can balance the aggressiveness of high frequencies,” he adds. “Otherwise, if not done right, they can result in sound that is too aggressive and intrusive in a totally unnatural way.”

Vincent hopes to develop a class of musical talent in China by working with a young generation of music lovers who have an appreciation for not only western music but also fusing music genres such as doing remix of traditional Chinese music with modern musical instruments.

“We are seeing musicians who are now getting to the right mixes and blends, and they are no longer afraid of experimenting with low frequencies,” Vincent says. “It has evolved quite a lot.”

From live events to the recording studio in China or elsewhere, it is all about facilitating a culture for music and creating a total experience with better sound for an audience, Vincent believes. “In doing so, we must be able to deliver not only the sound waves accurately but, more importantly, the emotions of artists shared through their music.”

“It takes sensitivity and an understanding of what is needed to create a listening experience that gives people goose bumps,” he adds. “It is what we as audio specialists and engineers do to help deliver that enriching experience.”

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ENERGY

An Economically Viable Biodegradable Fuel ASB Biodiesel is Hong Kong’s largest producer of biodiesel. CEO Anthony Dixon – an investment banker turned environmentalist entrepreneur – describes how the non-toxic, biodegradable fuel can be a sustainable solution to the issues of pollution and environmental degradation in a commercially viable way

By Betsy May Veloo

S

itting in his office in Tseung Kwan O, Anthony Dixon, an investment banker turned environmentalist entrepreneur, is pondering just how he could spread his passion of combating climate change and improving air quality globally, including Hong Kong where he now calls home.

Dixon is CEO of ASB Biodiesel, Hong Kong’s largest producer of biodiesel – a “fuel of the future” as he describes it. “Biodiesel is a clean, low-carbon transport fuel. It’s also non-toxic and biodegradable,” he points out. “Part of what we are doing is to help address the issues of pollution and environmental degradation, and we are providing a sustainable solution to those issues.”

ASB Biodiesel, backed by Bahrainbased Al Salam Bank, has officially opened a state-of-the-art processing plant last October in Hong Kong.

Dixon is hopeful that the plant will reach full capacity by the end of this year producing 100,000 tonnes of pure biodiesel – an amount enough to power every diesel vehicle engine running in Hong Kong with a B10 blend (a mix of fuel with 10 percent biodiesel and 90 percent fossil diesel.)

This, if applied, could basically reduce 257,000 tonnes of greenhouse gas emissions annually, which is

Anthony Dixon

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equivalent to some 3.6 percent of the total carbon dioxide emissions from Hong Kong’s transport sector.

An alternative fuel Electric cars are one a good form of transport that is effective in reducing air pollution, particularly with carbon dioxide emissions – along with other pollutants – on the roadside. However, in order to reduce overall emission in meaningful way, electricity on which cars run must be generated from a clean source of fuel.

With Hong Kong often blanketed by poor air quality, biodiesel can greatly reduce many of the pollutants produced by tail-pipe emissions that pose health risks, Dixon says. For example, a blend of 20 percent biodiesel and 80 percent fossil diesel, otherwise known as B20, can reduce emissions of particulate matters – including PM10 and PM2.5 – by 10 percent, unburned hydrocarbons by 21 percent and carbon monoxide by 11 percent. It is also an ultra-low sulphur fuel.

“Biodiesel is not a silver bullet,” Dixon stresses. “It doesn’t make pollution go away completely, but it reduces pollutants by these percentage ranges.”

In addition, with electric cars, car owners have to be willing to ditch their

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diesel engines for a new vehicle, and there has to be some infrastructure changes, including the construction of charging stations, to accommodate the adoption of electric vehicles.

“In the case of biodiesel, no engine modifications are needed,” says Dixon.

“And, people don’t have to sell their diesel-run vehicles and buy a new one.

They can just drive to any gas station and fill up their tanks with biodiesel. It is really simple.”

To facilitate a wide adoption of biodiesel for drivers and make it even simpler, a jurisdiction could consider a mandate for just one single blend for all consumers, Dixon suggests. Otherwise, gas stations might require additional storage facilities for different blends of biodiesel to suit different consumer needs – a scenario which makes it more difficult for places, like Hong Kong, that are space constrained.

Currently in Europe, B7 is the mandated blend for all transport vehicles – and all gas stations are required to carry this mix. When there is no legislation for a certain blend for a region or country, it usually becomes harder to offer biodiesel as a consumer product, Dixon notes.

“It’s just a matter of choosing a blend that is best for the transport sector of a locale,” he says. “The process of blending is very simple: pour one liquid into the other, and you’re done. You don’t even have to shake it.”

Highly competitive One advantage of powering an engine with biodiesel comes from the high lubricity of the fuel than fossil diesel, a benefit making an engine run more efficiently and last longer. As a solvent, it will also cleanse the engine over time.

“Even if every car on the road ran on electricity, it wouldn’t materially reduce carbon dioxide emissions because we’re primarily getting electricity from coal and natural gas,” Dixon points out. “It’s also going to take many more years for electric

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vehicles to see a wider adoption around the world.

“Whereas – with a stroke of a pen – every truck, bus, ferry, every piece of equipment on the construction site and every stationary generator in Hong Kong could be using biodiesel tomorrow, and the impact would be immediately achieved,” he adds.

According to Dixon’s estimation, the impact of a B5 blend of biodiesel on the retail price is quite small – about six and a half cents higher than the cost of regular diesel which today stands at about HK$12.70 per liter.

Sixty-two countries now use biodiesel in their mix of fuel for their transport sectors, with global consumption reaching over 24 million tonnes.

ASB Biodiesel – one of three biodiesel manufacturers in Hong Kong – relies on a source of waste vegetable oils (used cooking oil and grease trap oil) from about 4,000 restaurants in Hong Kong, including some of the local fast food chains, in addition to imports from other places such as Singapore.

For every 100 liters of used oil collected, ASB can produce 95 liters of pure biodiesel. Much of what the plant produces now is exported to Europe.

And, whatever waste is generated during the production process is recycled back into the plant, while waste by-products, such as glycerine and fertilizer, are sold to pharmaceutical companies and agricultural sectors, respectively.

Furthermore, biodiesel can also be used as a fuel for a variety of purposes including power generation. The Zero Carbon Building in Kowloon Bay, for instance, uses this environmentally friendly fuel for a generation system to provide heat, cooling and power.

Why Hong Kong Many have wondered why ASB Biodiesel chose Hong Kong for its operations. “It is because Hong Kong is a good place to do business,” Dixon

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says. “It’s a good place to be based with a view of expanding a business around the region, particularly into Mainland China.”

The large proliferation of restaurants in a city of high density makes Hong Kong an ideal location and are naturally conducive to securing sources of waste oil. “When driving around to collect waste oil, we don’t have to drive 500 miles to cover the same number of restaurants, like in London,” Dixon says.

Noting the environmental benefits of biodiesel, Dixon highlights a move by the Hong Kong government to undertake a study on the fuel as a major step forward. “It’s a very good sign. Once questions about distribution, economic impact and how much it costs the end customer are sorted out, I am sure the decision whether it is viable will become much more clearer in favor of this biodegradable fuel.”

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The biodiesel industry also provides traceability and reliability. In fact, ASB is audited annually and can account for every liter of waste oil that is collected from any location. “It provides insurance to the restaurants that their waste is not going to end up in any unscrupulous outcome,” Dixon points out. “There is traceability in our supply chain.”

“Biodiesel has certainly come a long way,” he says. “Only a decade ago, there simply wasn’t widespread use of the fuel globally, and there definitely wasn’t a biodiesel industry in Hong Kong. Part of what we are doing today is to bring up-to-date information into the discussion so that people can understand the impact of biodiesel.”

