AmCham biz.hk Jul/Aug 2016 by The American Chamber of Commerce in Hong Kong

Jul/Aug 2016

JOURNAL OF THE AMERICAN CHAMBER OF COMMERCE IN HONG KONG

www.amcham.org.hk

July/August 2016 â&#x20AC;¢ VOLUME 48 NUMBER 7- 8

CMY

July/August 2016

Contents

Vol 48 No 7-8

Publisher

Richard R Vuylsteke

Editor-in-Chief Kenny Lau

Assistant Editor

COVER STORY

A 16-member team of business executives representing AmCham Hong Kong travels to Washington DC for a series of discussions with US government officials and elected representatives as well as key personnel of various think tanks and international agencies on a broad spectrum of relevant issues on behalf of US businesses and members of the Chamber

Jennifer Khoo

Assistant Advertising Sales Manager Tom Chan

AMCHAM NEWS AND VIEWS 04 Is TPP Good for America? The Numbers Say It All

biz.hk is a monthly magazine of news and views for management executives and members of the American Chamber of Commerce in Hong Kong. Its contents are independent and do not necessarily reflect the views of officers, governors or members of the Chamber. Advertising office 1904 Bank of America Tower 12 Harcourt Rd, Central, Hong Kong Tel: (852) 2530 6900 Fax: (852) 3753 1206 Email: amcham@amcham.org.hk Website: www.amcham.org.hk Printed by Ease Max Ltd 2A Sum Lung Industrial Building 11 Sun Yip St, Chai Wan, Hong Kong (Green Production Overseas Group) Designed by Overa Creative Tel: (852) 3596 8466 Email: ray.chau@overa.com.hk Website: www.overacreative.com ©The American Chamber of Commerce in Hong Kong, 2016 Library of Congress: LC 98-645652 Single copy price HK$50 Annual subscription HK$600/US$90

The Trans-Pacific Partnership (TPP) is about an expansion of access to existing and potential markets in the Asia Pacific region where American workers and businesses will be able to offer so much more and benefit from international trade in a range of industries – from precision machinery to communication equipment and software; from poultry, beef and pork to dairy products; from retail to professional services

07 New Business Contacts 29 executives join AmCham’s business network last month

64 Mark Your Calendar

COVER STORY 08 Connectivity with Substance A 16-member team of business executives representing AmCham Hong Kong travels to Washington DC for a series of discussions with US government officials and elected representatives as well as key personnel of various think tanks and international agencies on a broad spectrum of relevant issues on behalf of US businesses and members of the Chamber

FINANCIAL SERVICES

16 Hong Kong as an Evolving International Financial Center: The Significance of Regulation Ashley Alder, CEO of Hong Kong Securities and Futures Commission (SFC), highlights three areas where Hong Kong can remain a structurally sound platform and capture opportunities as a result of China’s growing participation in the global financial markets

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16 FINANCIAL SERVICES Ashley Alder, CEO of Hong Kong Securities and Futures Commission (SFC), highlights three areas where Hong Kong can remain a structurally sound platform and capture opportunities as a result of China’s growing participation in the global financial markets

TRADE & INVESTMENT With depleting oil reserves, Brunei Darussalam – a member state of ASEAN – faces an ongoing challenge to diversify its economy in order to safeguard the country’s economic future, despite the fact that it is the fifth wealthiest country in the world by GDP per capita

TRADE & INVESTMENT

22 Brunei Darussalam: An Economy on the Rebound

With depleting oil reserves, Brunei Darussalam – a member state of ASEAN – faces an ongoing challenge to diversify its economy in order to safeguard the country’s economic future, despite the fact that it is the fifth wealthiest country in the world by GDP per capita

TAXATION

26 US Extends Effort to Tackle Offshore Tax Evasion

The introduction of the Foreign Account Tax Compliance Act (FATCA) has provided the US government with greater access to information about individual taxpayers on a global scale. It means US individuals will increasingly be under the scrutiny of the IRS regardless of their residency

LAW

30 FAQs about FATCA The Hong Kong Financial Services and the Treasury Bureau provides answers to some frequently asked questions regarding FATCA and how the intergovernmental agreement (IGA) signed between Hong Kong and the US can facilitate due diligence and disclosure requirements

HUMAN RESOURCES

32 Office Revolution: Rise of the Flexible Workspace Jonathan Wright, Associate Director of Office Services at Colliers International, talks about the growing demand for flexible working spaces in Hong Kong, the impact on employee productivity and motivation levels, and the implications for traditional office-based companies

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22 EDUCATION

Professor Kar Yan Tam, newly appointed Dean of HKUST Business School, shares his views on how innovation has shaped the world of business and why it is relevant to business education in today’s hyper-connected and highly globalized world

COMMUNICATIONS & MARKETING

36 Essential Steps Towards Social Media Success

How should companies make use of the online platforms while navigating through the risks of a new frontier of communication? Industry experts from tech giant Facebook and social media-focused communications agency Text 100 advise on strategies to fully leverage social media for your business

EDUCATION

40 Preparing for a Paradigm Shift

46 US Institutions Approved for Admission of Mainland Students The University of Chicago Booth School of Business (Hong Kong) and SCAD Foundation (Hong Kong) have been approved by the Education Bureau for admission of Mainland students to their designated locally accredited non-local degree programs

CHARITABLE FOUNDATION

48 In Recognition of Young Talent

The AmCham Charitable Foundation presents 2016 scholarship and awards in recognition of three full-time MBA candidates, four high school graduates and 20 secondary school students in Hong Kong for their exceptional academic records and achievements in leadership and community service

INDUSTRY FOCUS

55 Hospitality & Tourism News Briefs The latest regional and global developments by prominent industry players in Hong Kong’s glittering hotel sector

Board of Governors Chairman Vice Chairman Treasurer

Walter Dias Steve Lackey Owen Belman

Executive Committee Evan Auyang, Sean Chiao, John (Jack) E Lange, Alan Turley, Jennifer Van Dale Governors Donald Austin, Elaine Cheung, Diana David, Sean Ferguson, Robert Grieves, Matthew Hosford, Clara Ingen-Housz, Michael Klibaner, Simon Ogus, Seth Peterson, Anna-Marie Slot, Catherine Simmons, Eric Szweda, Patrick Wu, Lennard Yong Ex-Officio Governor President

Peter Levesque Richard R Vuylsteke

Chamber Committees Apparel & Footwear Ball China Business Communications & Marketing Corporate Social Responsibility Education Energy Entrepreneurs/SME Environment Financial Services Food & Beverage Hospitality & Tourism Human Resources Information & Communications Technology Insurance & Healthcare

Mark Green Diana David Devin Ehrig Lili Zheng Oliver Rust Pat-Nie Woo Virginia Wilson Rick Truscott Cynthia Chow Laurie Goldberg Jim C Taylor Steven Chan Veronica Sze Mark Kemper Peter Liu Benny Lee

Rebecca Harrison Hanif Kanji Gabriela Kennedy Intellectual Property Jenny Wong Chiann Bao Law Jessica Bartlett Margaret Driscoll Pharmaceutical Edward Farrelly Real Estate Robert Johnston Terrance Philips SelectUSA Lili Zheng Philip Cheng Senior Financial Forum Bianca Wong Senior HR Forum Ivan Strunin Taxation Barrett Bingley Trade & Investment Gavin Dow Transportation & Logistics Jennifer Parks Women of Influence Jennifer Wilson Michael Harrington Young Professionals

biz.hk Editorial

he Trans-Pacific Partnership (TPP) is unlike any other free trade agreement of the past. It covers a host of developed and developing economies across the Pacific Rim: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam, while others, including Colombia, the Philippines, Thailand, Taiwan, South Korea and Indonesia, have shown great interest in becoming signatories of an unprecedented trade agreement that is set to level a large part of the global playing field of international trade. By design, free trade agreements are a two-way street, allowing participating economies to export their products and services without the forbidding barrier of tariffs often put in place to “protect” the vital industries of a national economy. The elimination of import tariffs is an economic issue as much as it is a political one – a phenomenon very much highlighted in the current US presidential campaigns. In reality, will US businesses and workers benefit from TPP? Let’s take a look at some numbers provided by the Office of the United States Trade Representative: in 2014, a total of US$56 billion in US machinery products were exported to TPPdesignated countries, and import taxes were as high as 59 percent; in 2014, a total of US$89 billion in US automotive products were exported to TPP countries, and import taxes were as high as 70 percent; in 2014, a total of US$36 billion in US information and technology products were exported to TPP countries, and import taxes were as high as 35 percent. With TPP, import taxes will be zero.

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IS TPP GOOD FOR AMERICA? THE NUMBERS SAY IT ALL What about exports of US agriculture products which make up about 20 percent of all farm income across America? TPP will remove import taxes as high as 40 percent on US poultry products, 35 percent on soybeans, and 40 percent on fruit exports. Although not all, most US exports of farm product will be completely import tax-free, and more than half of these US products (by value) will not be subject to any import tariffs in one of the US's most important export markets – Japan. Let’s take a look at some more numbers: in 2014, Japan imported over US$1.6 billion worth of American beef, with a 38.5 percent import tariff, and almost US$2 billion worth of American pork, with a 20 percent tariff on ground seasoned pork, costing US pig farmers an additional US$435 million per year. Currently, Japan buys US$86.5 million worth of American wine each year, with import taxes of up to 58 percent. Japan also has a 21 percent tariff on American soybean oil as well as a tariff of 40 percent on cheese made in the US. Under the TPP agreement, Japan will reduce tariffs on American beef to nine percent and will eliminate duties on 74 percent of its tariff lines within 15 years; it will eliminate 80 percent of its pork tariffs in 11 years and make steep cuts in the remaining lines; it will remove tariffs on US-made wine, soybeans and cheese. Better yet, TPP will help American farmers and ranchers to

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compete abroad by “ensuring that foreign regulations and agricultural inspections are based on science, eliminating agricultural export subsidies, and minimizing unpredictable export bans.” In essence, TPP offers more than just the formation of the largest free trade zone by doing away with over 18,000 different trade-related tariffs; it is an important step in the sustainable development of international trade through a high-standard framework designed to protect laborers and the environment, to allow small- and medium-sized enterprises to benefit from global trade, to fight unfair practices and corruption, and to promote e-commerce, internet freedom, corporate governance, inclusive economic growth and future development as well as capacity-building. To a large extent, the US is already a leader as an export market of high-quality products and services in many of the industry sectors included in the free trade agreement – from precision machinery to communication equipment and software; from poultry, beef and pork to dairy products; from retail to professional services. TPP is all about an expansion of access to existing and potential markets in the Asia Pacific region where American workers and businesses will be able to offer so much more and benefit from international trade in the age of globalization.

www.amcham.org.hk

AMCHAM Means Business

Members Directory

Over 500 pages in three major sections, including a complete guide to chamber services, corporate sponsors and AmCham Charitable Foundation. This directory lists about 1,400 members from about 700 companies and organizations. ISBN 978-962-7422-33-4

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

MEMBER PRICE HK$800 US$104

AmCham Member Name: Title: Company: Address: Tel: Fax: Email: Website: copy(ies) of Members Directory Total: HK$/US$ (postage inclusive) payable to The American Chamber of Commerce in Hong Kong check# Bank: Charge to AMEX (US$) Diners (HK$) Visa (HK$) Master Card (HK$) Cardholder's Name: Card# Expiry Date: Issuing Bank: Signature: (Not valid unless signed) The American Chamber of Commerce in Hong Kong 1904 Bank of America Tower, 12 Harcourt Road, Hong Kong. Tel: (852) 2530 6900 Fax: (852) 3753 1208 Email: hchung@amcham.org.hk

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New

Business Contacts The following people are new AmCham members: AIA Group Derek Lau District Manager Michele Flanagan Director of Marketing

Amber Road (Hong Kong) Limited Andrew Cheung Director, Customer Success

American Airlines Inc Thomas Scruby Commercial Director, Hong Kong, Southern China & South East Asia

Future Motors Limited (Ford) Jerry Tse Deputy General Manager

Ivey Business School

Macy Chui Director, Ivey Case Center (Asia)

Matthew Belecanech International Property Consultant

Lanson Place Hotel Alicia Too General Manager

Dezan Shira & Associates Kelsey Ryan Corporate Communications Officer

Charmaine Yong Paralegal

Lockton Companies (Hong Kong) Limited Irene Tong Senior Vice President, Strategic Business Development

MetLife Eli Lilly Asia, Inc Margaret Driscoll General Manager

Anik Tremblay Business Development Manager

Ning Chu Founding Chairman

Spring Professional (Hong Kong) Ltd Stephen Smith Country Director, Hong Kong Tim Rodrigo Manager, Property & Construction Vahid Haghzare Manager, Information Technology

The Gap Partnership Rionna Chan Senior Client Manager, APAC Vanessa Chan Client Development Associate, APAAC

University of Virginia Darden School of Business Richard Johnson Executive Director for Global Affairs

Ashia Razzaq Head, Business Communications, Asia

Wells Fargo Bank NA PCCW Limited

Equiom Group

SME Global Alliance

Lewis Silkin LLP

Credit Suisse (Hong Kong) Ltd Anita Chiu Vice President APAC Public Affairs & Policy

Theresa Mak Senior Associate

Jones Lang LaSalle (JLL)

Asia Pacific RT (HK) Ltd Jonathan Lee Executive Director

Rouse Legal

Veronica Lockyer Vice President RegulatoryCompliance

Jim Johnston APAC Regional President

Philip Morris Asia Limited EY Henry Ho Managing Director, Transaction Advisory Services

Kittipong Jangkamolkulchai Manager Corporate Affairs, Hong Kong & Macau Marco Rotondo Area Vice President, HK, Macau & Taiwan

View our other members at: www.amcham.org.hk/memberlist

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COVER STORY

CONNECTIVITY WITH SUBSTANCE A 16-member team of business executives representing AmCham Hong Kong travels to Washington DC for a series of discussions with US government officials and elected representatives as well as key personnel of various think tanks and international agencies on a broad spectrum of relevant issues on behalf of US businesses and members of the Chamber. The purpose of the delegation led by AmCham Chairman Walter Dias, Vice Chairman Steve Lackey and President Richard Vuylsteke is to promote international trade, share Hong Kongâ&#x20AC;&#x2122;s perspectives on regional and global political, economic and commercial trends, and gain a better understanding of the latest US views on Sino-US relations, global financial development and other trade-related topics

By Kenny Lau

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Photo: Thinkstock

From left: Joseph Van Houten, Jeremy Plotnick, Joshua Snear, House Ways and Means Committee Chief Trade Counsel (Majority) Angela Ellard, Walter Dias and Simon Ogus

16-member team of business executives representing AmCham Hong Kong has logged in nearly 40 meetings with US Administration officials (including a briefing with incoming Consul General to Hong Kong & Macau Kurt Tong), elected representatives and their staffs on Capitol Hill, scholars of think tanks and NGOs, and key personnel of various international agencies and business associations for a series of discussions during a four-day “Doorknock” advocacy trip to Washington DC in the week of June 13th-16th. The delegation, led by AmCham Chairman Walter Dias, Vice Chairman Steve Lackey, and President Richard Vuylsteke, was in the nation’s capital to promote international trade, share Hong Kong’s perspectives on regional and global political, economic and commercial trends, and gain a better understanding of the latest US views on Sino-US relations, global financial development and other trade-related topics. With the purpose of “keeping Hong Kong on the map,” it was a strategic dialogue on a broad spectrum of relevant issues on behalf of US corporations and businesses as well as other MNCs based in the Asia Pacific region as a result of AmCham’s continuous efforts in promoting free trade, private enterprise and the rule of law. And it was particularly timely because of

the US-China Strategic & Economic Dialogue (S&ED) held earlier in Beijing and the ongoing US presidential campaign this year. The annual “Washington Doorknock” is a highlight of AmCham Hong Kong’s vigorous year-round advocacy agenda targeting government officials in Hong Kong, Mainland China, and the US as well as various other countries in Asia for meetings and roundtable discussions far beyond mere courtesy calls. The Chamber is privileged to have extraordinary access in Washington DC as delegations have for many years “knocked on the doors” of key leaders and decision-makers to provide candid, constructively critical comments on key issues. “The annual trip to Washington is part of our ongoing advocacy efforts in addition to the opportunity to brief US officials whenever they visit Hong Kong,” Dias points out. “Oftentimes we’re able to meet with them on more than one occasion. It means we can be more straight-forward during our discussions on issues – and we have a track record for providing good information and insights from an Asia perspective. This gives us great credibility.”