“The opportunity to use biodiesel in Hong Kong is low hanging fruit, and it addresses three of the territory’s big environmental issues - waste, air pollution and climate change,” he adds. “And we need to seize the day

because this is an opportunity for Hong Kong to turn environmental problems into environmental benefits.”

Dixon says he has no regrets about leaving the world of finance to become an entrepreneur in an environmentally sustainable industry. “Environment is my passion,” he says. “I studied science in university, and for a long time I’ve always been interested in environmental topics.”

“When I was in banking, I worked on things that are somewhat abstract.

Now, I am doing something very hands-on and very tangible. You can actually see it and smell it. What’s more is we are providing a solution to a set of different problem. It is definitely a very satisfying experience.”

Editor’s note: Anthony Dixon recently left ASB Biodiesel to pursue other opportunities in renewable energy after spending three and half years to get the plant in Tseung Kwan O built and operating. The company's Chief Technology Officer Roberto Vazquez is now acting CEO.

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ECONOMICS & FINANCE

Is Fed intervention effective?

Ask the ‘shadow' rate

By Dee Gill

T

he US Federal Reserve’s attempts to boost economic growth through market intervention in recent years have prompted heated debate among economists and lawmakers. How should we measure the efficacy of such monetary policy? Did a $3 trillion bond-buying program and explicit forward guidance actually reduce unemployment? Do those programs cause inflation? And how will businesses and consumers react when the Fed ends quantitative easing?

Jing Cynthia Wu, assistant professor of econometrics and statistics at Chicago Booth, and University of

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California San Diego graduate student Fan Dora Xia, have what they believe could be adopted as a new standard measure for monetary policy on which all sides can agree, regardless of their opinions on the current round of Fed interventions.

Wu and Xia propose using what some have termed a “shadow” federal funds rate to measure US monetary policy fluidly over time, from 1960 to the Great Recession, and into the future. By integrating decades of historic data with numbers from the Great Recession, the researchers offer a more holistic look at how the Fed’s unconventional monetary policies since 2009 have affected unemployment and other macroeconomic measures.

A break from the past As the economy spiraled down after the systemic 2007-10 financial crisis, the Federal Reserve took drastic measures. In hopes of sparking economic growth, the Fed squashed the federal funds rate to near zero, a place known as the zero lower bound.

(Although the federal funds rate itself has little impact on the broad economy – it’s the short-term rate used by financial institutions to lend each other money – other interest rates traditionally rise and fall in relationship to it.) The federal funds

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rate has been artificially kept at the zero lower bound ever since.

The zero lower bound has posed a challenge for the central bank, as it has limited its ability to stimulate the economy – the Fed can lower the federal funds rate no further than it already has because nominal rates can never be in negative territory.

Unable to move the short end of the yield curve, the Fed has taken unconventional measures, such as its famed quantitative-easing bond-buying programs, to increase the money supply.

And the situation has also dogged economic research. That the federal funds rate is not moving effectively

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nullified researchers’ time-honored ways of measuring the economic impact of changes in monetary policy.

The most popular studies relied heavily on the federal funds rate as a market-sensitive number. Those models became useless with rates artificially stuck at the zero lower bound, where the rate has no meaningful variation even as economic conditions change.

Researchers have devised various ways to measure monetary-policy activity postrecession. Rather than use the federal funds rate in their models, some researchers instead used the maturity structure of Treasury debt.

However, it’s difficult to reconcile

these measures of supplies of Treasury securities with the federal funds rate people use for the pre-zero-lowerbound period. That leaves no more than five years’ worth of data, too few for meaningful inference.

Use the shadow rate instead But Wu and Xia suggest there’s a way to avoid tossing out a half-century’s worth of macroeconomic data: they advocate using a shadow rate.

They suggest viewing the interaction between monetary policy and macroeconomic variables in the past,

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current, and future as a continuum, using a hybrid of the federal funds rate and this shadow rate. Their work suggests that by substituting the shadow rate for the preferred federal funds rate only during zero-bound years, researchers can rely once again on popular monetary economic models.

The shadow rate as a finance concept can be credited to the late economist Fischer Black, who spent time as a Chicago Booth faculty member alongside the coauthor of their famous Black-Scholes equation, Nobel Laureate Myron Scholes. While terminally ill with cancer, Black submitted a paper in 1995 to the Journal of Finance that took a creative approach to dealing with interest rates at the zero lower bound. Short-term interest rates can’t technically be negative, but what if there were a hypothetical, shadow short-term rate that could move into negative territory?

Using a shadow-rate model to describe the yield curve didn’t catch on, in part because it typically required arduous, complicated simulations. It remained out of favor for years, until very recently, when researchers looked for a way to model the yield curve in a zero-lower-bound era. A handful of researchers produced their own variations on Black’s original shadow rate, but many believed these shadow rates were of limited use and perhaps unreliable. Wu and Xia aren’t so quick to dismiss their shadow rate, another variation on Black’s original idea. They believe that their shadow rate can be used to summarize the impact of Fed actions including quantitative easing.

More importantly, according to Wu and Xia, the shadow rate correlates with macroeconomic variables at the zero lower bound in much the same way as the federal funds rate does during normal economic times. They demonstrate these correlations in two exercises. In one, called a structural break test, they substitute their shadow rate for the federal funds rate in some macroeconomic models for the zerolower-bound period, and find the model behaves similarly before and during the zero-lower-bound period.

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Why it works

The shadow rate in action

The federal funds rate isn't market sensitive at zero.But the shadow rate could replace it in models.

When the Federal Reserve chair hinted at a taper, the shadow rate immediately reflected the stance.

Effective federal funds rate Wu-Xia shadow federal funds rate

Percent 6

4

May 2013

4 3

3

2

2

1 0

1

-1

0

-2

-1

-3

-2 -3

April 2013

Percent 5

Federal funds rate target reaches zero lower bound

5

Expected short rate

2013

2004

2006

2008

2010

2012

2015

2017

2019

2021

Year (each tick mark represents April)

2014

Expected shadow rate

Source: Wu and Xia, 2014

2023

April 2013

Percent

May 2013

5

In another exercise, they plot how macroeconomic variables, such as industrial production, consumer prices, unemployment, and housing starts, dynamically respond to monetary-policy shocks before and during the zero-lower-bound period.

The results affirmed their views that the shadow rate moves in the zero lower bound the way the federal funds rate would if negative rates were possible.

Quantifying the effects of QE and forward guidance With a wealth of historical data again rendered applicable, Wu and Xia used their shadow rate to quantify the effects of the Fed’s recent and unconventional monetary policies such as quantitative easing and forward guidance.

To do so, they ran two counterfactual analyses. In the first, they sought to estimate what would have happened had the Fed, at the zero lower bound, used the shadow rate to

follow historical monetary policy according to a variation on the Taylor Rule. The Taylor Rule, named for Stanford economist John B. Taylor, calls for central banks to change short-term rates (the federal funds rate in the United States) in response to economic conditions.

If the Fed had merely continued the strategy of targeting the short interest rate (shadow rate in the case of the zero lower bound), the shadow rate would have been −1% on December 31, 2013. With the Fed’s additional stimulus programs, Wu and Xia calculate that the shadow rate was -2%. The unemployment rate would have been 0.13% higher, or 6.83% instead of the reported 6.7%.

In a second analysis, the researchers sought to estimate what would have happened to the US economy had the Fed refused to provide stimulus once those actual short-term rates hit zero.

They find the economy would have suffered even more. A shadow rate stuck at 0.25% (essentially zero) would have created an unemployment rate a full 1% higher than observed, according to research.

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4 3 2 1 0 -1 -2 -3 2013

2015

2017

2019

2021

2023

Year (each tick mark represents April) Source: Jing Cynthia Wu

Just like the federal funds rate demonstrates the stance of monetary policy, the shadow rate demonstrates the stance of unconventional monetary policy, Wu says. On May 22, 2013, then–Federal Reserve Chairman Ben Bernanke told Congress that the Fed was discussing slowly tapering its asset-buying program. According to the researchers’ calculation, the shadow rate initially spiked, then fell back as Bernanke further explained that the taper would not signal monetary tightening. Further decline

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in the shadow rate suggests that Bernanke’s message had an effect on interest rates, which could have a broad effect on the overall economy.