The agenda: trade Formal meetings were held across different

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The Delegation Name

Position

Company

AmCham Leadership

Walter Dias

Managing Director Greater China & Korea Chairman, Asia Pacific President

United Airlines Inc

Chairman

BNY Mellon The American Chamber of Commerce in Hong Kong FedEx Express

Vice Chairman President

Paul, Weiss, Rifkind, Wharton & Garrison DSG Asia Limited State Street Bank & Trust Co

Governor Governor Financial Services Committee Chair Scheduler

Steve Lackey Richard Vuylsteke Alan Turley Jack Lange Simon Ogus Steven Chan Christine Davies Marc Johnson Joseph McGowan Larenda Mielke Jeremy Plotnick John Rindlaub Joseph Van Houten Ming-Lai Cheung Queenie Tsui

Vice President International Affairs, APAC Partner CEO Regional Head of Regulatory and Government Affairs Vice President for Global Partnerships & Development Executive Director for Global Initiatives Affairs Senior Vice President, Global Supply Chain Senior Director, Executive Education Director of Marketing and Crisis Management Regional President - Asia Pacific President & COO Director, Government Relations & Public Affairs Assistant Manager, Government Relations & Public Affairs

agencies of the US Administration, including the Department of State, Department of Defense, Department of Treasury, Department of Commerce, and Office of US Trade Representative, in addition to briefings with Congressional leaders and discussions at the Center for Strategic and International Studies (CSIS) and Brookings Institution. Topping this year’s agenda was international trade – an area for which the delegation urged stronger support in Washington and highlighted the case of Hong Kong as an example of a highly successful open economy where trade continues to play a big role. It was a critical message given some of the current political rhetoric against trade agreement of any sort largely because of the ongoing presidential campaigns in the US. The stance on trade in the US Congress seems especially harsh, particularly the prospect of passing the Trans-Pacific Partnership (TPP), and there are mixed feelings as to whether TPP will be ratified during the lame duck period later this year. Moreover, despite a certain extent of optimism, the trade community is increasingly skeptical of the possibility because of divergent views among officials and other specific issues which remain unsolved. In Washington, expectations come from both sides of the aisle: on one hand, some believe that “no way the TPP can pass” and that “unions are anti-trade,” while others say “the TPP has to pass and should make it during the lame duck session of Congress [between the November election and the inauguration of the next

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Asia Society, New York

Governor

University of Virginia Darden Business School PVH Far East Limited University of Virginia Darden Business School FormerFedsGroup.com Wells Fargo Bank NA Market Movers, LLC - Visionairs Division The American Chamber of Commerce in Hong Kong The American Chamber of Commerce in Hong Kong

President].” But one thing is certain, TPP has gone from an issue of economics to become a political debate. Whether TPP will be passed in 2016 has also become a symbol of US commitment to the Asia Pacific region. While there is a general understanding of the relevance and importance of free trade agreements to the US market in the form of employment and export opportunities, there is a far greater emphasis on the domestic economy in an election year, despite the US notion of a strategic pivot of rebalancing towards Asia. Many are worried that failure to approve TPP at this stage would be a negative message about US engagement in the region and that it could lead to the possibility of increased anti-trade and protectionist sentiments within the US in the coming years. Others point out that “TPP is a security issue for Japan as well as Southeast Asia and a reflection of the increasing geopolitical and security tension in the region.” It had also been suggested repeatedly in a number of the meetings that the business community can play a larger role in relation to advocating for the passage of TPP from a US perspective by making a better case on the expectation of domestic job creation from the international trade agreement.

Key takeaways Trans-Pacific Partnership (TPP) The agreement covers countries in the fastest growing region of the

From left: Jeremy Plotnick, Steven Chan, Walter Dias, Congressman Rick Larsen (D-WA), John Rindlaub, Joseph Van Houten, Jack Lange, Simon Ogus and Ming-Lai Cheung

world and will be a driver of job creation, export opportunities and overall economic growth. The ratification of TPP will demonstrate US leadership and renewed commitment to a geopolitically diverse and dynamic region that is Asia. The lame duck session after the presidential election on November 8, 2016 presents a narrow window for ratification. China “Reciprocity” rather than “engagement” is key to balanced US-China relations on issues ranging from market access to defense and cyber security, and other aspects. While China’s economy is on a downward trend, there is still decent growth and consumption in various sectors across different regions. The lack of available details about the Belt and Road initiative signals at present a “wait-and-see” position as the best approach. Hong Kong The HKSAR has unique value to China as a “connector” to global markets and as a source of high quality services for Chinese companies seeking global expansion. The rule of law, judiciary independence and connectivity within the Pearl River Delta region are named to be Hong Kong’s competitive advantages. The “one country, two systems” guaranteed in the Basic Law is essential to the continuing success of Hong Kong. US-ASEAN Relations The engagement of ASEAN

nations with the US has grown more intensely as a result of air and maritime disputes over territorial claims in the South China Sea. There isn’t, however, much expectation for an early resolution to China’s claims in the region, and security concerns are on the rise. Separately, military and economic activities in North Korea may have a significant impact on the stability of the Asia Pacific region. Financial Services The creation of renminbi (RMB) clearance facilities in US is in good progress following an agreement between the People’s Bank of China (PBOC) and the US Department of Treasury on the standard operating procedure through a Memorandum of Understanding. Meanwhile, more lobbying efforts are suggested for the possibility of modifying FATCA in order to reduce the enormous cost and burden on US citizens.

Impact of advocacy The annual “Washington Doorknock” is indeed an important exchange of views and an opportunity to give direct feedback based on the day-to-day business engagement of MNCs and smaller businesses here in Hong Kong and in the region, Vuylsteke points out. “We are often asked why we travel halfway around the

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From left: Joseph McGowan, Simon Ogus, Steven Chan, Alan Turley, Jack Lange, Walter Dias, Under Secretary of Commerce (International Trade) Stefan Selig, Steve Lackey, Joseph Van Houten, Richard Vuylsteke, Jeremy Plotnick and Larenda Mielke

The Meetings U.S. Administration

Hong Kong Government Representatives

• Department of State

• Hong Kong Economic & Trade Office, Washington, D.C.

- Bureau of Australia, New Zealand & Pacific Islands - Bureau of East Asia and the Pacific Affairs

Agencies & Business Associations

- Bureau of Economic and Business Affairs

• Akin Gump Strauss Hauer & Feld

• Department of Commerce, International Trade Administration

• Baker & Hostetler

• Department of Defense

• Forbes-Tate

• Department of the Treasury, International Affairs

• International Monetary Fund (IMF)

• U.S. Trade Representatives, Asia & Africa

• RTHK, International Economics • U.S. Chamber of Commerce, Asia & Africa

U.S. Congressional Offices • House US-China Working Group Co-Chairman Representative Rick Larsen (D-WA)

Think Tanks / Universities • Asia Society Policy Institute

• House Committee on Foreign Affairs

• Bower Group Asia

• House Committee on Ways and Means

• Brookings Institute

• Senate Committee on Finance

• Center for Strategic and International Studies (CSIS)

• Senate Committee on Foreign Relations

• National Committee on North Korea

• Congressional-Executive Commission on China

• Stimson Center

• Congressional Research Service

• College of William and Mary, Mason School of Business • George Washington University, Elliott School of International Affairs

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Kurt Tong, sixth from right, incoming US Consul General for Hong Kong & Macau

world to meet with US government officials, and that’s in fact one of the very first questions we get in our meetings on the Hill and elsewhere in Washington.” “The reason is simple: our business executives operating here in Asia are in the trenches,” he explains. “We see the challenges every day, and we feel the impact of the decisions being made in Washington regarding policy and regulations on US businesses and individuals and on the region as well. That’s why we are in Washington year after year to speak on behalf of our members.” “While the actual impact of a Doorknock trip is difficult to know, we can confidently say that the closed-door meetings in Washington provide AmCham Hong Kong with important insights into how its own advocacy agenda should be adjusted, refined, and strengthened in light of what Washington leaders need to know,” Vuylsteke explains. “Our Doorknock experiences have been positive, thanks to having first-rate participants who are willing to have their voices heard on issues,” he adds. “This is an effective means to support – or to counterbalance – issues under discussion in our nation’s capital. One week in Washington has year-round impact on AmCham’s informational and advocacy activities.”

Acknowledgements • United Airlines for sponsoring air tickets for staff • Akin Gump Strauss Hauer & Feld for an in-depth breakfast briefing and scheduling for the Congressional meetings • Asia Society Policy Institute for hosting the delegation at a panel event on US-Asia issues • Colonial Williamsburg for their hospitality hosting staff prior to the Doorknock sessions • Christine Davies, Asia Society Vice President of Global Partnerships and Development, for scheduling assistance

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FINANCIAL SERVICES

Hong Kong as an evolving international financial center: The significance of regulation “How does Hong Kong position itself for the future? As an international financial center like London? As a super-connector for China? As something else? Or as all of these?” Ashley Alder, CEO of Hong Kong Securities and Futures Commission (SFC) highlights three areas where Hong Kong can remain a structurally sound platform and capture opportunities as a result of China’s growing participation in the global financial markets – as a place to manage onshore China risks, as a listed market and as a fund management center

By Kenny Lau

Photos courtesy of HKSI Institute and SFC

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Ashley Alder

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uch has happened in the financial markets over the past 18 months, and it has been a year of turbulence in stock markets globally, including the Shanghai and Shenzhen stock exchanges in China where its currency, renminbi, was no less volatile. The Hang Seng Index in Hong Kong, meanwhile, dropped by about a third in value within a five-month period from a peak in April 2015. The global market is undoubtedly facing significant headwinds, but an equally important question is how Hong Kong can remain an international financial center ready for “many of the underlying secular trends [which] have continued unchanged, including China’s opening up,” said Ashley Alder, CEO of Hong Kong Securities and Futures Commission (SFC), speaking in a recent luncheon at the Hong Kong Securities and Investment Institute (HKSI Institute). “We can see this in the recent liberalization of the domestic bond markets for foreign institutional investors – free of any quota restrictions,” Alder highlights. “There is also the probable launch of the Shenzhen leg to Stock Connect, and the recent expressed wish of the China Securities Regulatory Commission (CSRC) to establish domestic commodity futures markets which are open to international investors.” “Now at the SFC we believe that the key to our continued success is to synchronize the sophisticated markets and services which Hong Kong has to offer with the accelerated development and opening up of the Mainland markets,” he says. “In essence, we should do what we have done ever since the first H-share in 1993. This is to enable the world to access China via a regulatory, legal and market environment which ensures very high levels of confidence in fairness, resilience and security.” But China’s market is also very different today from how it was in 1993, Alder notes. “Most of the big state-owned enterprises have now all listed. Although Hong Kong’s initial public offering (IPO) market was again number one in the world last year, questions are now being raised about relative valuations and other factors which may attract companies to list in other markets. In short, it is a far more competitive environment, and we need to be agile.” “So how does Hong Kong position itself for the future? As an international financial center like London? As a super-connector for China? As something else? Or as all of these?” he says, highlighting three areas where Hong Kong can remain a structurally sound platform and capture opportunities as a result of China’s growing participation in the global financial markets. “First, Hong Kong as a place to manage onshore China risks. Second, Hong Kong as a listed market. And third, Hong Kong as a fund management center.”

Hong Kong as a risk management center While Hong Kong is already a “connector” as the leading offshore renminbi center through the ShanghaiHong Kong Stock Connect program and more recently through cross-selling of Mainland and Hong Kong funds in each other’s markets under the Mutual Recognition of Funds (MRF) scheme, being a center for managing the more difficult risks arising from overseas institutional investment in the Mainland markets is a significant prospect, Alder believes. “In large part it is about the further development of derivatives, futures and other hedging or risk management instruments which require both sophisticated regulation and world-class, secure pre- and post-trade market infrastructure,” he explains. “China clearly remains keen to attract greater onshore participation from overseas institutional investors and, despite concerns about the currency and capital flows, in the longer term to allow Mainland investors to put more of their savings to work outside the Mainland.” For China, Hong Kong can serve as a market with the full range of hedging and arbitrage options, together with the right regulatory and institutional framework to manage the risk profiles of a range of exchange-traded and over-the-counter (OTC) risk management financial instruments, Alder says. “This is largely about the way in which institutional investors were perceived to have had access to onshore derivatives to hedge or speculate on falling prices whilst retail investors were excluded, leading to what were seen to be unfair outcomes,” he points out. “This perception led to new restrictions in the derivatives markets, especially A-share futures. This has meant that investors have fewer choices to manage their long positions effectively.” Hong Kong, Alder says, can therefore play a major role as place which originates and clears futures and other derivatives that are more precisely calibrated to manage onshore Mainland risks. “This could create a virtuous circle by enabling investors – mainly foreign institutions – to increase their domestic Mainland exposures on the long side. And this, in turn, should increase the volume of risk management activity in Hong Kong – where we are in the right time zone and have the right experience to do this.” “Of course, an expansion of our markets to offer more sophisticated hedging and similar tools will also require the SFC, as regulator, to manage the more complex inherent risks that come with this activity,” he stresses. “But we think we are well positioned to succeed as we are moving forward with the implementation of the new legislation focusing on the clearing of OTC derivatives, and we are also participating in international work concerning the resilience of the central counterparties which clear derivatives trades.”

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Listing regulation “In recent months we have been looking hard at how our market is functioning, focusing on some apparent anomalies. For example, we have investigated whether some sharp market movements in individual stocks have been a consequence of legitimate capital flows or something else,” Alder notes. These sharp market movements were discussed at the SFC Regulatory Forum 2016: the market capitalization of 860 listed companies in Hong Kong had doubled within a six-month period between 2013 and 2015. The share prices of 56 of these companies (which had a collective market capitalization of close to HK$400 billion by the end of 2015) had increased by more than 10 times within six months. Out of these 56 companies, 39 were loss-making and 10 had price/earnings ratios of over 50 times. And some of these companies were included in other major market indices. “The question is whether there are any common themes or causes behind instances of extreme volatility and, if so, whether this should prompt regulatory action,” Alder says. “Of course, when a stock is included in major market indices, many institutions are compelled to buy, and this tends to have a snowball effect on the stock price. But a fair number of these companies were also subject to SFC high shareholding concentration warnings.” “Given their market size, any single instance of misconduct related to their share price performance could seriously dent investor confidence, threaten our market reputation and even raise issues about systemic risk,” he explains. “And we were not the only ones who were concerned. FTSE in December 2015 and MSCI early this year introduced new rules to exclude from their indices stocks which are subject to SFC high shareholding concentration warnings.” While the extreme price volatility of newly-listed stocks in the Growth Enterprise Market (GEM) is a concern, the questions need to be answered are more fundamental. GEM was initially to cater to high-growth companies such as those in technology but re-positioned in 2008 as a stepping stone to the Main Board with a streamlined process. At the moment well over 80% of GEM companies are traditional businesses. Moreover, Alder notes that “we have seen that newly-listed GEM companies are often associated with extreme price fluctuations, small public floats and high shareholding concentrations.” “In many cases, IPO proceeds are minimal – far too small to justify the expense and effort of an IPO. We have been very concerned about these and other developments in our listed market. Hence, we have been working with HKEX on an overall review of a range of listing policies, including a holistic review of GEM,

biz.hk 7-8 • 2016

John Maguire, left, Hong Kong Securities and Investment Institute (HKSI Institute) Chairman, presents a souvenir to Ashley Alder, CEO of Hong Kong Securities and Futures Commission (SFC), at a recent luncheon focusing on Hong Kong’s evolving role as an international financial center.

backdoor listings, shells and prolonged suspensions, because getting on top of these issues is critical to preserve the quality of Hong Kong’s market.” The current listing regulatory structure, in which the SFC and the Exchange have separate but overlapping functions and powers, was conceived more than two decades ago. “There is a compelling case for a far more coordinated approach towards listing regulation. We believe that this requires greater interaction between listing policy and the Listing Rules, which are administered by the Exchange, and the regulation of listed companies and intermediaries by the SFC under the Securities and Futures Ordinance,” Alder elaborates.

Fund management The launch of MRF was ground breaking because it allowed cross-selling of Mainland and Hong Kong mutual funds in each other’s market for the first time. Today, 37 Mainland funds and six Hong Kong funds have been approved to operate since the launch of MRF at the end of 2015. “Like early H-shares and Stock Connect when first launched, the cross-border traffic under the MRF scheme is not large,” Alder says. “But this was to be

Renminbi Qualified Foreign Institutional Investor (RQFII) quotas. But there is also a need for more diversification and innovation in the current low-yield environment, Alder says. “So in April and May we saw the listing of two crude oil futures ETFs, an asset class which was previously confined to institutional money.”

Asset management

expected. Markets have been difficult, and we know it takes time to develop distribution capacity and new products. The important thing is that Stock Connect and MRF have operated smoothly and have paved the way for more market integration and connectivity. For Stock Connect, we are looking to extend connectivity to Shenzhen, and for MRF we will continue to deepen and broaden the scheme.” More importantly, several initiatives are underway to tackle a number of structural issues as part of a larger, ongoing strategy of promoting Hong Kong as a global hub of asset management, he points out, noting a bill recently passed by the Legislative Council to create a legal framework enabling the introduction of a new open-ended fund company (OFC) structure in Hong Kong where funds will be given an extra option to be structured in corporate form rather than as unit trusts. Fund distribution, Alder notes, is another area due for enhancement. Right now, roughly 80 percent of funds are sold through banking institutions and only three percent by brokers. The issues are limited shelf space, high costs and limited choices for investors, and alternative distribution platforms are necessary in order to encourage greater diversification. As such, SFC supports the idea of an exchange-sponsored platform to enable brokers to buy and sell funds for their clients in the primary market. “We have discussed with HKEX whether their clearing and settlement system can accommodate primary subscriptions and redemptions, and HKEX has agreed to incorporate a capacity to handle fund distribution in its next generation system upgrade,” he says. “Separately, we want to encourage the growth of in-house or third-party online platforms, and an SFC working group on suitability, platforms and advice (SPA) was formed earlier this year to clarify how the requirement to ensure that financial products are suitable for clients operates across different business models.” With a shift to passive management in the global funds industry, there has been a rapid growth of exchange-traded funds (ETFs) in Hong Kong, particularly in the last few years alongside the expansion of

“The final but most important limb of our asset management strategy is about regulation,” Alder stresses. “Over the last few months, we have consulted the industry about a revamp of the Fund Manager Code of Conduct as well as about a liquidity risk management circular. The liquidity of the underlying assets [in mutual funds], particularly if they are emerging-market bonds, is fair at the best of times, and poor in times of stress.” “The conventional wisdom that equity markets are liquid is also being challenged. So in this part of the world, we have seen a number of liquidity issues in the A-share market, most recently as a result of the circuit-breaker mechanism, and of course the events of last summer which led to widespread suspensions of A-shares in which funds are invested.” “As a fund manager, how do you actually manage the risk of mismatch between redemption pressure and the liquidity of your fund assets? Is your portfolio structured to be resilient to shocks? And have you been monitoring the liquidity profile of your funds on a continuing basis?” he says. “Our new liquidity risk management circular aims to provide principles-based guidance in these areas.” “And we are continuing to look at the feasibility of identifying market orders directly at a client level rather than at a broker level,” he adds. “At the SFC, we are keenly aware that our regulation must take Hong Kong’s unique position into account. As recent events have shown, our regulatory regime must be resilient under fast-moving and challenging market conditions, but also adapt to changes in the markets and the broader economic environment.” “Hong Kong has had a long track record of successful adaptation, and we’ve come a long way since the listing of the first Mainland business in Hong Kong in the early 1990s,” Alder reflects. “Now 70 percent of the trading on our exchange is centered on Mainland companies. Over the past five years or so, the introduction of RQFII and QFII, the growth of offshore renminbi and other initiatives such as Stock Connect and MRF are transforming our market once again.” “So, it is up to all of us to make sure that Hong Kong’s competitive advantages are cultivated and advanced and to reinforce our reputation as a place where international and local investors can operate with confidence,” he says.

biz.hk 7-8 • 2016

TRADE & INVESTMENT

Brunei Darussalam: An Economy on the Rebound The Southeast Asian nation of Brunei Darussalam is known for its vast and seemingly endless supply of oil, which has fueled the national economy for the past century, establishing the country as the fifth wealthiest in the world by GDP per capita. With depleting oil reserves, Brunei – a member state of ASEAN – faces an ongoing challenge to diversify its economy in order to safeguard the country’s economic future

By Jennifer Khoo

edated by the warm tropical breeze, women in headscarves shuffle unhurriedly across the courtyard of a huge, half-empty shopping complex towards the Sultan Omar Ali Saifuddien Mosque; the Islamic call to prayer bellowing out from a gold-domed minaret over Brunei’s sleepy capital. Upon first glance, many would fail to guess that this quiet, peaceful nation perched on the northern coast of the island of Borneo overlooking the South China Sea is one of the wealthiest countries in the world. Ever since the discovery of oil in the 1920s, Brunei has enjoyed considerable wealth due to the steady global demand for crude oil and natural gas. The nation’s citizens have benefitted from their

geographically-determined fortune, enjoying free healthcare, education from kindergarten through university, cheap home loans and subsidized housing, and zero income or sales tax, with many finding comfortable jobs in government after graduation. This generous social contract has enabled citizens to accumulate higher-than-average levels of disposable income, lending to their international image as wealthy people. Though history and popular belief imply that citizens under autocratic rule are generally discontent, it is quite the opposite in Brunei, where the Sultan who has ruled since 1967 enjoys genuine popularity, especially among the ethnic Malays who make up the majority of the population.

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of government revenue for the past 100 years, there is no question about the need for economic diversification, particularly in light of estimates by the BP World Energy Outlook that the nation’s hydrocarbon reserves will run out in just 22 years if no new sources are discovered. The Bruneian government, in acknowledgment of an unhealthy reliance on the oil sector and an urgent need for economic reform, announced the implementation of a long-term development framework called “Wawasan 2035,” or Vision 2035, with plans to transform the nation into a vibrant regional trading and financial hub with “an enterprising, knowledge-based economy” over the next 20 years. “We seek to diversify our economy by promoting investment, increasing food self-sufficiency, encouraging opportunities for women and maintaining high standards of governance in public and private sectors,” said the Sultan Haji Hassanal Bolkiah, king and prime minister of Brunei, upon unveiling of the plan in 2008.

Energy

Photo: Thinkstock

End of an oil economy Brunei’s bubble of comfort has been gradually thinning however, as record low oil prices since 2015 launched the nation into its third consecutive year of recession. Following a 70 percent drop in FY2015/16 government earnings compared with FY2012/13, and a projected budget deficit of BN$3.84 billion (US$2.81 billion) for FY2016/17, one is left to further wonder about the sustainability of Brunei’s existing social contract which has, for years, provided an accustomed level of comfort for its citizens. With oil and gas exports traditionally accounting for 65 percent of Brunei’s GDP and more than 90 percent

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Fast forward eight years, and though the challenging external climate – together with an increasingly competitive regional environment – has kept progress sluggish, significant steps have been taken to diversify Brunei’s economy. To an extent, the nation has managed to shield itself against fluctuations in global energy demand by forging long-term supply contracts with various countries and industrial entities. In July last year, the majority state-owned Brunei Gas Carriers took delivery of another LNG tanker as part of its plans to upgrade its fleet and boost export capacity. Brunei has long-term Liquefied Natural Gas (LNG) agreements with Japan and South Korea, with 90 percent of Brunei’s LNG exports going to the former – one of the world’s biggest LNG consumers – on a yearly basis. Japan first started importing LNG from Brunei in 1972, and it continues to have an active trade relationship with the Sultanate in other areas such as petrochemicals, metal processing, energy efficiency and technology transfers. Speaking to the Brunei Times in February this year, Noriko Iki, Ambassador of Japan to Brunei said that the country is “attractive for Japanese investment because it has relatively low utility costs, including electricity and water, as well as a central location in Southeast Asia offering accessibility to other member countries of the Association of Southeast Asian Nations (ASEAN).” Elsewhere, the government has made significant investments in energy and power projects in an attempt to attract foreign investment and revitalize the nation’s manufacturing industry, which currently accounts for just over 12 percent of Brunei’s GDP.

Participating Countries in Free Trade Agreements Regional Comprehensive Economic Partnership Australia

Brunei

Canada

Cambodia

Chile

China

India

Indonesia

Japan

Laos

Mexico

Malaysia

Myanmar

New Zealand

Peru

Philippines

Singapore South Korea Thailand

United States of America Vietnam

Trans-Pacific Partnership

ASEAN

The new Chinese-contracted oil refinery and aromatics cracker plant on the industrial island of Pulau Muara Besar is expected to create 800 jobs; and once operational, it is anticipated to inject around US$2 billion per annum into the Bruneian economy, boosting GDP by 2 percent. Desire to be a part of this landmark project may help to redistribute some of the country’s highly skilled workforce, where a currently estimated 70-80 percent are employed by the government or government-linked institutions in cushy, high-paying jobs, and employment growth in the private sector is stunted by the local mindset that employment in the private sector is second rate to civil service.

Finance In Brunei’s financial sector, significant development is expected to take place over the next two years. In May last year, the Autoriti Monetari Brunei Darussalam (AMBD) announced plans to launch a securities exchange as early as 2017, following the introduction of new capital market rules in February 2015. The new securities exchange will enable Brunei to ramp up its role in the increasingly integrated ASEAN capital markets, allowing businesses to access funding via equity listings initially and adding bonds and sukuk (Islamic bonds) at a later stage. The country’s business community has welcomed the move, with around 12 major domestic firms as potential listing candidates including utility company Telekom Brunei and financial institution Bank Islam Brunei Darussalam (BIBD), the country’s largest lender. “Initial success would be slow, for a full-blown capital market it will be a longer journey,” Javed Ahmad, Managing Director of BIBD, told Reuters last year. Small- and medium-sized enterprises (SMEs), which make up roughly 95 percent of Brunei’s businesses, also stand to gain from a more mature capital market environment. Currently, local banks, which are largely state-run institutions, are under increasing government pressure to boost lending to SMEs. However, the lack of personal income tax in Brunei makes it difficult for banks to judge the creditworthiness of small businesses, as owners often prefer to remain as sole proprietors.

Eco tourism The country’s eco-tourism industry has benefitted enormously from the 130-million-year-old, conservation-protected Borneo rainforest that sits on its doorstep. It attracts a steady inflow of tourists who come to experience the pristine and unpolluted

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Brunei’s Top 5 Export and Import Partners South Korea Japan

US$1,152 Million

Major Import Countries (Buyers)

US$3,911 Million

US$957 Million

Malaysia

US$741 Million

Indonesia

US$637 Million

India

Singapore US$736 Million

Major Export Countries (Sellers)

South Korea US$313 Million

China

US$358 Million

Australia

US$795 Million

United States US$325 Million

Source: World Bank

environment offered by nature. While Brunei certainly has the potential to further develop its eco-tourism offering, transportation and infrastructure links are still relatively underdeveloped, making it difficult for visitors to get around independently. The government has taken steps to improve the local infrastructure, most recently with the BN$1.6 billion (US$1.1 billion) Temburong Bridge project which will provide a 30km-long dual-highway from the city to the Temburong district and easier access to the rainforest upon its completion in 2019. In addition, the final phase of Brunei International Airport’s BN$130 million (US$952,000) modernization project is on track to be completed this year and is expected to have double the current annual passenger capacity from 1.5 million to 3 million. However, despite a promising ecotourism sector, the country’s traditional tourism sector still has a long way to go, and the realm of possibilities isn’t boundless. A strict ban on alcohol limits and gradual implementation of the controversial Sharia law are measures which have played a significant role in deterring many potential visitors.

Regional & global opportunities The expansion of regional and international trade remains a key strategic focus of the Sultanate, using its influential position within the Association of Southeast Asian Nations (ASEAN) as a platform. In December last year, leaders of ASEAN’s ten member states signed a declaration establishing the ASEAN Economic Community (AEC), an initiative which aims to boost political, economic and social integration within the Southeast Asian region. All member states currently benefit from removed tariff barriers and visa restrictions among other measures

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designed to improve regional cooperation and integration. Moreover, as an integrated group of over half a billion people and a combined economy equivalent to what would be the 7th largest in the world, AEC membership will provide Brunei with more clout when dealing with economic giants like the United States or China. Meanwhile, negotiations are underway to reach a final deal for the Regional Comprehensive Economic Partnership (RCEP) by the end of 2016. If the current talks come to fruition, it will forge a single economic alliance – consisting of ten ASEAN nations plus Australia, China, India, Japan, New Zealand and South Korea. The RCEP will lead to the potential creation of one of the world’s largest free trade areas, comprising an integrated market of over three billion people. Being part of an economic free trade zone – in light of the improvements made to Brunei’s transportation and infrastructure links – will unleash a flow of prospects for the nation of Brunei. Furthermore, Brunei’s participation in the Trans-Pacific Partnership (TPP) ties in nicely with its broader foreign and trade policy, with the aim of boosting imports and inbound foreign investment. Despite its small size geographically, Brunei is well regarded within Southeast Asia for its leadership, diplomacy and opinions on foreign policy issues, particularly within ASEAN, and the TPP will serve as a global extension of that platform. Bruneian citizens remain hopeful that the nation’s involvement in the TPP will show the world that it is serious about economic reform, diversifying beyond oil and increasing transparency, all in the name of becoming a truly open economy. Whether the Sultanate can achieve that under an absolute monarchy remains to be seen, but no one can doubt that it is indeed trying.

TAXATION

US Extends Effort to Tackle Offshore Tax Evasion The introduction of FATCA has provided the US government with greater access to information about individual taxpayers on a global scale, adding to the information that the US has already gathered as a result of its voluntary disclosure programs for individuals. It means US individuals will increasingly be under the scrutiny of the IRS regardless of their residency. Here is an in-depth discussion on the issues of US tax compliance and legal implications for individuals and institutions

By Nan-Hie In and Kenny Lau

he possibility of an American trying to stash financial assets in a foreign bank account as a way to evade US tax liabilities is surely becoming a thing of the past. The enactment of the US Foreign Account Tax Compliance Act (FATCA) in 2010 was the beginning of a worldwide effort to crack down on US persons – citizens and permanent residents alike – who may be involved in the criminal act of tax evasion. FATCA is a step towards greater financial and tax transparency as participating foreign (non-US) financial institutions (FFIs) are obliged to report information of their US clients and account holders to the US Internal Revenue Service (IRS). When FFIs fail to comply, they are subject to a penalty of a 30 percent withholding tax on all US income. Hong Kong as a jurisdiction has already signed an agreement with the US government for cooperation and compliance. The implementation of FATCA, however, has created a number of unintended consequences: US

citizens are reportedly having a hard time opening financial accounts with certain banks, and some are simply denied basic banking services – all because FFIs may be reluctant to do business with Americans. “FFIs are absolutely petrified of the supposed 30 percent penalty that the IRS is going to assess on the grounds of noncompliance,” says Larry Lipsher, a US-certified public accountant who has been in Hong Kong for more than 20 years. Under FATCA, foreign financial institutions with clients with US tax liabilities are required to file reports to the IRS, and they must do so under the Foreign Financial Institutions and Entities scheme and apply for a Global Intermediary Identification Number (GIIN) number, he points out. “This is a government number for FFIs under FATCA, which all banks must have.”In the current economic environment where institutions are likely more concerned about revenue than compliance, there is a possibility that FFIs may fall behind the schedule of coming into full compliance, Lipsher cautions, highlighting a potential problem.

biz.hk 7-8 • 2016

“The risk is that the longer you wait, the lower the priority it may become in your organization,’ he says. “I’d recommend that organizations complete Form 8966, and electronically file it to the IRS on every account of each and every US client.”

Disclosure of information FATCA is essentially a worldwide reporting regime for the purpose of enforcing US tax compliance by requiring all foreign banks and financial institutions to provide the IRS with information of their US clients and account holders. It has significantly expanded the IRS’s ability to find out more about individual US taxpayers – and it does not matter if they live and work in the US or in a foreign country. Over the past few years, FFIs in every corner of the globe have been working to install a system to identify US account holders and report such findings to the IRS; otherwise, they could be found guilty of noncompliance for which a large portion of their US-sourced income would be withheld as a penalty. From the perspective of individual Americans, it means the IRS will have more access to their financial information. Recent whistleblowing and cyber breaches have also provided tax authorities with a rather high-profile leads to financial data of US taxpayers, provoking tax authorities to take a deeper look into potential cases of noncompliance with US tax laws. The recent leak of 11.5 million financial documents from a law firm in Panama is a case in point. Whether rightfully or not, it has exposed the undisclosed wealth of high-profile people and has prompted the US government to take further action against offshore tax cheats and shell companies. “With so much information being gathered by the US tax authorities, people – US citizens and green card holders – are frankly mistaken if they think they are not going to be discovered,” says Seth G Cohen, a US tax expert and a partner of law firm Withers Bergman LLP, noting a growing number of legal tools and measures being made available to the IRS for tax compliance enforcement. The IRS has been employing tactics far more aggressively in recent years than at any time in the past, including attempts to outdo bank secrecy laws of other countries or jurisdictions, even using the infrequently used “Bank of Nova Scotia summons” in February to get a branch of UBS in Miami to furnish financial records of a US citizen’s UBS account in Singapore. It is highly likely that the IRS is acting on data and records of financial information about US bank account holders, provided by foreign banking institutions and other sources. In effect, it is a money trail that US tax authorities could follow from one offshore jurisdiction to another, including Hong Kong.

biz.hk 7-8 • 2016

What does this mean for US individuals in Hong Kong? It is advisable for those with exposure to “come clean” before they are hunted down for noncompliance.

Legal consequences Individuals and institutions often overlook the wide-ranging effects of America’s worldwide taxation system. Americans, unlike their peers of other major developed economies, are taxed on their foreign-earned income, and they are required by law to file US tax returns annually and disclose their financial assets, even if they live and work overseas, Cohen points out. In other words, it is a legal requirement that all US individuals regardless of residency must report their salary, earnings and pay as well as their foreign bank accounts to the IRS. “If you are an American who has a foreign bank account with an aggregate value of over US$10,000, you need to file a Foreign Bank and Financial Accounts Report (FBAR),” he notes. “The penalty for failing to do so can be as high as 50 percent of your undisclosed assets on a yearly basis.” “For example, if you had US$1 million for the Cohen Seth past six years in a foreign bank account which you’ve failed to disclose, the IRS could impose a fine of US$3 million,” he explains. However, new guidelines were issued in 2015, partly because of the possibility that such penalty may be considered disproportionate in a US court of law and deemed a violation of the US Constitution as an “excessive fine.” Moreover, whether a noncompliant taxpayer is found to have committed a willful (or non-willful) violation is also part of the assessment. “In the past, those who opened a foreign bank account with the intention of evading taxes and those who were simply unaware of the existing reporting requirements were treated the same way,” says Cohen. “The IRS has now determined that certain people are less culpable than others.” “While the law says the authorities can impose up to six years of fines based upon the statutes of limitations, they generally will not,” he adds. “If it is a willful violation, under the new guidance, the IRS will generally only impose a 50 percent penalty in most cases and a maximum of two 50 percent penalties in more extreme cases.”