Using shadow rates in the US and abroad The research suggests that the Fed’s bond buying and forward guidance did, in fact, expand the US economy. Economists at the Federal

Reserve Bank of Atlanta have applied the Wu-Xia approach, using their own preferred economic models. They substituted the Wu-Xia shadow rate for the federal funds rate to measure monetary-policy effects on variables such as real GDP growth, core PCE inflation, and unemployment, starting in the first quarter of 2009. The exercise generally produced results consistent with the Fed economists’ own expectations.

In the case of the federal-fundsrate forecast, the Atlanta Fed economists noted that the Wu-Xia shadow rate created a “more believable” result than the standard model with the federal funds rate had, calling for a zero interest rate until late 2015 instead of an immediate exit from zero lower bound. Unlike results from the standard models, that forecast was in line with the Federal Open Market Committee’s (FOMC) own at the time, as well as with the Philadelphia Fed’s Survey of Professional Forecasters and the New York Fed’s Survey of Primary Dealers. The FOMC recently updated its guidance, and many economists now expect rates to begin rising in spring of 2015. Now the Atlanta Fed’s Center for Quantitative Economic Research hosts data from the Wu-Xia model on its website, and updates that data monthly.

The Wu-Xia shadow rate may also prove useful for measuring the effectiveness of monetary-policy efforts by other central banks. While the researchers focus their research on the US, Wu provides a helpful start for research on the United Kingdom and the European Union, with downloadable datasets of shadow rates for both regions, along with US shadow rates, at her website.

Editor’s note:

The article first appeared in the summer 2014 edition of Capital Ideas, a publication of the University of Chicago Booth School of Business, and is reprinted with permission.

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CHARITABLE FOUNDATION

T

Sunny Mak

A Shining Light of Hope Sunny Mak, Founder of Sunshine Action, is presented with AmCham Charitable Foundation’s 2014 Ira Dan Kaye Community Service Award – an annual award recognizing the outstanding service and contribution of an individual volunteer committed to serving the community of Hong Kong and helping those in need

By Ron Ip

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he AmCham Charitable Foundation has presented its 2014 Ira Dan Kaye Community Service Award to Sunny Mak, Founder of Sunshine Action.

Introduced in 1986, the award – named after a past AmCham chairman as a special tribute – recognizes outstanding service of individuals serving the community generously.

“Sunny’s work resonates with those of us who knew Ira Dan Kaye, reminding us of how his volunteer work was out of the public eye,” says Douglas Henck, AmCham Charitable Foundation Trustee. “While Ira was well-known and respected in the business world, his charitable work – most often hands-on efforts helping those in need – was less well-known.

Sunny represents well the values Ira demonstrated throughout his life and is a deserving awardee.”

By contributing food supplies and providing services to 292 organizations in Hong Kong and around the world, Sunshine Action has helped 89,739 low-income families and 156,700 people directly.

“Sunny’s contribution to society is impressive,” says James Sun, Chairman of the AmCham Charitable Foundation. “Sunshine Action fulfils our requirement of being a smaller and lesser known charity, for which Sunny does a lot of hands-on work on his own helping people in need. The board of trustees appreciates his attitude in helping people and acknowledges his work throughout the years, and we hope he could keep on contributing to society.”

More than a career An MBA graduate, Mak did not start off as a volunteer. “Like most of the people in Hong Kong, I used to be one of those hard workers in the business sector. Work and career used to be everything,” he says. However, at some stage in life, he started to ponder upon the meaning of life and how he could make the best out of it.

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“I am not going to spend my entire life working because I also want to do something more meaningful in life,” he adds. He found out that volunteering – and helping people – is the ultimate pursuit that he wants, and eventually quit his decent job in the marketing field.

Mak first started volunteering in 2006, working for various organizations like Red Cross, Samaritan Befrienders Hong Kong, Oxfam, World vision, and many more. Despite his great passion in volunteering, he felt somewhat constrained helping volunteer organizations he used to work with. “I want more freedom on whom I help and how I help them,” he says. “I don’t want to be just a participant in a volunteering event. I want to help people in my own way because I feel I could do more,” says Mak. Therefore, in 2008, Mak took a great leap of faith, quit his job and founded Sunshine Action. “Founding Sunshine Action allows me a lot of freedom, with no restrictions of office hours and the nature of volunteer work, opening up the opportunity to engage in an extremely wide ranging volunteer work in different places throughout the globe,” Mak notes.

Quitting a job to become a volunteer is never easy, especially in Hong Kong. Sacrificing his material life, Sunny believes, ‘If you don’t try when you are young, you are not going to try when you are old. And right now, as I am still young, I can go back to the workforce whenever I like. Volunteering is all about the dedication. If you want to volunteer, nothing could stop you. Mother Teresa was poor and was only 38 years old when she started.”

Mak’s dedication does not come from nowhere. Several experiences in India, Thailand, and Cambodia have had far-reaching effects, propelling him to his decision of quitting a day job and founding Sunshine Action. In 2007, Mak went to India and visited the Kalighat Home for the Dying, established by Mother Teresa – one of Mak’s idols – who cared for dying patients back in the days.

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“I have heard of Mother Teresa saving dying patients at the street, but I have never imagined even in this day and age, there are still a lot of people having worms on their bodies, at the verge of death, laying on the streets in India,” Mak sighs. “It was heartbreaking. The India experience was really extreme and profoundly changed my view on volunteering.”

Core mission Along with his best friend and his sister, Mak founded Sunshine Action with no additional staff. All fund raised through various means went directly to people in need and was never used to pay salaries, rental fees or marketing expenses. Furthermore, all funding comes from the general public, which ensures the freedom from political parties and government policies, allowing Sunshine Action to help people in need with more flexibility.

Despite its size and scale, Sunshine Action has no specific structure as an organization, but to date, it has already involved 10,000 volunteers and engaged in a long-term relationship with corporations, including the American Club, Bloomberg, Hang Seng Bank, Boy Scouts, Credit Suisse, and a lot more. Despite the lack of a strong marketing strategy, Mak’s passion and vision has become a beacon attracting many volunteers, especially among students, to sign up for a worthy cause.

It’s been a journey through which Mak never thought his organization could grow to such scale. Instead, he constantly focused on the core of his volunteer work and helping people. His passion and effort has already led to the successful collaboration with over 280 partner charities worldwide.

Mak hopes to further expand the services to other regions in the world, making Sunshine Action an international charity based in Hong Kong.

Outside Hong Kong, Sunshine Action travels frequently to poor villages throughout Asia to donate food, hygiene products and medical supplies. It has also completed several

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construction projects, including the building of bridges, water wells and toilets for the disabled.

“We do volunteer services outside Hong Kong for a few reasons. But the most important one, I would say, is to let volunteers from Hong Kong to experience how bad the conditions under which people are actually living in poorer countries,” Mak says. “This would help them treasure their wonderful living condition and take that as bliss.”

In order to truly appreciate what people in need are feeling and understand what their way of life entails, Mak always spends time to get to know them in their actual living environment and, by doing so, hopes to restore their human dignity and basic human rights.

Sunshine Action also strives to protect the environment and preserve marine resources. In fact, it has planted more than 322,200 saplings and fruit trees, and released over 88,880 indigenous fish into the sea as part of its global environmental protection program.

Aspirations The development of Sunshine Action has allowed Mak to realize his personal mission – to offer emotional healing to the elderly and people who are economically disadvantaged as well as those who are facing difficult time in their lives. Yet, Mak wants to make a bigger difference and help more people in the world.