Number of Published Expatriates Renouncing US Citizenship Per Quarter (2008 to Q1 2016) 1600 1400

1426

1335

1200

1130 1001

1000 800 502

400

403

360

460 189

1062

776 560

630

576

460

238

1 Q 20 16

1 Q 20 15

1 Q 20 14

1 20 13

1 20 12

1 20 11

45 Q

499 519

158

20 10

20 08

23 22 63 67 15 Q

123

20 09

200

397 398

600

679

560

1158 1058

Source: US Treasury Department, Andrew Mitchel LLC

The penalty structure is as follows: for a willful violation, the fine is 50 percent of the aggregate balance of one’s foreign account(s); for a non-willful violation, the penalty is up to US$10,000 per year per account. But under the new guidance in most cases, the IRS would issue, depending on the circumstances, only a single US$10,000 penalty for all years to a non-willful violator. Another recent development is the ability of the IRS to restrict international travel movements of US individuals found to be tax non-compliant, says Laurence Ho, a partner at Withers. In December last year, a new rule was established and signed into law, and it gave the US government the legal power to revoke passports of Americans who owe more than US$50,000 in taxes (including penalties and interest). The law went into effect in January 2016. “They can deny your passport application for renewal or outright revoke it,” Ho points out, noting an IRS communication system with the Department of Homeland Security (US port entry) and Department of State (US passport issuance). “For Americans overseas, their US passport may be the only passport they possess; so it might cause a lot of difficulties in terms of travel and their work visa for which they depend on a valid passport.”

Voluntary disclosure Various options are indeed available to encourage US taxpayers who had previously failed to fulfill their tax reporting obligations to, once again, become compliant. Eligibility for these programs depends on individual cases and circumstances. One of the criteria is whether noncompliance was intentional or not. The Offshore Voluntary Disclosure Program (OVDP), launched in 2009 and based on an earlier model of voluntary disclosure, is one example. It is an IRS program which affords US taxpayers (those who have failed to report their foreign financial accounts) the opportunity to reconnect with the US tax system on a voluntary basis and to avoid criminal prosecution before

they are pursued by the US tax authorities. The OVDP program is not available to individuals once there is an IRS case against them. For those who are eligible, they may choose to participate and pay eight years of back taxes, plus interest and a penalty which may vary from 27.5 to 50 percent of all unreported offshore assets. Those who did not willfully fail to meet their reporting obligations may consider the new Streamlined Offshore Domestic and Foreign Procedures, Cohen notes. “It gives you the opportunity to come forward and pay three years of taxes with interest. This applies to US individuals outside the US.” And there is no additional penalty. Conversely, domestic US taxpayers are subjected to a five percent penalty. Under certain circumstances, one can elect the least onerous route: it is the Delinquent Foreign Bank Account Report (FBAR) and the International Informational Return Submission Procedures. Taxpayers who have unintentionally failed their reporting obligations and have owed no taxes on omitted income may make a filing and walk away, and there will unlikely be any further complication, Cohen notes. It is advisable that banks and trust companies continue to assess whether any financial account holders are of US status, including those as signatory of non-US companies, he adds. “They will need to go through their documents and determine if the accounts were owned outright or owned through an entity, and, if there are problems, they will need to come forward with the information in order to avoid prosecution if they are investigated.” In any case, those that are found to have deliberately supported structures designed to circumvent tax laws could be subject to criminal liability, Cohen stresses. “The IRS, Department of Justice (DOJ), and Congress have made it a lot easier to prosecute those who are not compliant. If a bank is investigated, at a minimum, the appearance of impropriety exists, and you start with a losing proposition with worries about the potential reputational damage from a criminal indictment.” &

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LAW

FAQs

about FATCA

The Hong Kong Financial Services and the Treasury Bureau provides answers to a number of frequently asked questions regarding the implementation of the US Foreign Account Tax Compliance Act (FATCA) – a law requiring foreign financial institutions to identify and disclose information about their US clients – and how the intergovernmental agreement (IGA) signed between Hong Kong and the US can facilitate due diligence and disclosure requirements

By Kenny Lau Q: What is FATCA’s implication for Hong Kong? A: Under FATCA, foreign financial institutions (FFIs), including those of Hong Kong, are required to sign agreements with the US Internal Revenue Service (IRS) to identify and disclose detail regarding their US account holders. These financial institutions will be required to withhold tax for relevant US account holders who do not give consent to such disclosures, or to close such accounts. An FFI which does not sign or is not otherwise exempt will face a punitive 30 percent withholding tax on all “withholdable payments” derived from US sources, initially including dividends, interest and certain derivative payments. In addition, starting from 2017, gross proceeds such as sales proceeds and returns of principal derived from stocks and debt obligations generating US source dividends or interest will be treated as “withholdable payments.” Q: What is an IGA under FATCA? A: The US Treasury announced in June 2012 its intention to sign Intergovernmental Agreements (IGAs) under FATCA with other jurisdictions in order to simplify due diligence and disclosure requirements, reduce or eliminate conflicts with local legislation, and eliminate certain withholding requirements. The US has developed two models of IGAs to simplify the implementation of FATCA. Model 1 establishes a framework of reporting account information on US persons by financial institutions to their domestic authority which in turn provides the information to the IRS. As of September 2015, 68 jurisdictions including Australia, Canada, France, Germany and the United

Kingdom have signed Model 1 IGAs with the US. Hong Kong has opted for a Model 2 IGA with the US. It establishes a framework of enabling relevant financial institutions in Hong Kong to seek consent for disclosure from US clients and then to report relevant tax information to the IRS, supplemented by the operation of a tax information exchange agreement. Austria, Bermuda, Chile, Japan, Moldova and Switzerland have also signed Model 2 IGAs. Q: How does the IGA between Hong Kong and the US help minimize the compliance burden? A: Firstly, financial institutions complying with FFI Agreements will not be subject to a 30 percent withholding tax on US-sourced payments by institutions in the US or other FFIs owing to their own FATCA obligations. Secondly, the IRS will waive the requirements under the relevant US Internal Revenue Code for financial institutions in Hong Kong to withhold tax on payments to recalcitrant accounts (accounts of which the holders do not consent to FATCA reporting and disclosure) or close those recalcitrant accounts. Thirdly, they may rely on a set of streamlined due diligence procedures to screen and identify US indicia in order to locate US accounts and clients for reporting purposes, thereby reducing inconvenience for other account holders who are not the targets of FATCA. Moreover, for group institutions with worldwide operations, their Hong Kong operations shall continue to be treated as FATCA-compliant despite any noncompliance of a related entity operated in a jurisdiction that prevents its compliance with FATCA.

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Lastly, a wide range of entities, financial institutions and products including, among others, mandatory provident fund schemes, other retirement products that fall within the specified criteria, institutions with a predominately local clientele, shall be exempt in view of the low risks of themselves being used by US taxpayers for tax evasion. Q: Are there any exemptions from compliance with FATCA owning to the IGA? A: There is a list of exemptions for entities, financial institutions and financial products which otherwise may fall within FATCA reporting and withholding rules. Some exemptions are waiving a wide range of compliance obligations. Some are partial exemptions requiring the institutions to register with the IRS for reduced compliance requirements. Exemptions as “exempt beneficial owners” include HKSAR Government and all statutory bodies, all Mandatory Provident Fund (MPF) schemes as well as certain retirement products that fall within the specified criteria, the Grant Schools Provident Fund and the Subsidized Schools Provident Fund, and international organizations based in Hong Kong. Partial exemptions as “registered deemed-compliant FFIs” or “certified deemed-compliant FFIs” can be granted to financial institutions licensed and regulated under the laws of Hong Kong with no fixed place of business outside of Hong Kong and Mainland China, and with a client base comprising predominantly residents of Hong Kong or the Mainland. Certain credit union, credit card issuers, regulated collective investment schemes as well as investment advisers and investment managers are also included. Exemptions of financial products from being “financial accounts” for the purpose of FATCA include certain term life insurance contracts which have no contract value that any person can access without terminating the contracts, and certain employee incentive share schemes such as share option schemes, share award schemes, employee share purchase schemes, share appreciation rights schemes, usually established by listed corporations. Q: What are the obligations when a financial institution in Hong Kong enters into a FFI agreement with the IRS? A: Financial institutions in Hong Kong will be required to use established due diligence (know-your-customer) procedures under the prevailing anti-money laundering legislation to identify US accounts and clients. They will need to obtain a consent of relevant US clients – individuals and entities – for reporting their relevant account balances, gross amounts of relevant interest incomes, dividend incomes and withdrawals, and identification details to the IRS annually starting from 2015.

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They are also to report “aggregate information” of account balances, payment amounts and number of non-consenting US accounts to the IRS. The IRS, based on such aggregate information, may request an exchange of information (EoI) with the Inland Revenue Department on a group basis under the tax information exchange agreement signed between Hong Kong and the US in March 2014. Q: What kind of client information do financial institutions in Hong Kong have to provide to the IRS? A: With the consent of their US clients, financial institutions in Hong Kong have to report to the US IRS their US clients’ identification details, such as name, address, US federal taxpayer identifying numbers known as “TINs,” and the prescribed type of entity if the client is an entity. They also have to report the relevant account balances, gross amounts of relevant interest incomes, dividend incomes and withdrawals. If their US clients refuse to give any consent to report their account information, financial institutions should report “aggregate information” of account balances, payment amounts and number of non-consenting US accounts to the IRS. Q: How would financial institutions protect the privacy of Hong Kong residents? A: Financial institutions in Hong Kong would only provide the relevant account information of their US clients to the IRS with their clients’ prescribed consent. The majority of Hong Kong residents are not US taxpayers. Their personal data is not subject to reporting under FATCA. In any circumstances, financial institutions in Hong Kong cannot provide their clients’ information to any unauthorized third party without their clients’ consent. Q: How can people in Hong Kong verify whether a financial institution has complied with FATCA? A: Unless they are exempt from registration as specified in the IGA, all financial institutions treated as FFIs under the IGA have to register with the IRS and be assigned a Global Intermediary Identification Number (GIIN). The IRS has provided a list of all participating FFIs, which is updated regularly, and tools for searching and identifying participating FFIs and their GIINs from the list at its website. According to the list published by the IRS, more than 2,800 financial institutions in Hong Kong have already registered. Depositors, investors and financial institutions in Hong Kong can enquire about financial institutions regarding their compliance with FATCA. They can also verify the participation status of the related financial institutions at the IRS website.

HUMAN RESOURCES

Office Revolution: Rise of the Flexible Workspace Exciting things are happening in the world of work – under the overarching influence of technology and the burgeoning Internet of Things (IoT), not only is the way of doing business evolving but where it is done. Jonathan Wright, Associate Director of Office Services, Colliers International, talks about the growing demand for flexible working spaces in Hong Kong, the impact of this working arrangement on employee productivity and motivation levels, and the implications of this trend for traditional office-based companies

By Jennifer Khoo

hile it probably surprises no one that Hong Kong was crowned the world’s most unaffordable housing market in 2016 for the sixth consecutive year, few may realize that Asia’s world city currently also boasts the most expensive office rental market on earth. In light of this finding, research has also shown that demand for flexible workspace is rising across Asia, particularly in Hong Kong and Singapore. According to a June report released by Colliers International, there is a general expectation that flexible

working operators will lease 20 percent more office space in 2016 than the total leased by Chinese companies in the city last year. The expectation is based on findings that Chinese companies secured 400,000 square feet of office space in Hong Kong under new leases in 2015, whereas flexible workspace operators secured 252,000 sq. ft. of space in Hong Kong over the first five months of 2016 alone, with a forecasted 475,000 sq. ft. to be taken up by end of year. “The impact of these operators will be huge and they will change the way people work,” Jonathan Wright,

Associate Director of Office Services at Colliers, says in an interview.

Driving factors According to Colliers, the steady emergence of flexible workspace operators can be attributed to one or more of the following factors: shrinking budgets (a characteristic of the current economic climate), a growing millennial workforce that values work flexibility and opportunities for collaboration, as well as the growth in FinTech (financial technology) and start-ups of internet applications across Asia.

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Occupation of Hong Kong office space by Chinese groups in 2015 and flexible working operators in 2016

Source: Colliers International

Whether the growth of technology ventures is a result of the Hong Kong government’s StartmeupHK program, its recent announcement of a HK$2 billion (US$257 million) Innovation and Technology Venture Fund, or the fact that Alibaba poured HK$1 billion (US$128 million) into its Hong Kong investment program for start-ups just last year, one thing is clear: the demand for flexible co-working spaces has risen alongside a surge in the technology start-up scene, and it is expected to continue. The overall concept of a flexible workspace encompasses both traditional private serviced offices and

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open-plan co-workspaces, though the domains are increasingly converging, and most operators offer both options under one roof. In both cases, operators lease space within a building from a landlord and fit it out with desks and IT equipment, before renting out the furnished space to end-users on an hourly, monthly or yearly basis. The only difference is that end-users of a serviced office utilize a private area within the building, while those in a shared co-working space conduct their business in an open-plan work environment. This arrangement is popular among end-users in similar fields of work, who enjoy the benefits of a communal atmosphere in a flexible, well-designed work environment. According to a research paper published in the Journal of Organizational Behaviour in 2012, it was discovered that people who had worked in a co-working space reported levels of “thriving” amounting to an average score of six on a seven-point scale; in comparison, their traditional office counterparts reported markedly lower levels of thriving and enthusiasm about their current setting.

Jonathan Wright

The reasons A survey by the Harvard Business Review of several hundred workers from dozens of co-working spaces across the US revealed three rather unsurprising findings about the link between work environment and feelings of “thriving.” It showed that people who use co-working spaces: 1) see their work as meaningful, 2) feel as though they have more job control, and 3) feel part of a community.

Seeing work as meaningful: Aside from the type of work they were doing, survey participants reported finding meaning in feeling able to be their true selves at work – something they felt that being in an unconventional work environment allowed, in contrast with most traditional office settings which can be riddled with internal politics and clouded by an atmosphere of direct competition among peers and colleagues. Co-working spaces often host users coming from an array of different industries, companies and projects, allowing occupants a much stronger sense of work identity. Additionally, given the fact that each person has a unique skill set in an environment which encourages sharing and collaboration, it is easy to see how one can ascribe meaning to feeling useful and distinctive. Having more job control: Survey results showed that having decisionmaking power over one’s working environment and schedule boosts productivity alongside efficiency. Accessible 24/7, flexible work spaces provide users with the options of quiet, private spaces when uninterrupted concentration is required, and open collaborative spaces when interaction is required, allowing workers to choose whichever environment is most suitable for the task at hand. The results further suggested that total autonomy at work only aids productivity to an extent; even the most independent workers benefit from some form of structure in their routine, and being part of a co-working community provides just enough of it to spur on motivation without the constraints of a conventional office space. Feeling part of a community: Identifying with a community is one of the main reasons that flexible workspace users report high feelings of thriving and productivity. US operator WeWork, which recorded a valuation of US$16 billion this year, emphasizes how it seeks to create “a place you join as an individual, ‘me,’ but where you become part of a greater ‘we.’” However, along with access to a

Location of coworking operators within Hong Kong: centers as percentage of total

12%

10%

27%

18%

13%

Admiralty

Central

Mong Kok

Tsim Sha Tsui

Causeway Bay

Kwun Tong

Sheung Wan

Wan Chai Source: Colliers International

community and an environment conducive to interaction, co-workers have the option to be left alone if they do not wish to be disturbed, by choosing to work in a quiet space or private room. In light of the growing body of research on the subject, workplaces are full of people with unique working styles who are at their happiest and most productive when given the space and support to be their true best selves.

Implications for companies An increasing number of traditional office-based companies have begun to warm to the idea of leasing flexible office space in recent years, particularly as it offers a cost-friendly alternative to binding leases in the current time of economic difficulty, but also due to changing perceptions about the types of tenants that flexible office spaces are suitable for. Although stereotypically thought of as a realm reserved for entrepreneurs, freelancers and the tech industry, an

increasing number of MNCs have begun to see the wider potential of the flexible office space for their own employees. “In uncertain economic times, the ability to take space on flexible lease terms is a huge advantage,” Wright explains. “This means companies can take as much or as little space as they need on a month by month basis – this suits companies better than three or six year leases. In addition, there is no capital expenditure required, which is another advantage over a traditional lease.” Aside from the beneficial cost and flexibility aspects, an increasing number of operators are working to challenge any misconceptions about flexible workspaces as inferior work environments, by establishing a presence in Grade-A, prime office buildings in upmarket locations around the world. One such example is Australian operator Servcorp, which prides itself on only leasing space in prime commercial real estate, occupying 22,000 square feet of space in the IFC

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Hong Kong Entrepreneur Sector Distribution Number of entrepreneurs

100

150

200

250 273 273

Information, Computer & Technology 48

Hardware (IoT, prototypes, wearables)

200 106

E-commerce/ Supply Chain Management

137

Design

124 57

Education & Learning

104 74

Financial Technology (Fintech) 26

Data Analytics

44 40 36 39

Gaming Sustainable Technology

142

Professional or Consultancy Services

Health & Medical

300

21 26 195

Others/don't know 2014

217

2015 Source: StartmeupHK, Colliers International

Two in Central, one of Hong Kong’s most prestigious and iconic commercial buildings in the heart of the city’s financial district. Listed with a market capitalization of US$500 million, it now has a presence in 52 cities globally, with UBS of Switzerland and the UK’s Guardian newspaper as clients. Another example is aforementioned US operator WeWork, which is now one of the world’s most valuable start-ups at just 6 years old, having raised around US$430 million this year in a new round of financing led by Chinese private equity investors for its expansion into Asia, including the opening of two new Hong Kong offices in the bustling hubs of Causeway Bay and Wan Chai. Other operators with a presence in upmarket locations across Asia include Luxembourg-based company Regus, as well as privately owned and Hong Kong-based Compass Offices and The Executive Centre, both of which are expanding rapidly across the region and beyond.

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Market expectations “We certainly feel that the new wave of flexible workspace operators is here to stay,” says Wright. “The sustainability of these operators will be driven by the increasing appetite of MNCs looking to add diversity and flexibility to their operational real estate. We’ve already seen increased take up of this type of space by MNCs in other markets, and we fully expect Asia to follow suit.” Furthermore, the growth in FinTech and internet applications in Asia is reinforcing the surge in the supply and demand of flexible workspace, he adds. “We see large banks and financial groups are increasingly trying to adopt FinTech solutions in order both to rationalise their operations and to defend themselves against new challenges.” Despite this, some initial resistance to the flexible-workspace concept is to be expected, particularly in Mainland China and Hong Kong markets, where traditional practices relating to workplace

hierarchy are deeply ingrained, and where having your own office is seen as an indication of seniority. However, Wright expects the idea will become more accepted over time as everyone uses the same desks and greater interaction takes place. “There is no doubt that expansion of the flexiworkspace market will be exponential in Asia,” he says. “WeWork has certainly grabbed the headlines this year taking up over 150,000 sq. ft., and everyone is excited to see how they fare in the Hong Kong market.” “We believe they will continue the success from their other markets and expand further,” he adds. “Other operators will follow suit, with Regus’ new concept ‘Spaces’ being rolled out amongst others.” There will always be a need for certain companies to have their own designated offices, Wright notes. “Law Firms require privacy; banks must have their own offices for certain operators. However, we see the majority of industries embracing flexible solutions in part or as a whole as time moves on.”

COMMUNICATIONS & MARKETING

Essential Steps Towards Social Media Success The ability of social media to draw attention and target specific segments of the online community is unprecedented. It is increasingly a medium where businesses can inspire and energize their consumer base. How should companies make use of the online platforms while navigating through the risks of a new frontier of communication? Industry experts from tech giant Facebook and social media-focused communications agency Text100 advise on strategies to fully leverage social media for your business

By Nan-Hie In

ocial media is a powerful tool for businesses, with the medium’s ability to draw consumer attention and the potential to target and reach audiences with precision. It is increasingly a place where businesses can inspire and energize their consumer base. When done right, it can generate buzz for a brand and amass huge responses quickly, which bodes well for any firm looking to connect with its stakeholders. When gone wrong, it can mean disastrous consequences provoked by a stream of negative news about a company. The social media landscape is evolving swiftly, and organizations are adapting quickly to make use of the online platforms to grow their businesses and to reach their current, past and potential customers while at the same time navigating through the risks of a new frontier where multinational companies (MNCs) as well as small- and medium-sized enterprises (SMEs) can punch above their weight in building brand loyalty. At Facebook, with 1.65 billion users monthly, a rising trend is mobile users. Of 4.9 million users in Hong Kong, 4.5 million access the social network through smartphones, says Elizabeth Hernandez, Head of Public Policy at Facebook for Asia Pacific. “Think about that as a marketing professional or someone who wants to promote their business. Everything you design should be for that tiny screen on mobile phones, and you have to be a mobile-first company to be able to use social media effectively.” Platforms such as Facebook Live and Snapchat are dominant channels in Asia, concurs Rosemary Merz, Vice President and Managing Consultant of Text100 Hong Kong, a global communications agency. She says social media trends are fickle and that companies should recognize them but not necessarily hop onto those shifts. “Consider [first] which channels should be a good fit; if the goal is to build awareness, excitement, advocacy or sales conversion, then pick social channels that are most relevant to you.” And there is a need to rethink marketing in a new world that is conducive to a two-way dialogue with social media. The challenge, though, is a tendency of companies to focus on accruing fans and followers rather than fostering engagement. It is the equivalent of

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publishing content in traditional media, say, 50,000 copies of a magazine or newspaper, Merz says. That’s because they were without the ability to create and maintain a channel for a large volume of feedback from readers. And if somehow no one read those newspapers, such efforts were likely futile. Whereas in social media, if you can track 50,000 people who are actively participating in a conversation online with their ideas or simply by sharing your posts, then engagement is more prevalent, and it will be more relevant to your business and brand than the number of followers, she adds. “It’s important that engagement in social media is educated throughout the company, otherwise your efforts may not be as effective as they can possibly be.”

Facebook tips Start with a “page” Set up a page instead of a personal profile. A key difference is that the former offers additional features designed for brands and businesses, including advertising and audience-targeting features, data analytics and more. In addition, a page can broaden the scope of audience by making it easier to follow or “like’ and a source of regular updates and information about a particular business, says Hernandez. Regarding the type of information companies should put onto their page, one way is to think of the site as a store of your business, Hernandez points out. To put in another way, when customers walk in, what is it that a company would want them to know about the business? The next step is to furnish the page with details so that people who have shown interest in the business can learn more about specific features or characteristics of a given product or service. Create captivating content An effective site requires regular posts about a business, with videos, photos or text updates. Content should be creative and less formal as authenticity is key to viewership and consumer engagement on most social media platforms. According to Hernandez, users tend to continuously scroll through Facebook’s stream of content or “newsfeed,” and you have three seconds to grab the attention of viewers.

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These days, it takes an engaging video with an emotional hook, Hernandez says. And videos do not have to be professionally produced. “Today, people seem to be looking for more authentic and raw videos as a way to get engaged,” she explains, highlighting the power of creativity and the value of producing clips which can tell a story with emotional resonance to garner impact. Brevity is key to good storytelling on Facebook. “A lot of times people make the mistake of putting everything on a post,” she says, adding that the short attention span of viewers on social media means users tend to bypass long posts. The idea is to keep posts “catchy, simple and short.” Promote your posts Use the advertising features such as targeting tools to boost visibility of the posts. One can specify the desired demographic of a target audience, based on age group, geographic reach and more. The distribution of content can be tailored for small- or mass-market reach. “You can invest as little as US$25 and start very small [in terms of reach] with your post,” says Hernandez. She suggests users explore such features to find a fit that suits a particular set of marketing goals and budget. Measure performance Track the performance of content through various data metrics using Facebook’s Insights. “You will know how many people ‘liked’ it; what kind of reach your post is having; the kind of engagement your post is getting including the number of ‘shares’ [it has generated]; and whether they were viewed by men or women,” Hernandez explains. The information can be invaluable to business organizations trying to grasp what content resonates with an audience and can help refine one’s social media strategy, says Hernandez Moreover, by having a better understanding of competitors’ activities and engagement with the general public through their Facebook pages can provide business intelligence and a benchmark to measure performance against others.

Risk management Social media can be a double-edged sword, and it is imperative that companies are prepared for potential risks by having strong oversight and a guideline of

Elizabeth Hernandez

conduct in place. There are different views on the issue. “One side sees social media as a way to be informed about your market and to understand the intricacies playing out within your market across social channels, including where issues come from,” Merz says. On the other hand, there are those who take a wait-and-see approach and only deal with issues whenever they arise, she adds. “We see this as a key social media risk.” She notes that comments on social media can help companies understand consumers. In turn, such information can help with the relevance of your business in the market. And companies need to consider how comments play into their overall strategy and how they could better engage with the audience. Should it be through influencers or videos, for example?

Having to deal with platforms flooded with negative comments is a common challenge – an aspect for which businesses should be prepared when participating on social media platforms, mindful of the fact that people are entitled to their opinions but within reason, Merz points out. Companies should outline a set of rules of engagement on their social media pages. One example is to make clear rules on how users should speak with respect in conservations free of defamatory or foul language and to provide customer support through a moderator. “For those that do not abide by the rules, you have the right to say ‘we will remove your comment’ or to deal with them with more guidance and authority on how they should behave on your page,” says Merz. Any social media channels, she adds, should be in lockstep with the customer services of a business as they understand how to response and resolve issues. “There are cases where you’ll find comments of customers about their parcel on a social media platform of a logistics provider. Our response is: we hear you, and we will put you in touch with customer services in your local market. This way, you can connect them and take it [offline] to address the problem.” On brands that get social media right, Merz praises GoPro and Lululemon, which focus on the outcome of what their products can deliver rather than the technical capabilities of products themselves. She also credits Asia’s Next Top Model, a Text100 client. “It’s on all the different social media, it’s multi-market, it’s got a really complex feedback loop for ongoing engagement and improvement, and strong issues management,” she says. Sentiments are often expressed on social media channels, and they can be inflammatory when groups criticize each other and engage in a heated debate based purely on emotions. “We diffuse it by not shutting down those comments but using hashtags [in response],” Merz says. The role of social media is to help people engage positively and stay connected with brands and issues they are passionate about. When there is significant organic growth as a result of these platforms, it is indicative of good content and a good social media strategy.

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CMY

EDUCATION

Preparing for a Paradigm Shift To remain competitive in todayâ&#x20AC;&#x2122;s hyper-connected and highly globalized world, companies and business leaders face more pressure now than ever before to stay on top of advances in technology. The newly appointed Dean of HKUST Business School, Professor Kar Yan Tam, shares his views on how innovation has shaped the world of business and why it is relevant to business education

By Jennifer Khoo

biz.hk 7-8 â&#x20AC;˘ 2016

Kar Yan Tam

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ounded in 1991, the Hong Kong University of students tended to specialize in one of the functional Science and Technology Business School areas of business: accounting, finance, marketing, or (HKUST Business School), is part of a operations; however, recent trends have indicated an sprawling, green campus located on the coast expansion of that teaching model, moving towards a broader educational experience that integrates knowledge of Clearwater Bay overlooking the inner seas of different functional areas. of Sai Kung. Academically, the business school is Moreover, there has been an additional focus on renowned for a full range of education programs, from helping students to cultivate personal qualities such as undergraduate degrees to post-graduate professional perseverance and positive thinking; transferable skills degrees and non-degree executive programs. Since joining the faculty in 1992, Professor Tam has such as planning, communication and execution of not only witnessed the institution’s tremendous growth ideas; and the ability to work with people of different from the ground up, but also played a pivotal role in cultural backgrounds and perspectives towards a shaping its modern reputation as a top-tier, internacommon goal. tionally acclaimed business school, with a top-ranked Professor Tam asserts that these qualities have MBA program in Asia and an EMBA program considered become essential for commercial success in today’s best in the world for five consecutive globalized world, to the extent that years. many modern business programs are “The question is, as Bill starting to edge away from the With a background in mathematics, IT, and business, and a strong teaching model of merely Gates suggested, we need traditional supporter of academia-business cultivating technical skills in favor of collaboration, Professor Tam has banking, but do we need one that also encourages whole pioneered a number of key initiatives person development. banks?” including HKUST’s Global Business Technical skills, however crucial, Program and Undergraduate can only be learned in a classroom to Research Opportunities Program. He believes a a degree. Most people learn best by doing, and since business education should be “intellectually challenging” many employers nowadays have training schemes in and “practically relevant.” place for new graduates who may be inexperienced, technical skills are acquired gradually on the job. Thus, Professor Tam believes that the real value proposition of a good business education program lies The model of business education has evolved in the environment it creates for students to acquire considerably to become what it is today. In the past, transferrable skills as well as business knowledge – an

A changing landscape

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environment which they may not have access to elsewhere – before they enter the workplace. In an age of doing business without national boundaries, there is a particular emphasis in business schools on the development of a global perspective and openness towards other cultures among students, Professor Tam points out. And HKUST is no different: it employs a diverse faculty of more than 140 staff made up of over 25 different nationalities, and has one of the highest percentages in Hong Kong of international students enrolled in its BBA, MBA, and EMBA programs. In addition to a diverse environment, over 50 percent of the student body of HKUST Business School have the opportunity to spend at least one semester studying abroad, and over 80 percent will have had some form of overseas experience by the time they graduate. This overseas study and work experience is also highly valued by employers, explains the Dean. “We really see a difference in our students, particularly at the undergraduate level, when they go abroad for a semester. The difference is very apparent,” Professor Tam says. “They return from overseas feeling more confident and willing to talk to people, sometimes without even realizing it themselves,” he adds.

huge yield management scheme – an idea that has existed some years back. Today, the commercialization of this concept is possible due to advances and accessibility to technologies such as mobile devices and digital map infrastructure. The immediate implications of this trend for consumers have so far only been positive: access to lower prices and far more choices, a more efficient purchase process, and shorter transaction times, to name a few. The implications from a business perspective, on the other hand, have caused a wave of disruptions to the way A specialist in the fields of “Big Data” and business is conducted. “e-Commerce,” Professor Tam says the role of In a highly competitive business environment amid technology is becoming inexorably intertwined with the a shift towards automation, organizations of all sizes are way the world is doing business, particularly with faced with growing pressure to stay relevant. Innovation regards to the nature of business transactions. The and entrepreneurship, as in the past, will remain two notion that consumers rely on traditional intermediarimportant keys to business success in ies to conduct economic activities is the 21st century. And it starts with gradually fading. “The key is to develop human capital. The development of crowdIn order to stay relevant, compafunding and financial technology the right mindset and the nies need to hire people who not only (FinTech) platforms, along with skills to deal with changes are technically skilled but are also advances in e-commerce with big creative, passionate, and can think data, has enabled buyers and sellers once they arrive.” “outside the box,” Professor Tam to come together directly; a trend emphasizes. The values of innovation that sees modern day economies and entrepreneurship are no longer restricted to the growing at a faster pace than ever before, urging start-up world; these qualities are desirable in big traditional intermediaries to rethink their business corporations too, from entry-level staff to C-suite models. executives. “The question is, as Bill Gates suggested, we need “The core values of innovation and entrepreneurship banking, but do we need banks?” Professor Tam says. are indeed an important aspect of the HKUST The ideas behind some of the novel business models Business School,” he notes, citing an “Entrepreneurial we praise today, he adds, were in fact conceived some Bootcamp” as part of its Kellogg-HKUST Executive time ago, but they simply weren’t feasible back then MBA program for senior executives, led by faculty due to suboptimal conditions like slow processing members and alumni who have had success and speeds and poor connectivity. substantial experience in the real world of entrepreThe concept behind Uber for example, is essentially neurship. the collection and processing of data to support a

Impact of technology

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Many of the program’s participants, he adds, are interested in making an investment in start-ups and are eager to learn more about the current commercial landscape from other business owners. In fact, many of the school’s alumni and current students have gone on to start their own businesses upon graduating; most notable recently is Bradley Chiang, who founded a start-up called Snapask when he was a year-three student at HKUST Business School, and made the 2016 Forbes Asia “30 under 30” list for the Consumer Tech sector.

An imminent shift Despite the current economic uncertainty facing many of the world’s developed and developing countries, Asia is still experiencing steady economic growth, with many companies in the region looking for ways to step onto the global stage. This presents a constant stream of new opportunities for well-trained executives to climb up their career ladders. Chinese telecommunications giant Huawei, for instance, which has announced an ambitious plan to launch its 5G network in 2020 and further expand its market share globally, will certainly be looking to hire people with not only the right technical skills but also crucial attributes, including the ability to work with people from different backgrounds and cultures, and the willingness to travel or relocate for global assignments. From his own experience, Professor Tam has observed that graduates who possess a combination of skills in business and technology are extremely sought after by employers, with demand set to increase as

companies begin to realize what is necessary for commercial success in today’s economic environment. Furthermore, accessibility to technology has opened the window to a world of opportunities for young graduates who have the knowledge and time to invest into start-ups of their own, with a growing number of them declining high paying jobs in traditional industries such as law or finance, in order to pursue an entrepreneurial career path. From an educational standpoint, Professor Tam believes that changes in the world should be reflected in the classroom. “No one can foresee exactly what will happen in the future, but the conditions necessary for a technological paradigm shift are already in place. The key is to develop the right mindset and the skills to deal with these changes once they arrive.” “The point of a business As head of the HKUST Business School, Professor education is not just to Tam is set to continue on produce specialists, but the path of academic research “anchored on to expose students to the relevance” in order to maximize the impact it world of business where, has. “We need to commu- hopefully, they will find nicate our research to the public in ways they will their own path.” understand and have an interest in what we’re finding out through our research,” he says. The school has actively engaged with corporations on collaborations in a mutually beneficial relationship – an important tie between the business community and academia on issues relevant to MBA and EMBA students. “The point of a business education is not just to produce specialists, but to expose students to the world of business where, hopefully, they will find their own path,” Professor Tam says. “The most important thing is to develop a passion that will guide you through difficult times, as without passion, people can easily lose their sense of purpose,” he believes. “Find a career you are passionate about, and not necessarily in one of the traditional industries.”

Editor’s Note: The Kellogg-HKUST Executive MBA Program is an exempted course under the Non-local Higher and Professional Education (Regulation) Ordinance Cap 493 (the Ordinance) of Hong Kong. It is a matter of discretion for individual employers to recognize any qualification to which this course may lead.

biz.hk 7-8 • 2016

CHINA CONFERENCE Managing the Transition: Foreign Business in the New China

2016 Sept 9

#AmChamHKChinaCon

This exceptional half-day event will provide insights on the economic transition happening in China and related hot topics. Take the opportunity to learn from and interact with over 20 different Asia Pacific CEOs of renowned MNCs and China experts about business best practices in today’s China.