“Volunteering is all about passion and intention. If you are eager enough to do it, no matter how poor or busy you are, you will be able to find time to do it,” Mak believes, noting a recent trend of less enthusiasm for volunteering in Hong Kong. “Hong Kong is way too materialistic and emphasizes too narrowly on the financial sector. People sometimes put too large of a focus on making money without taking time to think about all the other things.”

“When the economy is good, people are too busy earning money and getting promoted. When the economy is bad, there would be unemployment and people would not have the mood to

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volunteer,” he notes. “This is just how pragmatic some people are, often thinking to themselves, ‘I understand but I have nothing to do with that. I only hope other people would join in and volunteer more.’”

In a reflection of his mission as a volunteer, Mak quotes a term from Buddhism, “CiBei,” from which “Ci” means making others happy while ‘”Bei” means taking away others’ pain.

It is a wisdom Mak always bears in mind as a reminder of the reason behind his work. “However, I need to make it clear that volunteering is not about a particular religion,” he stresses. “I believe that, in all religion, the ultimate goal is to help people.”

“Helping people is about doing good, and doing good is eventually helping your spiritual self,” he says. “I always remind my volunteers that volunteering is for your own good. You are saving kindness and goodness in your life, and it feeds your spiritual self.

Anyone could do it.”

“I truly believe volunteering increases one’s life value,” he adds. “No matter how successful you are in your career or in your life, or how much money you have, it is just your – and at most your family’s – business. What about everyone else?

“I don’t want to feel like I have just lived for myself when I die one day.

Even if I die now, at least I know I’ve made an effort to help some people.”

In an effort to promote volunteerism, Mak launched a campaign back in 2008 and named January 1st as Sunshine Action Day. The idea is to encourage people to volunteer on the first day of each year, while raising awareness among the general public about making a contribution to society through donation, voluntary work or even becoming a vegetarian for one day.

The campaign aims to ignite a culture of volunteerism and “is a good opportunity for people to start volunteering,” Mak says. “I hope the Sunshine Action Day could make a difference by attracting more people to become a volunteer and letting them know how good it feels to lend helping hand to people in need.”

In Hong Kong, Sunshine Action has four major programs: Walk with Poverty: Showing our warm hearts in snowy weather

Six-month to one-year food and living support to help impoverished, needy families and individuals who are living under extremely tough conditions and who lack access to social support networks.

Festive Food Bags

Distribution of food bags to the poor – so far 15,000 food bags at 5kg each to people in need. The program resonates with the spirit of Sunshine Action, “I was hungry and you gave me food; I was a stranger and you welcomed me; I was naked and you gave me clothing; I was sick and you took care of me.”

Care for the Homeless

Volunteers from Sunshine Action periodically visit some 120 homeless people in Sham Shui Po and distribute food, drinks and other daily necessities such as blankets, toothpaste and toothbrushes to those in need.

Medical Support

Sunshine Action in collaboration with another NGO provides access to free or very affordable Chinese medicine and medical consultations for the poor.

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Guide to

Early Education 2014

Educational Nirvana With a newly commissioned school campus in Sai Kung – which offers a more enriching learning experience for students – Hong Kong Academy is well on its way to becoming a world-class educational institution. biz.hk talks to head of school Stephen Dare in a conversation on the organization’s rapid growth and its educational programs for young learners

By Nan-Hie In

T

he Hong Kong Academy (HKA), a 14-year-old educational institution, has endured a few moves in the past but its final relocation last year to its current campus, a massive 20,000 square meters educational complex in Sai Kung, is the most redefining moment in the school’s history.

Pupils enrolled in the institution – ranging from pre-school toddlers to high school students – now have a plethora of opportunities for their learning experiences and activities which were simply more difficult to engage because of space constraints in the previous locations.

For instance, dance programs are now a reality, thanks to the newly built facilities on campus includes an 80-seat studio theater and a 350-seat auditorium equipped with a professional sound system.

A new location The new campus is also located in a neighborhood known for a range of aquatic activities and other outdoor recreational facilities and venues –

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swimming, kayaking and paddleboarding, options that are accessible to students. Other unique offerings at the school include a golf program for young learners.

“All of these support a wider breadth of programs now available to our students as a result of the new facilities,” says head of school Stephen Dare.

The school’s progressive quality is not confined within the classroom but extends to its green building – it has been awarded a BEAM Plus Platinum rating, which signifies a highly level of prominent eco-friendly features that have been embedded in the design and construction of the school building.

Everyday, students walk into a campus where greenery can be spotted at every turn, with much foliage planted on the walls and more on the roofs soon.

The five-story building has also been designed to utilize more natural light throughout the premises, with other features to limit the environmental impact on its surroundings.

A unique feature is a CFC-free climate control system in addition to a recycling project of rainwater in the works. Collectively, HKA has set a new educational and environmental standard

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of schools in the city. Most of all, it has fulfilled several of the institution’s core initiatives that were established since its inception in 2000.

A humble beginning When Benjamin L Frankel, an American attorney, and Teresa Armellino Richman, a psychologist and educator, founded the school in 2000, they had a set of fundamental educational ambitions in mind. Their mission was to offer greater educational diversity for young students, a proposition they observed was extremely rare in Hong Kong, Dare points out.

Both Frankel and Richman had envisioned an “inclusive” school that would provide different learning opportunities for a diverse range of learners, with a focus on children with special needs. The idea was to create an environment in which those with special educational needs would have the appropriate learning support whilst being able to co-exist with others in the mainstream classroom.

Additionally, it would be a school

with a more personalized education style through smaller class sizes, while nurturing students to develop a strong sense of commitment to the community.

Their vision materialized at first with the opening of the Hong Kong Academy Primary School on a floor of a former secondary school campus on Stubbs Road. “It was a humble beginning – the building was at the end of its life,” says Dare. Despite these challenges, in a few years the venue garnered much popularity for its “intimate and personalized type of education,” and HKA realized it needed more facilities and space for its further growth.

To some degree, those needs were met with the second move to a five-hectare space in Ka Wai Man Road, Kennedy Town in 2010 – which, again, was converted from an old site into a learning facility. It was only a temporary solution, and by this stage the government had granted HKA land in Sai Kung to build a bigger and more architecturally sound education complex, which would take three years to complete.

“I think we were awarded it partly because of the school’s success and partly because of the realization that it could not continue to operate in the old buildings it had been occupying,” Dare points out. In the meantime, HKA’s Kennedy Town campus had grown to a school of 400 students.

In 2013, construction of the new campus in Sai Kung was completed; by August, students were able enter the premises equipped with an all-purpose gymnasium, a studio theater, a two-floor library and more. The five-story building beckoned a new era for HKA, a culmination of years of growth from various phases.

It started as a small early education provider with only a few dozen students in 2000 to a more comprehensive educational facility with over 600 pupils, a school that now offers an International Baccalaureate curriculum for primary and secondary grades, plus diploma education. “We’ve seen more rapid growth than we’ve anticipated,” says Dare. “Our intention is to

45

Stephen Dare

reach a student body of around 680 to 700 students. Once we reach that number, our school will be full.”

Early childhood education In the early stages of education for children, the school’s priority is to provide a very interactive, fun and enquiry-based learning experience.

“We really want to create a school environment where kids can socialize more and are encouraged to fulfill their intellectual curiosity about anything,” Dare explains. “We want to give them practical hands-on experiences to make them ask questions about the world, to help make sense of the world.”

In fact, many conversations take place in the classroom to help early learners develop a better understanding of different concepts, such as language, numbers, as well as families and friendships. Typically, each student gets to learn in a classroom size of about 14 to 18 kids, whose parents can join in to take part in the education process.

The bilingual element is integrated – and an important part – in the pre-school curriculum: an English speaker and a Chinese Mandarin

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speaker are present at any one time.