DETAILS Date: Time: Venue:

Friday, September 9, 2016 8:00am – 2:30pm Four Seasons Hotel Hong Kong, Grand Ballroom, 2/F, 8 Finance Street, Central

SPEAKERS Jeanette Chan Sanjeev Chatrath Sean Chiao Michael Falcon Dr. Fu Yuning Christopher Johnson Dr. Stephan Kothrade Lincoln Leong Neil Shen Kevin Sneader Ryan Stork

Managing Partner of China Practice, Paul, Weiss, Rifkind, Wharton & Garrison LLP Managing Director of Financial & Risk for Asia Pacific and Japan, Thomson Reuters President of Asia Pacific, AECOM Chief Executive Officer of Asia Pacific, Global Investment Management, J.P. Morgan Asset Management Chairman, China Resources (Holdings) Limited Senior Adviser and Freeman Chair in China Studies, CSIS President Functions Asia Pacific, President and Chairman Greater China, BASF CEO, MTR Corporation Steward of Sequoia Capital, Founding and Managing Partner of Sequoia Capital China Chairman, Asia, McKinsey & Company Chairman, Asia Pacific, BlackRock

TOPICS • Finding Paths in the New China • Collaboration and Competition: New Dynamics in Chinese-foreign Business Ties • Megacities and Regionalization • Hong Kong and the Chinese Financial Reforms

Mary Simpson msimpson@amcham.org.hk

Program / Speakers William Lin wlin@amcham.org.hk

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For more details including speakers, program and sponsorship: http://www.amcham.org.hk/China-Conference.html

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US Institutions Approved for Admission of Mainland Students By Kenny Lau

Photo courtesy of Hong Kong Information Services Department

A meeting on higher education: (from left) Director of Public Affairs of the US Consulate General in Hong Kong Darragh Paradiso, AmCham President Richard Vuylsteke, Vice President of SCAD Hong Kong David Pugh, Secretary for Education Eddie Ng, Associate Dean of Executive MBA Program (Asia) of the University of Chicago Booth School of Business Richard Johnson, and Deputy Secretary for Education Brian Lo

wo US institutions of higher education, SCAD Foundation (Hong Kong) and the University of Chicago Booth School of Business (Hong Kong), have been approved by the Education Bureau to admit Mainland students to their designated locally accredited non-local degree programs, following years of advocacy highlighting Hong Kong’s unique and strategic position as an international education hub which provides students in the region with opportunities of high quality academic training. The news was announced on July 4th, coinciding with the celebration of the US Independence Day this year. It was a much welcomed arrangement which could serve as an impetus for the future development and competiveness of the institutions and Hong Kong. The Hong Kong campuses of SCAD and Chicago Booth School of Business may now start to recruit Mainland students for admission to their Bachelor’s and Master’s degree programs in Fine Arts and Executive Master of Business Administration (EMBA) program, respectively, starting from the 2016/17 academic year. “Over the past few years, the Hong Kong Special Administrative Region Government has been in liaison with the Ministry of Education [of Mainland China] for allowing locally accredited non-local degree programs in Hong Kong to admit Mainland students. We are grateful

for the support of the Mainland authorities concerned in finalizing the arrangement,” says Secretary Ng, noting the broadening of their recruitment base is conducive to Hong Kong’s position as a regional education hub, while congratulating the two US schools, which are both subsidiaries of world-renowned institutions in Hong Kong. SCAD, founded in 1978 to provide college degree programs in the US state of Georgia and to create a specialized professional art college for students domestically and internationally, established its campus in Hong Kong in September 2010 to provide degree programs in art and design, with a curriculum for the dual goals of excellent arts education and effective career preparation. Today, it has campuses in multiple locations as well as online distance education offerings. The University of Chicago Booth School of Business opened its Hong Kong campus in August 2014, after a relocation of its Asia Executive MBA Program from Singapore to Hong Kong in a move to expand and strengthen the school’s presence and influence across the region while continuing a robust presence in Singapore. In addition to classes in the new location for corporate executives and organizational leaders, its programs such as research, entrepreneurship, remote teaching, custom executive training and alumni events, have been substantially expanded in Hong Kong.

biz.hk 7-8 • 2016

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

BUSINESS NETWORKING

INFORMATION

VISIBILITY AND CORPORATE EXPOSURE

ADVOCACY

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CHARITABLE FOUNDATION

Scholar Awards Stephen Cheung, Hong Kong University of Science & Technology

2016 winners: (from left) Flora Xu, Stephen Cheung, Alvin So, Laurice Wong, Ji Min Kang and Nicholas Chiu (Jeffery He was unable to attend the award ceremony)

In Recognition of Young Talent The AmCham Charitable Foundation presents scholarship and awards in recognition of local students for their exceptional academic records and achievements in leadership and community service. In 2016, three full-time MBA candidates, four high school graduates who will be attending university in the US and 20 secondary school students are named winners of AmCham’s Scholar Awards, Lyn Edinger US Studies Scholarship, and Prize Book Awards

Stephen Cheung and his family moved from Hong Kong to Canada when he was only nine. “Although I didn’t speak English at the time, I really enjoyed the new surrounding and quickly adapted to the new environment,” he says. “And I found my passion to explore unfamiliar places and try new things. This is evident when I moved to work in San Diego after receiving my undergraduate degree in Canada.” As a part-time student for a Master’s degree in Engineering at UC San Diego while working in a full-time job, Cheung remained active in extracurricular activities and picked up a few hobbies including wakeboarding, kiteboarding and motorcycle riding. “Socrates’ philosophy of lifelong-learning has always inspired me, and it’s a major reason for my desire to take on new challenges,” he says. “Pursuing an MBA degree is my current challenge.” Having worked as an engineer for a number of years, Cheung believes technology can only thrive with a solid business plan or sound strategic management. “As such, I got motivated to becoming a strategy or management consultant. I decided to go for an MBA degree at HKUST in order to gain the necessary business skills, and I took my endeavor to Hong Kong because it’s a commercial hub in the Asia Pacific region.” The experience of an MBA program has been absolutely rewarding, he adds. “It is vastly different than engineering, and it has been an eye-opening experience to see the world in a completely different way. With my MBA degree, I’m looking forward to a new career and an exciting journey ahead.”

By Kenny Lau

biz.hk 7-8 • 2016

Alvin So, The Chinese University of Hong Kong

Flora Xu, The University of Hong Kong A graduate of the Hong Kong University of Science & Technology with a double major in Professional Accounting and Finance, and a minor in Social Science, Flora Xu is no stranger to the world of investment banking where for four years she not only exceled in pitching products across different asset classes and onboarding clients but was also heavily involved in providing extensive coverage of the largest banks, sovereign wealth funds and other commercial entities in the Greater China region. Because of her extreme fluency in English and Putonghua as well as Cantonese, Xu played a critical role on multiple occasions in providing translation and interpretation for senior executives in high-level meetings with Chinese clients and investors at the investment firm where she worked. And because of her outgoing personality, she was selected to organize and supervise events for summer analysts with programs designed to provide interns with a better understanding of the asset management industry. Xu is notable for her vast interest in extracurricular activities during her high school and undergraduate years, particularly her participation in debate competitions and as a student leader in several “ambassador” programs. She is full of ambitions regarding her life-long goals. “The reason I decided to take an MBA at the University of Hong Kong is that I am inspired to start my own business,” she explains. “With the dynamic environment and international exposure, Hong Kong is the perfect place to start,” she says. “Together with two of my MBA classmates, I am preparing the launch of a new language teaching app, to help working professionals improve their language skills. The MBA program has equipped me with important knowledge and a network of like-minded individuals, and we are aiming to expand the app to other places in the world in the near future.”

biz.hk 7-8 • 2016

With a Bachelor of Science degree in Chemical Engineering from the University of Michigan-Ann Arbor, Alvin So has worked for a few years as an engineer at a large US multinational manufacturer of family, personal and household care products, taking part not only in the research and development of consumer items designed for daily use but also in multi-functional teams to meet stringent industrial requirements of products throughout the manufacturing process. In his role, So was able to serve with different regional R&D teams around the globe to ensure products meet the needs of local consumers in the markets of the UK, Mexico, Belgium, Singapore, Japan and China. In fact, he was owner of projects in the creation of new household care products specifically for the market of China, collaborating with a team of scientists based in the US and managing testing facilities and personnel in Beijing. On a mission to search for – and ultimately apply – opportunities to improve lab facilities and their capabilities, So helped develop various testing methods through data modeling and process simulation, and partook in setting quality requirements for product manufacturing before production began. In addition, he worked closely with his counterparts in the marketing and finance departments for the adoption of strategies to ensure the profitability of products. On top of his professional achievements, So believes “it is important that we continue to encourage students to not only become future business leaders, but also to become future community leaders. That is, to run business that is ethical and at the same time continue to give back to society. The world is extremely interconnected and we must plot our path such that everyone will benefit from our actions.”

Lyn Edinger US Studies Scholarship Ji Min Kang, Chinese International School

Laurice Wong, Diocesan Girls School A top student with a “vibrant personality, intellectual curiosity, worldly knowledge and friendly disposition,” Laurice Wong has exceled in the classroom of Diocesan Girls’ School, embracing “one of the toughest combination of classes” where she was never afraid to raise questions and could lead a discussion with unique perspectives. Few can match “the sheer depth of her knowledge and natural thirst to expand it.” Yet, Wong’s achievements went far beyond: she was a House Captain, Assistant Head Girl, Editor of the school magazine, a delegate of the Columbia Model UN Conference, and a choral singer who designed the dress for her school’s choir in preparation for the 8th World Choir Games in Riga, Latvia in 2014. Above all, she is an individual of compassion always looking to provide for the disadvantaged through community projects. Wong has rightfully earned a place as an incoming freshman at Columbia University in the City of New York this fall. “I have always felt a strong compulsion to serve the community where I belong,” Wong says. “My aspiration to pursue an undergraduate degree in Economics and Political Science is my attempt to realize my philosophy of simultaneous liberalism and realpolitik through academic understanding.” “I hope to bring fresher insights on dissent, tolerance and compromise back to Hong Kong, and to implement the principles of negotiation and diplomacy into our polarized political atmosphere,” she adds. “The issue of income disparity and socioeconomic privilege is another pressing concern of our society, and it speaks to me dearly,” Wong reveals. “I am determined to return and serve Hong Kong by first gaining practical experience in the private sector of consultancy, then eventually entering civil service to formulate policies for a more egalitarian society.”

Born in Korea and raised in Hong Kong, Ji Min Kang is “exceptional, original, excellent, insightful, active, energetic, positive, engaging, responsible, dedicated, focused, articulate, collaborative, wonderful and genial,” and that’s how teachers at Chinese International School describe “her attitude towards the world she inhabits and her constant, self-driven quest for knowledge and new challenges.” She will be attending Princeton University. Kang is among the top half a percent of all IB Diploma students worldwide to have achieved the maximum score of 45 points. But she is far more than mere academic achievement: she plays field hockey and competes in rowing, is a Korean Janggu drummer, and has participated in the World Scholar’s Cup and organized a Human Rights Week; she was Head Girl, President of Interact Club, Chief Editor of CIS’s magazine and a leader of the Kids4Kids program. “I’ve cultivated my love of the world through both the spoken and written word, in languages including Korean, English, Mandarin, Spanish, a little bit of French and a dabbling of many others,” Kang says. “I’ve debated in countries like Lithuania and Turkey, and written poetry about my experiences. My main goal in life is to be an authentically global citizen: an individual who not only has seen, but also understands, the world through a myriad of different perspectives.” “As a current applicant to the Princeton Bridge Year Program, I’m hoping to spend nine months before my freshman year doing community service in either Bolivia or Brazil. In my junior year, I’ll aim for the Woodrow Wilson School of Public and International Affairs,” she further says. “Over the next four years, I want to learn alongside people from a whole host of different cultures and, of course, to experience these cultures for myself.”

biz.hk 7-8 • 2016

Jeffrey He, Hong Kong International School

Nicholas Chiu, Diocesan Boys’ School The “golden egg” stature of the Hong Kong Science Park is a reminder of the time when Nicholas Chiu “was left in awe and excitement” about an exhibition on stem cells research. “It represents the potential to divide, differentiate, and specialize, and it resonates with my dream of becoming a researcher working there and discovering the possibility of stem cells applications in treating neurodegenerative diseases,” he says. Chiu is “naturally gifted and intelligent, but his success is also the result of an unerring work ethic and exemplary time management and organizational skills.” He was a member of DBS’s Stem Cell & Regenerative Medicine Society and an exploratory science study group called Destination Imagination. He helped found a student-led community service group named “Experimentors” through which he and his fellow classmates provided “disadvantaged” students with guided lab experiments. Chiu will be attending Columbia University. “With state-of-the-art lab facilities, a legacy of excellence in neurobiology and a focus on undergraduate research, I see myself developing further in this field and continuing through graduate school, and I also see myself playing an active part in Environmental Biology after having initiated research on alginate biosorption of heavy metal ions in Hong Kong and having spent two summers on an ecological study of the Ting Kok mangrove.” “I have been captivated by the meticulous detail of life ever since I saw a glimpse of a tarantula’s DNA on an electropherogram,” he adds. “I hope to bring back the knowledge and skills I’ll develop through my studies in the US, and I want to share my passion with others. And I'll never forget how I was introduced to the world of scientific research and how the 'golden egg' has reinforced my passion."

biz.hk 7-8 • 2016

Academically, there is no question about Jeffrey He’s drive towards excellence. Of 900 graduating seniors in the past five years, he is among a handful of students to graduate with a perfect 4.0 GPA, “having maxed out the recommended number of AP classes and furthered his education on his own by taking MOOCs from top schools in the United States.” He is certainly among the very best: a member of the Ambassador Program and of the National Honor Society, an editor for the school newspaper, an active participant of Model United Nations, an elected student leader, a varsity volleyball player, and one of the best violinists the school has ever had. He is “intelligent, athletic, and a team player,” and is notable for his ability to see perspective – one of his greatest strengths. In serving the community, he is equally strong: a math and science tutor for his peers, a leader of “Service on Saturday” taking over the English teaching program, and a director for one of the two largest service clubs on campus. He is also the creator of two websites, HKIS Talent and Stories of Yesterday, dedicated to the community of HKIS. This fall, he will be a freshman at Harvard University where he plans to major in Economics and Computer Science. “Exposure to economics in high school has already led me to see the day-to-day dynamics of society differently,” He points out. “When I ask for volunteers to help with a bake sale, I think of diminishing marginal utility – more people in the group results in lower overall productivity. When I prepare for exams, I think of opportunity cost – more time spent on one subject is at the cost of time available for another.” “When I use my iPhone to facetime a friend, I think about the network effects, and how the iOS user base of nearly a billion increases the value of an Apple device,” he adds. “When I look up directions to a new place, I think of Dijkstra’s algorithm, which generates the shortest path on maps. Ultimately, both economics and computer science span across a wide range of applications in day-to-day life and are interconnected with one another.” “While economics as a traditional field will give me a greater understanding of society and its inefficiencies, computer science will provide me with tools I can use to address the unmet needs of society,” he believes. “Whether I end up forming an algorithm like Dijkstra’s or programming CPUs to make appliances more energy-efficient, I believe the two fields will equip me with the strongest skillset to make a real impact in the future.”

CMY

Front row, from left: AmCham President Richard Vuylsteke, Charitable Foundation Chairman Peter Levesque, Foundation Trustees Jon Zinke and Mark Michelson, with 2016 Prize Book Awards winners

Schools represented in the 2016 Prize Book Awards American International School

Island School

Carmel Divine Grace Foundation Secondary School

King George V School

Chinese International School

Sha Tin College

Diocesan Boys’ School Diocesan Girls’ School DMHC Siu Ming Catholic Secondary School German Swiss International School Hong Kong Academy Hong Kong International School International Christian School

Munsang College South Island School St. Paul’s Co-Educational College Textile Institute AmCham Woo Hon Fai Secondary School West Island School Yew Chung International School Yuen Long Merchants Association Secondary School

Prize Book Awards For 30 years, AmCham’s Charitable Foundation has worked closely with 20 or more high schools in honoring students who have demonstrated a combination of academic excellence, achievement in community service and leadership in a variety of projects both inside and outside of the classroom. It is an annual educational incentive scheme to recognize the accomplishments of students in Hong Kong and to promote AmCham’s objectives of contributing to the education system of Hong Kong. Each student is presented with a HK$1,000 book coupon, a certificate of achievement and a set of The Americans, a trilogy by Daniel Boorstin.

T W a W a c o H

1 2 3 4 5 6 7 8 9

GOLD SP

biz.hk 7-8 • 2016

20160718-Nomination_ad_biz-hk.pdf 1 18/07/2016 2:58:51 PM

Nominate a

Woman

of Influence CALL FOR ENTRIES: www.amcham.org.hk/woi DEADLINE: Monday, September 19, 2016

CMY

The American Chamber of Commerce in Hong Kong is inviting nominations for their Women of Influence Awards. Honoring seven professional women for personal achievement, a male who is a champion of women and one corporation for enlightened management. We are excited to announce one new award for 2016, “Lifetime Achievement” – will be awarded to a woman who is a leading personality in a for-profit, non-profit, NGO and/or community serving organization over 40+ years. The awards will be presented at the Women of Influence Conference and Awards 2016 on November 11, 2016 at the Four Seasons Hotel Hong Kong. This is your chance to nominate outstanding candidates for the following awards:

1. 2. 3. 4. 5. 6. 7. 8. 9.