That’s because “we want to develop internationally minded students, and one key component of that is the exposure to other languages,” Dare says, adding that this approach is conducive to fostering empathy and appreciation for people from different cultures.

More importantly, a greater diversity of learning experiences expands the horizon to suit the needs of learners at various levels – a core value of an

HKA education, Dare notes. For kids with special needs, for example, speech specialists and occupational therapists are there alongside for an inclusive learning environment by catering to their specific learning needs.

“These are features you’ll find in some schools, but it’s a big part of a very strong commitment to learning diversity within our school,” Dare points out.

Such diversity extends to offering

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different learning pathways for individual excellence, which is another core initiative, he adds. “The notion behind is: there are some students who want to go to academic universities and other students have different preferences and talents that they want to pursue beyond education.

“Our job here is to provide students with various tools and experiences so that they will go on to further study and become successful beyond HKA.”

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Mission possible Essentially, HKA has realized many of its original educational ambitions, and its students now have access to many public or private facilities in the nearby neighborhood of Sai Kung for a whole new learning experience.

The school, meanwhile, is actively involved in the local community through many events, including Sunday markets for which local operators

are given access to some of the school’s facilities.

It has taken years and considerable effort to cultivate a foundation to reach all the goals. “The mission of our school is not just a piece of paper,” Dare says. “It’s something we stand by as an education leader. We provide a captivating learning environment for kids and we provide a rigorous international program.” He considers HKA as evidence that all these elements can co-exist together at a school.

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The Montessori Way of Learning Young children are said to have an absorbent mind during their first six years of life in which they “soak up information from the environment and learn through their senses in the most natural and delightful way.” Education experts at Discovery Montessori School elaborate on the organization’s progressive approach to early education and its ambition to establish a primary and secondary school for students in Hong Kong

By Nan-Hie In

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A

mong the different learning styles and curriculum made available through numerous early education institutions in the city, the Montessori approach stands out as one that places a large emphasis on nurturing young minds in the most important period of their life for learning – from birth to the age of six.

That’s because young children have “absorbent minds” during their

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first six years of life in which they “soak up information from the environment and learn through their senses in the most natural and delightful way.” It is also during the period when “children form and shape their early impressions about the world around them and develop their intelligence.”

The practice is increasingly popular in Hong Kong, as epitomized by the fast-growing Discovery Montessori School (DMS) at Discovery Bay, which opened in 2010, and a newly established sister campus in Central, which opened in 2011. Moreover, in addition to other development underway, a Montessori Primary School is scheduled to open next year.

“The Montessori method of education has been in existence for 120 years, predominantly in Europe and in the United States, but it’s

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reasonably new in Hong Kong,” notes Mary Batterham, Vice Principal of the DMS’ campus in Central.

The idea of an education Over a century ago, Italian educator Dr Maria Montessori founded a unique approach for childhood education through her observations as well as collaborations with pioneering child developmental psychologists including Jean Piaget and Lea Vygotsky. Her theory is that children have intrinsic motivations and cognitive developments for learning.

Hence, her method is designed to nurture and develop these facets to help shape individuals to become mature, self-sufficient and inquisitive as well as life long learners. Students are taught in a stimulating learning

environment filled with specialized tactile materials. They have greater freedom to learn at their own pace, sometimes in a mixed-age classroom where elder students aid younger peers within an atmosphere that cultivates a sense of community.

This child-centric method, in some ways, is in stark contrast to the traditional mainstream classroom, where teachers typically instruct students through assigning tasks in a more stifling fashion. Batterham dubs it the “chalk and chalk” approach.

“The average 4-year-old is given more than four instructions verbally, but often they get lost,” she points out.

“The child simply may not [retain] all the instructions; he may have heard ‘pencil’ from the instructor but then wondered what to do with the object, so he returned to the teacher to seek further instructions.”

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Instead, under the Montessori method, it would employ a more action-orientated approach by using concrete objects to demonstrate the tasks involved so that students can model their behavior more proficiently.

Manautines emphasizes that it’s a prominent feature of the total learning experience that – through encouraging good habits as simple as pushing in chairs correctly and tidying up after their activities – allows students become as independent as possible.

Learning by examples

Curriculum

Concrete hands-on learning is a prominent feature of the school and is a part of its ethos that students better grasp abstract concepts if they can learn based on real experiences. At DMS, children at the ages of 3 to 6 often engage in stimulating learning activities such as number-counting wooden boards and beads to learn basic mathematics.

“The idea is that the child forms an abstraction from concrete examples,” Batterham explains. “Even as an adult, if you want to evoke something in your mind – a thought or action – and if you can see or develop a concrete idea, you usually find it easier to work with than from something that’s totally abstract.”

Educators here are often moving around the room to each individual to present new activities or guide students through their activities already in progress. It is part of DMS’s child-led approach.

“At Montessori, we talk about whole education and developing the whole child, we want them to learn to be independent, and we want them to be physically, mentally and emotionally mature,” says Batterham.

These are essential qualities and skills the school hopes to instill in every single child who will be better equipped to cope and excel in their future endeavors, including their academic pursuits.

The school also hopes that young students will grow to have good etiquette. “We have lessons on grace and courtesy, from simple gesture of saying ‘please’ and ‘thank you’ to learning how to respect peers, classmates, teachers and their environment,” Deputy Principal Sally Manautines notes.

The curriculum features five core themes: math, language and culture as well as practical life (exercises that have real-life application) and sensorial education (activities that stimulate the development of a child’s senses).

DMS is also a bilingual school where English and Mandarin are the core medium of language for classroom instruction.

There is a “playgroup” at each campus catering to kids of 1-2.5 years old, a program called the Little Casa Class for those aged from 2 to 3.5 years old, and the mixed-age Casa dei Bambini for the 3- to 6-year-old. Each program is designed with the cognitive development of children in mind.

At a typical Little Casa Class, around 20 pupils engage in various activities. “Generally, children of this age more likely want to work independently as they tend to be more self-centered and want to work without involving others at this developmental age,” Batterham explains.

“So, they often work alongside or do parallel play rather than interacting with one another.”

In contrast, it is at the mix-aged Casa dei Bambini classes where young learns often become more social and demand more interaction with their classmates. At this stage, children are developing into abstract thinkers, and the five-themed curriculum is more complex to facilitate further development among these students.

The step-by-step program is a gradual learning curve for students in the most critical learning period of their lives, which is a “sensitive” period for acquiring certain skills and personality traits. For instance, whilst younger students in the early stage are

50

taught to count numbers 1 to 10, subsequent programs create an environment where students learn to add, subtract, multiply and divide numbers with hands-on tools to enhance the learning of numerical concepts in an interesting way.

These early learners also exude self-sufficiency, evidenced by how they engage in the snack station for quick bites. “They are taught to learn to sit and wait for their turn, to say ‘thank you’ in grace and courtesy,” Manautines explains, adding kids from the age 3 to 6 years old can find a space to sit and eat by themselves and are taught to clean up after themselves.

Future plans While in Hong Kong for merely a few years, DMS has already established a unique learning environment where young children are maturing to their next level of development. At the same time, the school is also progressing in its next stage or “planes” for expansion.

Next year, it’s the Montessori Primary School, also in Discovery Bay, which will feature the Montessori curriculum alongside an International Baccalaureate (IB) program. The growth, however, won’t stop there.

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According to Batterham, the ambition of any Montessori institutions worldwide is to provide education for all four major stages of learners (aged 0-6, 6-12, 12-18 and 18-24).

DMS is striving for the second plane, and a secondary school is in the works, according to the school’s supervisor, Dr Christie Lau. It will also include the IB program, alongside Montessori’s curriculum from which students acquire more worldly education and ethos.

The Hong Kong Education Bureau has indicated that a shortage of 4,200 international school places for primary school students may arise by 20162017. To meet the growing demand, the government has made five sites available for the creation of new school places, including three in Tseung Kwan O and Tai Po and two vacant school campuses in Ap Lei Chau and Tai Po. DMS has submitted its expression of interest to establish a school at one of these locations.

If DMS secures the Tseung Kwan O site, an area measuring 8,200 square meters, a Montessori-style secondary school with a number of purposespecific facilities for students will be made possible in about three years, says Lau. “The space could fit in a couple of basketball courts, a swimming pool, all within a big campus.”

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Guide to Early Education 2014 Discovery Montessori School

American Academic Advisors 701, Tower 2, Silvercord, 30 Canton Rd., Tsim Sha Tsui, Hong Kong 2481 South Jasmine Place, Denver, CO 80222, USA

School Profile

Company Profile American Academic Advisors (美國升學顧問中心) is an a full service educational firm offering professional and personalized advice to students and families in choosing and planning their paths to US education, thus achieving their academic and career goals.

Our team of American educational consultants helps students to identify, develop and present their strengths, evaluate choices of education and extracurricular activities, design and implement strategy for admission to top US universities.

We provide a wide range of services – from early planning to emergency assistance – including college list advice, the Common App review, essay review and workshop, summer program and campus visit planning, transfer advising, test prep recommendation, and the most popular comprehensive advising and guidance (2-6 years).

American Academic Advisors has a solid record of success in helping students from different countries to enter top universities in the US.

Discovery Montessori Schools (DMS) provides a bilingual (English and Putonghua Chinese) Montessori Education for children aged 1 to 12 years old for Preschool and Elementary years.

DMS schools strive to help children reach their highest potential. The schools inspire and nurture the individuality of children, encourage children to explore and learn independently in a creative and enriched prepared environment. The schools foster a strong academic foundation for a lifetime of learning in the areas of practical life, sensorial, language, mathematics, biology, geography, science and history.

DMS schools holds over 600 International students from over 30 nations. With a low teacher-to-child ratio, the schools offer mixed-age classes conducted in Bilingual settings.

Tel: (852) 2698 7988 Email: info@USAcademic.hk or USA755@163.com

DMS implements high quality International Curriculum combining with International Baccalaureate (IB) Programme and Elementary Montessori Education for Elementary International students.

Chinese Curriculum

Curriculum

British Early Years curriculum framework

Transportation

Facilities

Hours

Fees

Morning: 9am - 12 noon Afternoon: 1 - 4pm

DMS schools are members of the Montessori Schools Association and candidates for accreditation by the MEAB in the United Kingdom.

Transport

School Bus services to most areas in Hong Kong Island

Age of students

Montessori Playgroup Class (12 months - 3 years) Little Casa Bilingual Class (2 – 3 years) Casa dei Bambini Bilingual Class (3 – 6 years)

Elementary Bilingual Curriculum - Montessori Elementary (6-12y) and IB Programme

The Spectacle, 8 Cho Yuen Street, Yau Tong, Kowloon, Hong Kong

School bus available

Accreditation

DMS implements the traditional Montessori pedagogy as outlined by the Association Montessori Internationale (AMI) which was founded by Dr. Maria Montessori in 1929.

Mills International Preschool At Mills International Preschool we develop the global leaders of tomorrow and follow a bilingual curriculum, teaching in English and Mandarin. We are the first pre-school in Hong Kong to incorporate the MindUP™ program, and operate in specially designed premises featuring the latest technology. Our focus is on enquiry-based learning and developing talents and academic skills in every child.

We provide a child-centered environment that is supportive and stimulating to ensure that all children are happy, confident, and enthusiastic about learning. We help children to focus on specific developmental needs whilst building upon their strengths so that they can excel.

We also offer an extensive range of extracurricular activities to complement academic learning.

Qualified AMI/ AMS/ MCI Montessori Teachers from over 12 countries.

Predominantly trained in United States, Britain, Canada, and Australia.

Preschool Bilingual Curriculum – Montessori Casa dei Bambini (3-6y)

www.USAcademic.hk

School Profile

Faculty of Staffs

13,000 sq ft $6,000

DMS has established a whole language approach to assist students acquire the Chinese Language in Putonghua during the sensitive period for language. The Chinese Curriculum is enriched with interesting in-class activities, theme-based field trips, and Chinese Literacy to support children from the beginning of oral language acquisition (speaking and listening) to reading and to the more advanced skills of journal writing.

Facilities

The layout of DMS facility is designed to incorporate the Montessori principles with regard to classroom furnishings and equipment, and features a library, spacious Indoor and outdoor playground, basketball court, art room, music room, multi-function room, Large and Bright Montessori classrooms with extra large floor to ceiling windows.

SCHOOL OPEN DAY *

* Fun games & Activities **/** Montessori Presentation ** 10am – 12pm Central Campus – Nov 1st SAT / Discovery Bay Campus – Nov 8th SAT R.S.V.P.

DMS Primary Campus (up to age 12) – NEW in 2015-2016***

Block 1, Discovery Bay North, Lantau Island, Hong Kong

Discovery Bay Campus (ages 1 to 6)

Unit 101, 92 Siena Avenue, Discovery Bay, Lantau Island, Hong Kong Tel: (852) 2987 1201 Fax: (852) 2987 2899 Email: enquiry@discoverymontessori.info

Central Campus (ages 1 to 6)

3/F Mandarin Building, 35-43 Bonham Strand, Central, Hong Kong Tel: (852) 2850 8006 Fax: (852) 2850 8009 Email: enquiry@dms.edu.hk

Tel: (852) 2717 6336 Fax: (852) 2717 6236 Email: preschool@millsinternational.edu.hk

www.dms.edu.hk

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Guide to Early Education 2014 Harrow International School Hong Kong

Generations Christian Education

Early Years (K1 and K2)

70 Bridges Street, Sheung Wan, Hong Kong

38 Tsing Ying Road, Tuen Mun, New Territories, Hong Kong

School Profile We are Generations Christian Education, providing international Christian education across four campuses located throughout Hong Kong. Our schools are Small World Christian Kindergarten and Island Christian Academy on Hong Kong Island, and Norwegian International School Kindergarten and Primary in Tai Po, New Territories. Our schools reflect our ethos through their open, green environments, welcoming community feel, and child-centered education, which helps the individual child to explore and build upon their strengths, while learning to navigate and improve upon their challenges.

By our mission statement, we are dedicated to cultivating individuals of character, compassion, courage and competence; by inspiring our students to pursue academic excellence within an engaged, diverse and nurturing community; creating a global people of Christian faith as servant leaders. We are committed to seeing that our students benefit from a wholechild instructional approach, focusing on educating and nurturing them in heart, mind, body and soul.

School Profile At the core of our teaching and learning, we use the International Primary Curriculum (IPC), an exciting thematic inquirybased curriculum which incorporates Science, ICT, History, Geography and Art as well as personal goals and international mindedness. We also use the rigorous UK National Literacy and Australian National Mathematics curricula as well as “Connect” for Christian studies. Each subject has clear goals for learning skills, knowledge and understanding. Understanding the importance of grasping another language in our global community, we offer daily Putonghua lessons, using internally developed materials and the Easy Pathway/Better Chinese Putonghua program. This combination of best practice curricula from around the world reflects our desire for academic excellence among our students.

Exploratory plans are well underway for secondary school options for our students.

Transport

School Fee

Curriculum

Hours

School bus available International Primary Curriculum

Facilities

<$95,500

08:00 - 14:30 Varies by school

Lab & Art Suite Indoor and Outdoor play areas For specific information for each school, please go to their websites: www.smallworld.edu.hk www.islandca.edu.hk www.nis.edu.hk

Harrow International School Hong Kong opened in 2012, and is the first international co-educational day and boarding school in Hong Kong. The School provides a British independent style of education from Early Years to Y13. It blends elements of educational philosophy and practice from Harrow School in England with the needs of the diverse international community of Hong Kong. Boarding can begin from Y6.