Professional of the Year Young Achiever of the Year Entrepreneur of the Year Non-profit Leader of the Year Master of The Arts Leading Woman on Boards Champion for the Advancement of Women Best Company for Women Lifetime Achievement (NEW) Early nominator discounts of 10% to the conference will apply to nominator(s) who submit their entry before August 15 Sponsorship: Ms Mary Simpson | msimpson@amcham.org.hk | (852) 2530 6922

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Private Events AmCham Feb 2016.pdf 1 3/3/2016 11:13:15 AM

INDUSTRY FOCUS

Conrad

Hospitality & Tourism News Briefs:

The latest developments in Hong Kong’s hotel industry

By Jennifer Khoo

CK Hutchison Harbour Grand Kowloon, the deluxe five-star hotel in Tsim Sha Tsui managed by the CK Hutchison group, has received the Halal certification on food preparation after several rounds of site inspections earlier this year. The accreditation was issued by the Incorporated Trustees of the Islamic Community Fund of “Harbour Grand Hong Kong, which is a HKSAR government Hong Kong recognized body that receives Halal represents the interests of Muslims in the city. Certification.” “Halal” is an Arabic term in Islam meaning “lawful or permissible.” For food to be considered halal, it must comply with stringent religious rituals while being processed and served. The opposite of “halal” is “haram,” meaning “forbidden” in English; pork and alcohol are the most typical examples of “haram” food and drink for Muslims. Upon request, guests now have the option of Halal food at the Harbour Grand Kowloon, in addition to the hotel’s existing selection of Chinese, Western and Japanese dining options.

biz.hk 7-8 • 2016

Conrad Hotels & Resorts has announced the signing of a franchise agreement with Sa Bora Bora Nui for the Conrad Bora Bora Nui. The 115-key resort, formerly known as Hilton Bora Bora Nui Resort & Spa, will undergo a multimillion-dollar refurbishment and open as Conrad Bora Bora Nui in March 2017. Conrad Bora Bora Nui is located on Motu To’opua, an islet off the coast of Bora Bora, about 20 minutes by boat from Bora Bora Airport. Offering panoramic ocean views, access to sea sports, coral reef diving sites and hiking trails, the beachfront Conrad Bora Bora Nui “Conrad Bora will feature 29 tropical garden and beach villas Bora Nui to and 86 overwater open in bungalows, including the destination’s only 2017.” double-story Presidential Suites. Conrad Bora Bora Nui will have a full-service spa, a Kids Club, a mini-golf course, a fitness center, and retail spaces. Located on an island rooted in Tahitian history and legend, Conrad Bora Bora Nui will offer experiences for guests to discover the local culture and traditions.

Four Seasons Four Seasons Hotels and Resorts, one of the world’s leading luxury hospitality companies, and Mitsui Fudosan Co, Ltd, Japan’s pre-eminent real estate development company, are partnering for an all-new luxury hotel in the heart of Tokyo’s bustling Otemachi business district. Part of a mixed-use development, the hotel is set to open in the spring of 2020 with approximately 190 guest rooms. The hotel will occupy the upper six “Four Seasons floors of a 39-story office strengthens tower, offering panoramic views of the presence in Japan city and in close proximwith second luxury ity to transit routes, shopping, dining and hotel in Tokyo.” the energized nightlife of downtown Tokyo. Blending contemporary and classic design, the soaring hotel tower will offer world-class dining through multiple indoor and outdoor restaurants and bars, as well as sweeping views of the city from the 39th floor rooftop terrace. It will feature a state-of-the-art spa, fitness center and indoor pool as well as extensive meeting and events spaces and an Executive Club lounge for business travelers.

Grand Hyatt The Hyatt Hotels Corporation has opened earlier this year its second property in Brazil: The Grand Hyatt Rio de Janeiro. Grand Hyatt Rio de Janeiro combines the brand’s effortless luxury experience with Brazilian design and hospitality in an urban resort setting. As the second Grand Hyatt hotel in Brazil, Grand Hyatt Rio de Janeiro is a significant addition to Hyatt’s existing portfolio in South America and the growing brand portfolio. Guests can enjoy its prime beach“Hyatt adds Grand front location in the exclusive Barra da Tijuca Hyatt Rio de Janeiro neighborhood and access to its South to world-class shopping, dining, cultural and American portfolio.” outdoor activities. The hotel is meticulously designed to exemplify the Grand Hyatt brand’s signature level of grandeur with an abundance of options for creating spectacular experiences. Every aspect of the hotel, from simple delights to elaborate gatherings, embodies the brand mantra of “Living Grand,” an expression of the ways in which Grand Hyatt hotels deliver extraordinary experiences and infuse care into every encounter.

Hongkong and Shanghai Hotels The Hongkong and Shanghai Hotels, Limited (HSH) has reached a new milestone in 2016 as it celebrated its 150th anniversary in March this year. Originally incorporated in March 1866 as The Hongkong Hotel Company, Limited, HSH was one of the first companies to be listed on the Hong Kong Stock Exchange and is currently the oldest registered company on the Hong Kong Companies Registry. Whilst having evolved to meet the changing times at home and abroad, HSH has never lost respect for its past and its heritage, and it continually strives to “Hongkong and emulate the standards of service and style Shanghai Hotels which has made the celebrates its company known as “The Far East’s leading 150th anniversary hotel company.” The in 2016.” concept of “Tradition well served” remains fundamental to HSH’s approach. Today, the HSH legacy encompasses a diverse portfolio of assets worth HK$44.2 billion, including ten Peninsula Hotels around the world, The Peak Tram, The Peak Tower and The Repulse Bay Complex in Hong Kong.

Hongkong International Theme Parks Hong Kong Disneyland Resort, managed and operated by Hongkong International Theme Parks, has entered into a multi-year alliance with Singapore company Pictureworks’ Hong Kong-based subsidiary, making it the resort’s official imaging service provider. This alliance will ensure that guests visiting Hong Kong Disneyland from around the world will be able to capture special moments through Disney’s PhotoPass, supported by Pictureworks’ services in the “Hong Kong resort. Pictureworks will have an integrated Disneyland and brand presence in Pictureworks sign various locations and platforms, including corporate alliance.” image preview and photo display areas, photo packaging and online PhotoPass imaging. Pictureworks specializes in the processing and management of digital imaging and multimedia to improve the functionality and efficiency of digital imaging platforms, such as photo printing kiosks. The company presently has offices in seven countries – Malaysia, China, Japan, United Kingdom, United States and Mexico, with its headquarters in Singapore.

Hyatt International – APAC Ltd Hyatt Hotels & Resorts and Cathay Pacific Airways last month announced their global collaboration, which will see the introduction of specially crafted Cathay inflight menus by star chefs at the Grand Hyatt Hong Kong and five Park Hyatt hotels. The cooperation will mark the most expansive inflight dining experience of its kind for both Cathay Pacific and Hyatt Hotels & Resorts. Starting from June 2016 and running until “Hyatt and Cathay mid-2017, Cathay Pacific’s passengers Pacific launch global will have the opportunity inflight dining to enjoy signature dishes from the hotel collaboration.” chain’s flagship restaurants from its hotel locations around the world, including the One Harbour Road restaurant at the Grant Hyatt Hong Kong. The restaurant is renowned for serving home-style Cantonese fare presented by Chef Tim, who has been with Grand Hyatt Hong Kong since it opened in 1989. The One Harbour Road menu for Cathay Pacific has been carefully crafted to offer passengers a taste of some of Hong Kong’s beloved local favorites based on traditional ingredients and cooking techniques.

biz.hk 7-8 • 2016

Hyatt Regency Hyatt Regency Shanghai has opened earlier this month in the thriving business, innovation and university district of Wujiaochang in Shanghai, China. The 306-room Hyatt Regency hotel offers guests an urban retreat that fosters connections and serves as a dynamic, energizing place where they can collaborate and find inspiration. Wujiaochang, meaning “hub of five avenues,” highlights the hotel’s ideal location by enabling guests to easily connect to the very best that Shanghai has to offer. Whether working, meeting, socializing or unwinding, guests can enjoy exciting culinary experiences, easy tech-enabled connectivity and convenient “Hyatt expands brand service. Hyatt Regency presence in Shanghai Shanghai, Wujiaocwith Hyatt Regency, hang is located in the Hopson International Wujiaochang.” Plaza, a new tower comprised of Class A-grade offices, a luxury shopping mall and dining and entertainment venues. The hotel is conveniently situated beside Wujiaochang Station on Metro Line 10, providing guests with easy access to and from central Shanghai. Shanghai Pudong International Airport is a 50-minute drive, and Shanghai Hongqiao Airport is less than 15 miles by car.

Intercontinental Grand Stanford The Intercontinental Grand Stanford hosted Hong Kong’s second ever Whisky Festival at the hotel's Tiffany’s New York Bar in May earlier this year, in celebration of World Whisky Day 2016. Founded in 2012, World Whisky Day started as a small event and has become an annual worldwide “2016 World Whisky celebration of whisky, aiming to promote Day Celebration at whisky knowledge and Tiffany’s New York appreciation all over the world, and also to Bar.” give those who do not normally drink whisky the chance to try it. Tiffany’s New York Bar was the appointed venue in Hong Kong for the official celebration of the World Whisky Day 2016. The event was a good opportunity for whisky lovers in Hong Kong to unite and enjoy a fun-filled evening involving whisky tasting, a curated cigar selection and sampling of whisky-matching food delicacies. Whisky experts were also there to share information about different whisky regions, flavors and styles.

biz.hk 7-8 • 2016

Intercontinental Hotel The InterContinental Hotels Group (IHG) signed a management agreement with the Amburaya Resort Company to rebrand the Sheraton Pattaya Resort as the InterContinental Pattaya Resort, as of April 2016. Nestled in the Phratamnak Hills south of Pattaya Bay, the 156-room beachfront resort is located five-minutes away from the Pattaya Exhibition and Convention Center, and offers a selection of superior & premium “IHG grows rooms and villas, in a Luxury Portfolio lush, exotic locale, coupled with unparalwith First leled service. The new resort also InterContinental features a Club Resort in Pattaya.” InterContinental lounge and Planet Trekkers - a dedicated space for young guests - as part of its new offering, and in a bid to reposition the property as an InterContinental Resort. Guest rooms will be renovated including the creation of Club InterContinental rooms on a dedicated floor. The InterContinental Pattaya Resort will join the Holiday Inn Pattaya as the second resort managed by IHG in the popular beach destination.

Island Shangri-La Island Shangri-La and Hong Kong & Kowloon Shangri La have become the first two hotels in Hong Kong to achieve Marine Stewardship Council (MSC) and Aquaculture Stewardship Council (ASC) Chain of Custody certifications. With these certifications, diners at both hotels’ restaurants can now enjoy seafood that is sustainably caught and responsibly farmed. Shangri-La’s commitment towards sustainable seafood began with its removal of sharks’ fin “Certified sustainable and endangered produce seafood at Island from all restaurant menus starting in 2010. Shangri-La and Hong To elevate its effort on sustainability, the group Kong & Kowloon rolled out “Rooted in Shangri La.” Nature” – a culinary sustainability initiative highlighting locally or ethically sourced food offerings in April 2014. This initiative enables all Shangri-La Hotels and Resorts to incorporate sustainable items from their unique markets into their menus. Dishes on offer include produce and herbs grown on the hotel grounds, locally sourced organic vegetables and fruits, line-caught fish, free-range poultry and beef, and more.

Lanson Place Hotel Lanson Place Hospitality Management Limited, a Hong Kong-based, high-end hospitality management brand in Asia, has opened the Parkside Serviced Suites by Lanson Place in Shanghai earlier this year, marking the tenth property under the Group and its fourth operation in Shanghai. Tucked away discreetly in the prestigious and charming former French Concession neighborhood, Parkside Serviced Suites is a contemporary retreat that brings in new energy to the bustling metropolis and the vibrant Huangpu community. It is located near the Madang Road metro station, which is easily accessible to the city’s renowned dining and entertainment hub “Lanson Place opens Xintiandi as well as its key financial district luxury property in Lujiazui. Shanghai’s former The property offers 182 one- and two-bedFrench Concession.” room suites ranging from 73 to 148 sq. m. All suites are equipped with a full kitchen, LED television, home theatre system, satellite and cable TV and wireless broadband internet connection. Other facilities include a 24-hour gymnasium, residents lounge and underground car park.

Le Méridien Cyberport Le Méridien Fort Lauderdale Airport will debut in 2017, following a comprehensive US$30 million renovation and conversion of the hotel. This forthcoming opening follows on the heels of tremendous brand growth in North America over the last 18 months in Charlotte, Chicago, Columbus, New Orleans, Tampa and Indianapolis. Le Méridien Fort Lauderdale Airport will feature 245 contemporary guestrooms and suites with “Le Méridien extends floor-to-ceiling windows and stunning views, as North American well as two redesigned presence with in Fort restaurants – one with a modern, Lauderdale, Florida.” mid-century open kitchen concept – and the brand’s signature Latitude Bar. The hotel will also introduce the Le Méridien Hub, which reinterprets the traditional hotel lobby into a social gathering place and builds on the brand’s award-winning arrival experience and coffee culture. Located just minutes from Fort Lauderdale-Hollywood International Airport (FLL) and Fort Lauderdale Everglades Cruise Port, the hotel is within the neighborhoods of several beaches, downtown Fort Lauderdale, and the world-famous restaurants, night clubs and boutiques of nearby Miami Beach.

Mandarin Oriental Mandarin Oriental Hotel Group has announced an agreement to brand and manage a portfolio of luxury residences in Bali called Residences at Mandarin Oriental, adjacent to the Mandarin Oriental Bali. The hotel and residences will form part of the Bukit Pandawa integrated resort development located on Bali’s southern Bukit peninsula. An initial 30 branded residences are scheduled to be completed at the same time as the hotel opens in mid-2018. As with Residences at “Mandarin Oriental Mandarin Oriental around the world, owners opens luxury of these private homes in residences in Bali, Bali will be offered an exclusive extension to the Indonesia.” luxury hotel experience. The Mandarin Oriental Bali will provide management services for the development, as well as bespoke amenities for individual residents. Perched on a clifftop plateau, the residences in Bali have been designed to take advantage of the outstanding ocean views, and will be integrated with the contemporary style and architecture of the hotel. Each residence will have its own 15-meter private pool with sundeck and outdoor dining space.

Marco Polo Hotels Marco Polo Hongkong Hotel, Gateway Hotel and Prince Hotel have each been recognized for their superior service and presented with the TripAdvisor 2016 Certificate of Excellence. It is the sixth consecutive year since the awards were established in 2011 that Marco Polo Hotels Hong Kong as a group has received the prestigious Certificate of Excellence for Superior Service. TripAdvisor’s Certificate of Excellence celebrates hospitality businesses that have consistently delivered high-quality guest experiences and achieved appreciative traveler reviews on the world’s largest travel site during the past year. The Certificate of “Marco Polo awarded Excellence accounts for the quality, quantity and TripAdvisor certificate frequency of reviews of excellence for sixth submitted by travelers on TripAdvisor over a consecutive year.” 12-month period. The recommendation helps travelers identify and book properties that regularly deliver great service. To qualify, a hotel must maintain an overall TripAdvisor bubble rating of at least four out of five stars, receive a minimum number of reviews, and be listed on TripAdvisor for at least 12 months.

biz.hk 7-8 • 2016

Marriott International Marriott International and South Beach Consortium have announced that The South Beach hotel, a 634-room luxury property designed by the renowned Philippe Starck, will become JW Marriott Hotel Singapore South Beach, offering the warm authentic service and crafted culinary experiences for which the JW Marriott brand is known. In addition, Marriott and Granmil Holdings Pte. Ltd. announced the introduction of The Singapore EDITION, the first from its brand to the city. The 8-storey boutique hotel, with 190 rooms, will be located on the former Boulevard Hotel site on Orchard Boulevard “Marriott opens The and Cuscaden Road. EDITION is the South Beach Hotel first true international and EDITION in luxury-lifestyle brand which combines the Singapore.” personal, intimate, individualized and unique hotel experience that Ian Schrager, the internationally recognized American visionary hotelier, is known for, with the reach, operational expertise and global scale of Marriott International. The property will mark the fifth city in the Asia Pacific market to welcome this one-of-a-kind brand of 5-star hotels.

Melco International Development Melco Gaming Assets Management (Korea) Limited, a wholly-owned subsidiary of Melco International Development, has entered into a strategic cooperation arrangement with New Silkroad Korea Development Limited, a wholly-owned subsidiary of New Silkroad, for the provision of Melco’s consultancy services regarding Silkroad’s casino project on Jeju Island in South Korea. “Melco partners Melco is to provide consultancy services to with New Silkroad New Silkroad with regard for Jeju Island to building, equipping and fitting-out of New Casino project.” Silkroad’s new casino on Jeju Island, as well as preparation and organization of the casino’s marketing activities, and also the provision of intellectual property advisory services. With the string of world-class integrated resorts opening on Jeju Island, coupled with the South Korean government’s vigorous promotion efforts, Jeju’s tourism industry, along with the island’s casino market is expected to undergo rapid growth. New Silkroad is looking to expand the casino business to take advantage of the growing gaming market and booming tourism industry on Jeju Island.

biz.hk 7-8 • 2016

MGM China Holdings For the eighth year in a row, MGM has topped the chart as the highest fund-raising corporate donor of the Orbis Raffle Campaign. This year, MGM raised MOP230,000 to support Orbis Macau in preventing avoidable and treatable blindness for the visually impaired kids through the participation in the “Orbis Raffle 2016” sale campaign between April 11 and 15. The campaign received an overwhelm“MGM has been the ing response within such a short period of time, highest corporate reflecting the communidonor of Orbis raffle ty’s genuine support and appreciation of Orbis’ sale for eight years.” sight-saving work in developing nations. MGM has been an avid supporter of community and philanthropy initiatives, including the long-term collaboration with Orbis Macau in support of its sight-saving work. Since 2009, MGM has participated in the annual Orbis Raffle Campaign and has co-organized a number of innovative fundraising programs. More than MOP2.1 million in cash and in-kind was raised for Orbis Macau over the years. MGM team members are encouraged to take an interest in charitable causes through participation in activities and services in the local community.