The experiences in Early Years provide students with solid foundations in readiness for their transition to Year 1 in the Pre-Prep School, enabling them to explore in a safe, secure and stimulating environment while sewing the seeds for development of the leadership attributes outlined in the School’s vision statement Leadership for a better world:

Learning Environment

The Class Teacher is responsible for all aspects of each child’s educational and personal wellbeing. K1 classes consist of 16 students maximum with the Class Teacher and Teaching Assistant; in K2, there are 18 students. The dedicated classrooms have excellent educational resources that support the delivery of the curriculum as well as direct access to a generously proportioned terrace that affords instant access to dedicated outdoor space.

There is a dedicated Music room, a large multi-purpose shared area for activities such as indoor sports, assemblies and productions, an adventure playground facility and access to whole school facilities, including the astro-turf and the swimming pool.

Deadline for applications for August 2015 entry is 1st January 2015.

1. Contributing positively to the community 2. Using knowledge with compassion 3. Solving problems collaboratively 4. Solving problems creatively 5. Making fair and just decisions choices 6. Facing challenges with determination

Curriculum

The Early Years Phase follows the UK based ‘Early Years Foundation Stage’ (EYFS) Curriculum. It provides students with a broad range of fun and engaging experiences, both student and teacher led, ensuring a strong and secure foundation for future learning.

Structure of the School Day

The Early Years day begins at 8.15am and finishes at 2.00pm from Monday to Friday. The day is interspersed with regular breaks and opportunities for students to interact and socialise.

Lunch at school is provided.

Tel: (852) 2824 9099 Email: info@harrowschool.hk

www.harrowschool.hk

Tel: (852) 2537 2552 Fax: (852) 2858 7271 Contact: Terri Appel / Herelle Cheung Email: development@generations.edu.hk

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Guide to Early Education 2014 Stamford American International School

Nord Anglia International School

1 Woodleigh Lane, Singapore 357684

11 On Tin Street, Lam Tin, Kowloon, Hong Kong

School Profile Nord Anglia International School, Hong Kong (NAIS) is the newest member of Nord Anglia Education’s global family of 31 premium schools in Mainland China, South East Asia, Europe, North America and the Middle East. In total, 3,500 teachers look after more than 18,500 students globally. NAIS opened in September 2014 for Year 1 to 7. As the school grows, Year 8 and 9 will be offered. The school has modern purpose built facilities that are generously staffed and resourced.

NAIS follows the English National Curriculum adapted to the needs of our international community and a contemporary teaching philosophy called High Performance Learning, a key feature of all the Nord Anglia Education school curriculum.

Maximum class size throughout the school is 22 children per class. NAIS is committed to educational excellence and students produce final year results well above the world average with over 90% going on to their university of choice. Mandarin is taught throughout.

Curriculum

English national curriculum

Transportation

Bus service available

Principal

Brian Cooklin

Fees

Years 1-6 HK$131,800 Years 7 HK$147,000

Facilities

A wide range of learning spaces including a 3-storey multi-purpose hall, a 25-m swimming pool (opening 2015), library, learning centre, cafeteria, music rooms, an art room, kitchen (for cooking classes) and an activity area for each year group.

School Profile Centrally located in Singapore, Stamford’s state-of-the-art campus welcomes children from Nursery (age 2) through High School. Easily accessible, Stamford is centrally located next to the Woodleigh MRT and is a short drive from all the major expatriate residential areas. Stamford is truly a diverse community with students representing over 60 different nationalities.

Best of American and International Learning

Integrated Technology – 1:1 iPads & MacBooks

Stamford believes that the implementation of Information and Communications Technology (ICT) prepares students for university and the workplace, where technology is an integral part of academia and business. Stamford integrates ICT into the core curriculum. There are interactive Promethean boards in every learning space, a 1-to-1 iPad Program for students from Kindergarten 2 through Grade 5 and a 1-to-1 MacBook Program for Secondary School students.

Stamford offers two rigorous programs of learning - the American Education Reaches Out (AERO) standards integrated with the International Baccalaureate (IB) Program.

The program builds on children’s natural curiosity through formal content mixed with a broad range of associated ‘realworld’ experiences.

Full Accreditation

Stamford is fully accredited by the Western Association of Schools and Colleges (WASC) and is an IB World School authorized for the PYP, MYP and DP. Additionally, Stamford is a proud member of the Council of International Schools (CIS) as well as Edutrust and Council of Private Education (CPE) certified.

Tel: (852) 3958 1488 Email: info@nais.hk

www.nais.hk

Foreign Language Education – Mandarin & Spanish

The Woodland Group of Pre-Schools

At Stamford, foreign language is part of the core curriculum for all students from Nursery (age 2) through High School.

Speaking, reading, writing and intercultural awareness are taught in order to promote international-mindedness and global citizenship for all students. Classes are divided to ensure that each child is challenged at an appropriate level.

Head Office – Suite 2405 Universal Trade Centre, 3-5A Arbuthnot Road, Central, Hong Kong, China.

School Profile

Tel: (65) 6602 7247 Email: admissions@sais.edu.sg

www.sais.edu.sg

For over 36 years Woodland has set the standard in Hong Kong for quality pre-school education. With ten schools, Woodland offers classes for children aged from twelve months to six years. Six of our schools use ‘Traditional’ teaching methods in line with the UK National Curriculum’s Early Years Foundation Stage (EYFS). These schools are fully accredited by the Pre-School Learning Alliance, London. Four of our schools offer ‘Montessori’ teaching methods that are fully approved and accredited by the Montessori Evaluation & Accreditation Board.

List of Woodland Schools

Tai Tam Montessori Repulse Bay Montessori Montessori Academy (Mid Levels) Junior Academy (Mid Levels) Peak Pre-School Happy Valley Pre-School Pokfulam Pre-School Waterfall (Pokfulam) Harbourside (Aberdeen) Sai Kung Pre-School

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Tel: 2525 1655 Tel: 2803 1885 Tel: 2549 1211 Tel: 2546 2198 Tel: 2849 6192 Tel: 2575 0042 Tel: 2551 7177 Tel: 2872 6138 Tel: 2559 1377 Tel: 2813 0290

Tel: (852) 2559 4855 Fax: (852) 2559 7162 Email: enquiry@woodlandschools.com General Manager: Mrs. Abi Tyrrell

www.woodlandschools.com biz.hk 10 • 2014

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Guide to Early Education 2014 Victoria Educational Organisation

Yew Chung International School 29 Kent Road, 3 & 20 Somerset Road, 151 Waterloo Road, Kowloon Tong (four campuses)

School Profile

Early Childhood Education Programme

Victoria Educational Organisation (VEO) has been providing high quality young-learners’ education in Hong Kong for almost 50 years. “Bilingual Learners Today, World Citizens Tomorrow – Love to Read, Eager to Inspire, Learn to Care” is the school’s motto. VEO implements a bilingual co-class teaching approach and through a total immersion programme with trilingual learning environment and activities, children’s bi-literacy and tri-lingual abilities are strengthened. Through inquiry-based learning, children will develop into caring lifetime learners with a global vision. With continuous growth and expansion, VEO now comprises nine nurseries and kindergartens.

The Yew Chung International School (YCIS) Early Childhood Education (ECE) programme provides a well-rounded education for children from six months to five years of age. It nurtures a child’s development and caters for the social, emotional, cognitive, physical, creative and spiritual aspects of the whole child.

The Kindergarten Section of YCIS provides a nurturing environment for children of nursery and preschool age.

Children are at the heart of the early childhood programme experiencing the joy of learning. It is the needs of children that determine the learning, and their interests that steer the learning experiences YCIS offers. At YCIS, it is most important that children see themselves as competent learners and know they are valued and understood.

Vision

To develop innovative learning and teaching environments that foster teachers’ professionalism and help children reach their full potential.