Millennium Hotels & Resorts Award-winning hospitality group Millennium Hotels & Resorts has added new smartphone service with free IDD calls to 15 countries, complimentary mobile internet and local calls to all of its six properties in Singapore. Guests staying in Singapore at the Orchard Hotel, Grand Copthorne Waterfront, M Hotel, Copthorne King’s Hotel, Studio M Hotel, and M Social can enjoy free “Millennium group mobile connectivity when out and about in launches smartphone the city’s shopping, service in Singapore entertainment or business district. hotels.” Following successful pilot testing in April, the smartphone service is now available in more than 2,600 guest rooms across all six hotels in Singapore, allowing guests to go online and stay in touch with friends and families no matter where they are. The complimentary smartphones also offer comprehensive city guides allowing guests to navigate the city with ease, which includes helping them to quickly locate the best dining, shopping, and entertainment venues during their visit.

Pentahotel Hong Kong Pentahotels has expanded its leadership team in Asia with the addition of a new, Hong Kong-based Director of Revenue Management, to drive forward the hotel’s growth in the region. This newly created position has been filled by Siim Karu, previously based at the company’s headquarters in Frankfurt. While in Frankfurt, Karu was responsible for portfolio strategy, pricing and sales channels of the Group’s hotels in Asia, and will utilize his deep understanding of the brand and the company to continue to expand “Pentahotels and strengthen the Asian market. expands leadership Launched in team in Asia to Europe, Pentahotels is a design-led, neighbordrive growth in the hood lifestyle brand region.” providing independent travelers with comfort and style in a contemporary environment. Pentalounge, a combined lobby, reception, bar and café – designed as a lively gathering place for hotel guests and local patrons alike – is a hallmark of Pentahotels.

Renaissance Harbour View Hotel The Renaissance Downtown Hotel Dubai – set to open at the end of 2016 – will be the United Arab Emirate’s first Renaissance Hotel, followed by the opening of four additional hotels by the Marriott Group in the country throughout 2016. The Renaissance Downtown will be a 298-room luxury hotel catering to business and leisure travelers. With the concept Business Unusual, Renaissance Hotels “Renaissance Hotel focus on helping their discerning guests to makes UAE debut make the most of their in Downtown trip – whether it be for business or leisure. In Dubai.” doing so, each hotel employs local experts called Navigators who are hand-picked and able to share what typically wouldn’t be covered in guidebooks. The five property openings planned for this year will drive the total number of Marriott International properties in the UAE up to nine. Aimed at discovery-oriented business travelers and curious leisure travelers, the Renaissance Downtown Hotel Dubai will join over 160 Renaissance Hotels around the world.

Rhombus International Rhombus International Hotels Group has been named “Leading Hotel Management Company for Worldwide Investors” for the fifth consecutive year at the Hong Kong Business High-Flyer Awards for 2016. The award acknowledges elite enterprises in Hong Kong, endorsing their outstanding performance and remarkable breakthroughs made in their industries. Founded in North America, Rhombus has over 29 years of experience in Canada, Europe and Asia. The company is known for management expertise and knowledge that is practical, efficient and customized to meet the “Rhombus awarded specific needs and requirements of each hotel across ‘Leading Hotel different regions amid a Management growing demand in the international marketplace. Company’ for fifth Rhombus currently manages four hotels in consecutive year. Hong Kong: Hotel Panorama by Rhombus in Tsim Sha Tsui, Hotel LKF by Rhombus in Central, Hotel Bonaparte by Rhombus in Wan Chai, and Hotel Pennington by Rhombus in Causeway Bay. The company also manages Rhombus Park Aura Chengdu Hotel in Chengdu, China.

Ritz-Carlton The Ritz-Carlton Hotel Company is preparing to open a second hotel resort on the Chinese tropical island of Hainan, in partnership with Hainan Golden Tide Tourism Development. The Ritz-Carlton Nanyan Bay is scheduled to open in 2017 with 244 guestrooms and suites in addition to 14 private villas. Located on the east “Ritz-Carlton coast near the city of Wanning, the private prepares to open oceanfront setting of the Ritz-Carlton resort will second resort in include two crescents of Wanning, Hainan.” white sand beaches, along with the first Ritz-Carlton Golf Club in China, designed by golf legend Jack Nicklaus. The hotel’s location is close to several natural hot springs and nature trails leading into the ancient tropical rainforests with 4,600 kinds of flora and fauna, and is the home to one of the three important local ethnic tribes – the Miao people. The luxury development underlines the provincial government’s drive to enhance Hainan’s appeal for international visitors with prestigious new projects, while taking care to preserve the island’s cultural heritage and natural beauty.

biz.hk 7-8 • 2016

Royal Pacific Hotel & Towers The Royal Pacific Hotel & Towers has been recognized as the first “Green Key” hotel in Hong Kong and China, a prestigious recognition in green and sustainability awareness by Green Key International. The Royal Pacific Hotel & Towers, which has gained the Green Key certification, is recognized for having fulfilled a list of environmental requirements covering a wide range of criteria: from environmental demands to action plans, sustainability education and communications. The recognition also “Royal Pacific signifies that The Royal becomes first hotel Pacific Hotel & Towers is an international industry leader in Hong Kong and committed to protecting the China to receive environment. Since the launch of the Green Key award.” initiative in 1994, Green Key has been presented to more than 2,350 tourism-related businesses in over 50 countries. All hotels awarded the Green Key certification are designated to have met the highest requirements with regard to environmental management and are audited based on their technical criteria related to maintenance and guest communications.

The Mira For the fifth time since the hotel’s opening in 2009, The Mira Hong Kong was once again awarded “Best Business Hotel in Hong Kong” by China’s leading travel industry professionals at the 9th Annual TTG China Travel Awards 2016. The accolade is the result of a vote by readers of TTG China, TTG-BT Mice China, TTG Asia, TTG India, TTG Mice, TTG Associations and TTG “Mira is once again Asia Luxury, and is a reflection of The Mira voted ‘Best Business as a pioneer of Hotel in Hong Kong’ tech-friendly hotel design and its leading in annual TTG position as the top Awards.” choice among travel industry partners. It is also an acknowledgement for a commitment towards service excellence. The Mira constantly strives to provide the best service solutions to guests. With tech-savvy business travelers in mind, the hotel provides a portable “Wi-Fi Buddy” device in each of its 492 rooms and suites, allowing guests to have unrestricted 4G connectivity across the city, with a signal that can be shared across up to ten personal portable devices.

biz.hk 7-8 • 2016

The Royal Garden Hotel The Royal Garden Hotel, owned by Sun Hung Kai Properties, has received numerous awards and accolades so far this year, including the hotel’s Dong Lai Shun, Inagiku Grande Japanese Restaurant, Le Soleil Vietnamese Restaurant, The Royal Garden Chinese Restaurant, Sabatini Ristorante Italiano – all named 2016 Best Restaurants by Hong Kong Tatler. These restaurants, along with The Greenery, Fine Foods, JIN CUISINE, INA by Inagiku (all of The Royal Garden Hotel) are also part of U Magazine’s Favorite Food Awards 2016, while Dong Lai Shun and Inagiku Grande Japanese Restaurant are among the “100 Top Tables” by South China Morning Post. Dong Lai Shun, Le “The Royal Garden Soleil and JIN CUISINE are three Hotel named in listed in the Michelin numerous awards for its Guide Hong Kong & Macau as recomacclaimed restaurants.” mended restaurants. The Royal Garden Hotel boasts nine acclaimed restaurants including the Dong Lai Shun restaurant with one Michelin star. Five of the hotel’s restaurants have been recognized by the prestigious Commanderie des Cordons Bleus de France.

The Royal Plaza Hotel The Royal Plaza Hotel, a subsidiary of Sun Hung Kai Properties, has been named in the TripAdvisor Travelers’ Choice award as one the “Top 10 Hotels for Families in China” and classified as a “Top Class Comfort” hotel by the MICHELIN guide Hong Kong & Macau in 2016. This is the fourth and second consecutive year, respectively, the hotel has been included in these awards, following a TripAdvisor “Hall of Fame” award in 2015 – an award given hotels that have earned a “Certificate of Excellence” for five consecutive years – and a Hotels.com Outstanding Performance Award (also in 2015) – an “The Royal Plaza award given to hotels providing outstanding classified as a service and earning top MICHELIN ‘Top ratings in guest reviews. The Royal Plaza sits Class Comfort’ hotel.” atop the MTR Mong Kok East Station, offering easy access to public transportation via MTR lines nearby and connects travelers to China via a 45-minute train ride. Acknowledged by the Michelin Guide Hong Kong & Macau, it overlooks the old-world charm of some of Hong Kong’s most traditional markets.

Sheraton Hong Kong Hotel & Towers Sheraton Hotels & Resorts, a part of Starwood Hotels & Resorts, has announced the opening of the Sheraton Grand Hangzhou Binjiang Hotel, located in the heart of Hangzhou’s bustling business district. The hotel is the first new-build property to join the brand’s premier tier of hotels, selected for their enticing destinations, distinguished designs, and excellence in service and guest experiences. Owned by China Yintai Holdings, Sheraton Grand Hangzhou Binjiang Hotel is recognized for its spectacu“Sheraton opens lar views of the city, including the Qiantang River first-ever hotel in nearby, and for its premium Hangzhou, location that is only steps away from the renowned China.” West Lake and Xiang Lake. Sheraton Grand is one of many initiatives currently underway for Sheraton 2020, a comprehensive plan designed to solidify Sheraton as a leading global hotel brand of choice globally. And China continues to be an extremely important growth market for Sheraton Hotels & Resorts, particularly in light of the upcoming G20 summit which will be hosted in Hangzhou.

Venetian Macau (Sands China Ltd) Nearly 80 percent of Sands China Ltd’s total procurement in 2015 at a value of MOP14.2 billion went to local Macau companies, a 36 percent increase over the previous year and a reflection of an increased focus on sourcing from local suppliers after the successful launch of the Local Supplier Support Program last year. “Sands China’s The program is a joint effort of the Macao Champrocurement ber of Commerce and Sands China Ltd (which program supports also owns Venetian Macau) Macau suppliers and launched in July 2015 – the first of its kind in Macao. entrepreneurs.” The pioneering longterm initiative focuses on three types of local businesses identified in conjunction with the Macao Chamber of Commerce: small and micro companies, “Made in Macao” companies, and Macao young entrepreneurs. Sands China’s Local Supplier Support Program is in line with the Macao government’s initiative to “buy local.” It is a demonstration of Sands China’s commitment to supporting local enterprises as part of the company’s corporate social responsibility efforts.

W Hong Kong W Hotels Worldwide, a part of Starwood Hotels & Resorts Worldwide, is expanding into the US state of Florida with the opening of W Miami, formerly the Viceroy Miami. W Miami is located on Brickell Avenue at the epicenter of Miami’s bustling downtown area, and is poised to redefine luxury lifestyle experiences at the core of the city. Known as the “Manhattan of the South,” Brickell is one of Miami’s buzziest neighborhoods, balancing towering financial centers alongside luxury condos and shopping. Directly across the street from W Miami, “W Hotel opens in Brickell City Centre will boast multiple upscale Miami following South restaurant and retail Beach and Fort options sure to delight locals and travelers Lauderdale.” alike. W Miami will be a new addition to the W Hotels currently in South Beach in the greater Miami area and in Fort Lauderdale. It marks the third W Hotel in Florida, bringing Starwood closer to its goal of reaching 75 hotels by 2020.

Wynn Macau Wynn Macau has announced that Wynn Palace, a new resort located in the Cotai area of Macau, is set of open on August 22, 2016. The US$4.1 billion Wynn Palace is a 28-storey hotel harmonizing the architectural grandeur of a palace and the natural splendor of flowers. Wynn Palace is Wynn Resorts’ second integrated luxury resort in Macau, joining the five-star Wynn Macau located in “Wynn Palace set to the city center. Boasting open in the Cotai grand views, 1,706 exquisitely furnished rooms area of Macau in and suits, and world class customer service, Wynn August.” Palace promises to delight new and returning guests to the Special Administrative Region of Macau as the city continues to develop the infrastructure of a world-class tourist destination. Wynn Resorts is owner and operator of its casino hotel property in Las Vegas, Nevada. The group is hopeful that the opening of Wynn Palace will help launch a new era of prosperity for Macau, attracting more international tourists and further supporting its development as a world center of tourism and leisure.

biz.hk 6 • 2016

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6/5/16 8:20 pm

MARK YOUR CALENDAR Aug Renewable Energy Opportunities: One-belt One-road

Dr. K K Chan, Founder and CEO, Nature Elements Capital China is promoting the development of One-belt One-road. Dr. K K Chan will discuss realistic opportunities in the field of renewable energy development. Is it real or just a slogan? Prior to establishing Nature Elements Capital, Dr. Chan was Managing Director & Head of Investments- Greater China, Climate Change Capital (an investment firm managing over US$1.5 billion assets). He was responsible for all investment activities in carbon emission credits under the Clean Development Mechanism and environmental projects in Greater China. Dr. Chan was Managing Director of CLP Renewables, China Light and Power. He was responsible for building and managing the clean energy and cleantech portfolio of CLP in Asia Pacific (particularly China, India and Australia). His achievements at CLP included winning the prestigious “Corporate Developer of the Year” by Euromoney and Ernst & Young in the “Global Renewable Energy Awards 2006”. Dr. Chan started his career as an investment banker with Credit Suisse First Boston and NatWest Markets, focusing on corporate finance, equity and debt capital markets, and advisory. Dr. Chan has a BA (First Class Honours) in Electrical & Information Science, PhD in Electronic Engineering (thesis on thin-film semiconductor technology), both from Cambridge University. He has also obtained a Bachelor of Laws (LLB) from London University and an EMBA from Tsinghua University, Beijing.

Aug The Asia-Pacific Economic Outlook

Richard Cantor, Chief Risk Officer, Moody’s Corporation and Chief Credit Officer, Moody’s Investors Service Monica Whaley, President, The National Center for APEC

Richard Cantor, Chief Risk Officer for Moody’s Corporation, and Chief Credit Officer for Moody’s Investors Service, will provide a brief Asia Pacific economic outlook as well as an overview of the APEC Business Advisory Council’s work. Cantor was appointed to serve as one of three US Members to ABAC late last year. He serves as a co-chair for ABAC’s Finance and Economic Working Group. Monica Whaley, President of the National Center for APEC and an alternate US ABAC Member, will be on hand to discuss plans for the upcoming APEC CEO Summit in November in Lima, Peru. She will also provide a look-ahead for 2017 when Vietnam hosts APEC.

Aug Brexit: Now What? Outlooks for Hong Kong and Asia

Alicia Garcia Herrero, Chief Economist, Asia Pacific, NATIXIS, Hong Kong Mark Austen, Chief Executive Officer, Asia Securities Industry & Financial Markets Association (ASIFMA)

The UK vote for Brexit on June 24 has roiled markets globally, pushing the pound to its lowest level since 1985, and led to the resignation of UK Prime Minister David Cameron. Since then, global markets have settled down but long term impacts on financial flows into Asia from the UK and Europe remain uncertain. International financial centers such as Hong Kong, could take a hit if financing flows slow down. In previous years Alicia Garcia Herrero held the following positions: Chief Economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria (BBVA), Member of the Asian Research Program at the Bank of International Settlements (BIS), Head of the International Economy Division of the Bank of Spain, Member of the Counsel to the Executive Board of the European Central Bank (ECB), Head of Emerging Economies at the Research Department of Banco Santander and Economist at the International Monetary Fund (IMF). Alicia holds a PhD in Economics from George Washington University and has published extensively in refereed journals and books. Mark Austen is the Chief Executive Officer of ASIFMA. Since joining ASIFMA in 2012, he has led the expansion of the association to encompass Equities, Compliance, Post-Trade and Asset Management in addition to its original division for Fixed Income, and its membership has grown to over 80 firms. He is an active member of the board of the Global Financial Markets Association (GFMA) where he represents the Asian perspective on global regulatory issues. Mark holds an LL.M. from the London School of Economics and an LL.B. from Osgoode Law School in Toronto.

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

Tel: (852) 2530 6900

Venue: The American Chamber of Commerce in Hong Kong 1904 Bank of America Tower 12 Harcourt Road Central, Hong Kong Time: 12:00pm - 1:45pm Fee(s): Member: HK$280 Non-member: HK$400

Venue: The American Chamber of Commerce in Hong Kong 1904 Bank of America Tower 12 Harcourt Road Central, Hong Kong Time: 3:30pm - 4:45pm Fee(s): Member: HK$200 Non-member: HK$300

Venue: The American Chamber of Commerce in Hong Kong 1904 Bank of America Tower 12 Harcourt Road Central, Hong Kong Time: 9:00am - 10:30am Fee(s): Member: HK$180 Non-member: HK$300

Fax: (852) 2810 1289

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07/07/2016 10:30

JOURNAL OF THE AMERICAN CHAMBER OF COMMERCE IN HONG KONG

www.amcham.org.hk

July/August 2016 â&#x20AC;¢ VOLUME 48 NUMBER 7- 8