The ECE programme is enhanced by the Co-Teaching model. Co-Teaching effectively facilitates the bilingual learning environment where both Chinese and English languages are equally valued. The children are immersed in a bilingual and multicultural learning environment where they are validated, valued and respected. It provides a model of acceptance of perspectives, attitudes and beliefs of both traditions and cultures.

Each class has an experienced early years team, comprising one English speaking and one Chinese teacher who work as equal partners to plan together for the learning needs of individual children. They provide an enabling environment where children interact naturally, feel comfortable about their own identity, language and culture, and begin to move easily between cultures. Such an achievement contributes positively towards a child’s future success in school, and later, functioning well in a global world.

The following kindergartens are authorised to provide IB education (Primary Years Programme) for students: • Causeway Bay Victoria Kindergarten, Causeway Bay International Kindergarten • Victoria (Belcher) Kindergarten • Victoria (Homantin) International Nursery

Playgroup

To help parents enrich their children’s learning during their crucial first three years, VEO offers Playgroup classes that are registered under the Social Welfare Department.

Playgroup provides a happy, caring, stimulating environment and programme, where experienced and caring instructors facilitate optimal development in early childhood. The toddlers develop their multi-intelligence through various enjoyable experiences.

Six Developmental Areas

The integrated curriculum content draws from children’s interests, ideas and questions which are often presented in their play. It is extended by learning taking place in six developmental areas. These include:

Learning is encouraged through active exploration and investigation.

Putonghua and dance are part of the ECE programme. Violin lessons are provided to the four- and five-year-old children in the whole-day programme.

YCIS knows the deep responsibility it has to children and families. It values a partnership with parents and their involvement in their child’s learning journey.

Age of students 8 months - 3 years 2 - 3 years 3 - 4 years 4 - 5 years 5 - 6 years

YCIS offers the following programmes to cater for the needs of different children.

Infant and Toddler Learning Programme (six months – two years old) Twos Programme (two–three years old) Threes Programme (three-four years old) Fours Programme (four-five years old)

Streams

Trilingual: English / Putonghua / Cantonese Bilingual: English / Putonghua

Tel: (852) 2338 7106 Fax: (852) 2304 6713 Email: admissions@ycef.com

Email: enquiry@victoria.edu.hk

www.ycis-hk.com

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YCIS combines the best of Eastern and Western cultures by promoting fluency in two major world languages, creating a truly bilingual learning environment. Besides Co-Teaching models, the integration of Eastern and Western cultures is also achieved through the Co-Principals system. Two Co-Principals, one Western and one Chinese, serve as partners in the operations and administration of the school. They provide excellent role models who respect and value one another’s culture.

Co-Teaching

International Baccalaureate (IB) Recognition

Playgroup Pre-Nursery Class Nursery Class Lower Class Upper Class

Co-Principals

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MARK YOUR CALENDAR Oct How do leadership teams in Asia perform:

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Trends from research and actual company experience Mitya New, Managing Director, Leading Organisations and Adjunct Professor, Department of Management, HKUST Elizabeth George, Professor of Management, HKUST Karel Bakkes, Senior Advisor, Strategic Client Programme, Deloitte Touche Tohmatsu, China At this lunch seminar you will hear about the analysis of the research as well as actual company experiences from senior leaders at multinational organizations in Asia which have been running programs to improve the performance of senior teams. This seminar is highly relevant for anyone involved in recruitment, talent development, leadership development and team performance improvement.

Mitya New is a global business leader with an impressive track record in team leadership and transforming performance in large organizations. With over 15 years of experience in CEO roles at multinational organizations, he has led large teams in Europe and Asia.

Elizabeth George has held academic positions at the Australian Graduate School of Management, University of Queensland and Western Michigan University as well as visiting positions in Duke University and the Indian School of Business. Her research has received recognition with a number of awards.

Karel Bakkes is responsible for Deloitte’s critical strategic account program and for developing the performance capabilities of strategic account teams. He has over 25 years of experience in a range of industries including technology, telecommunications and manufacturing.

Oct 2014 AmCham SME Forum:

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Where Is Your Business Heading?

Join us for the annual AmCham Small & Medium Enterprises (SME) Forum – a stimulating and unique half-day event that will help you and your organization advance beyond the crowd. Speakers will share their strategic knowledge and experiences leading you through the lifecycle of a business – from strategy creation to planning an exit.

PROGRAM

Business strategies for sustained growth: Choices and execution Jim Haybyrne, Chairman & CEO, Strategic Thinking Group

Funding your growth: Sources and their expectations, advantages and disadvantages Simon Squibb, CEO & Founder, NEST Investments Melissa Guzy, Managing Partner, Arbor Ventures Kevin Leung, CEO, Muku Labs

Marketing strategies for growth: Options, ideas, and resources

Venue: The American Chamber of Commerce in HK 1904 Bank of America Tower 12 Harcourt Road Central, Hong Kong

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Venue: Ivey Business School Rm S321, Level 3, HKCEC, Phase I 1 Harbour Road Wan Chai, Hong Kong

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Success Stories: Decisions, focus, and exit strategies

Tom Gorman, Chairman & Editor-In-Chief, FORTUNE China Elizabeth Thomson, Chairwoman & Founder, The Amber Foundation Ltd Brendan Blumer, Founder, OKAY.com

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IP Strategy for SMEs Gabriela Kennedy, Partner, Mayer Brown JSM Ruth Stackpool-Moore, Managing Counsel, Hong Kong International Arbitration Centre In today’s globalized world economy, intellectual property (IP) rights have to be protected against multiple parties from multiple jurisdictions and sometimes under multiple contracts.

The talk addresses the advantages and disadvantages of IP arbitration which should be weighted on a case-to-case basis and considered when drafting contracts to protect IP rights.

Gabriela Kennedy is the head of the Asia IP and TMT group at Mayer Brown JSM based in Hong Kong, practicing intellectual property, media, information technology and telecommunications law. She handles the full spectrum of intellectual property work from litigation to licensing, strategic advice and portfolio management. Kennedy has also handled a number of data breach complaints filed with the Privacy Commissioner in Hong Kong and has conducted in-depth data audits and drafted/devised privacy manuals and procedures for the Asia operations of a number of multi-national companies.

Ruth Stackpool-Moore is an UK qualified lawyer and oversees the administration of arbitrations and other forms of dispute resolution proceedings at HKIAC, working to promote the use of Hong Kong arbitration and other forms of dispute resolution worldwide. Prior to joining HKIAC, she worked with several international law firms in London, Sydney and Paris advising on a wide range of proceedings including international commercial arbitrations conducted under the ICC, LCIA, UNCITRAL, ICDR, VIAC and WIPO rules of arbitration as well as associated national court proceedings in civil and common law jurisdictions.

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

Tel: (852) 2530 6900

Fax: (852) 2810 1289

2014 Oct

Time: 12:00 - 2:00pm (Sandwiches & beverages included)

Media welcome

Claire Fenner, Founder & CEO, Heels & Deals Ltd. Katie McGregor, Marketing Consultant & Founder, Conduit Communications Gabriella Zavatti, Founder and CEO, ZAVVA Concepts Ltd

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Time: 12:00 - 2:00pm (Sandwiches & beverages included)

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Email: byau@amcham.org.hk

THE AMERICAN CHAMBER OF COMMERCE IN HONG KONG

FAST FACTS COMMUNITY AmCham celebrates over 45 years of promoting business and fostering greater trade ties and community service in Hong Kong

ACTIVITIES Members can access more than 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 1,700 members (40 different nationalities) from over 800 organizations, including multinational firms, small and medium enterprises, entrepreneurs, and non-profit organizations.

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

The American Chamber of Commerce in Hong Kong 1904 Bank of America Tower 12 Harcourt Road, Central, Hong Kong T: (852) 2530 6900 E: amcham@amcham.org.hk www.amcham.org.hk

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