June 2016
THROUGH THE COMPLEXITIES OF OBOR INDUSTRY FOCUS:
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June 2016
Contents
Vol 48 No 6
Publisher
Richard R Vuylsteke
Editor-in-Chief Kenny Lau
Assistant Editor Jennifer Khoo
Assistant Advertising Sales Manager Tom Chan
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COVER STORY
The “One Belt, One Road” (OBOR) initiative is one of China’s most sizeable and ambitious commercial undertakings in recent times and is poised to add fuel to the steady rise of the “Silk Road” region as the world’s center of economic gravity. Ben Simpfendorfer of Silk Road Associates explains the commercial implications and how your business can be a partner of a national strategy in response to real market opportunities
AMCHAM NEWS AND VIEWS 04 Optimization of Back-up Land: Revival of Maritime Logistics
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
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Rationalization of Hong Kong’s Port through more effective use of land in the vicinity will benefit the industry and the city as a whole by reducing the costs and pollution created from inefficiency, delays and idling engines of shipping lines, barge operators, truckers and port operators
07 New Business Contacts 29 executives join AmCham’s business network last month
64 Mark Your Calendar
COVER STORY 08 Through the Complexities of OBOR The “One Belt, One Road” (OBOR) initiative is one of China’s most sizeable and ambitious commercial undertakings in recent times and is poised to add fuel to the steady rise of the “Silk Road” region as the world’s center of economic gravity. Ben Simpfendorfer, Founder and Managing Director of Silk Road Associates and previously a senior China economist at RBS and JP Morgan based in Hong Kong, explains the commercial implications and how your business can be a partner of a national strategy in response to real market opportunities
TRADE & INVESTMENT
16 Hinrich Foundation Launches Sustainable Trade Index A new index measuring 19 Asian countries and the US economically, socially and environmentally highlights the importance of a global trading system in support of the long-term goals of economic growth, environmental protection and strengthened social capital across the region
biz.hk 6 • 2016
16 TRADE & INVESTMENT A new index measuring 19 Asian countries and the US economically, socially and environmentally highlights the importance of a global trading system in support of the long-term goals of economic growth, environmental protection and strengthened social capital across the region
TAXATION
BUSINESS MANAGEMENT
The Internal Revenue Service is now working with the Department of Homeland Security to flag, detain and interview Americans at US ports, and the Department of State can revoke existing US passports and deny applications for new ones – serious reasons for concern among Americans overseas
TAXATION
22 A Rude Awakening among Americans Abroad The US Internal Revenue Service (IRS) is now working with the Department of Homeland Security to flag, detain and interview Americans at US ports, and the Department of State can revoke existing US passports and deny applications for new ones – serious reasons for concern among Americans overseas
BUSINESS MANAGEMENT
26 Organizational Agility: Key to Survival in the 21st Century Industry experts Carla Arellano, Vice President and Global Client Leader of Organization Solutions of McKinsey & Co, and Charlotte Relyea, Partner and Global Leader of McKinsey Academy, explain the critical issue of agility in the context of business performance where speed plays a role
INFORMATION TECHNOLOGY
30 The Market for Information Gathering Information can be easily found everywhere nowadays. Peter Snell, CEO of Ipsos Business Consulting who has been in the market research industry for over 30 years, reveals the past, present and future of working with the right information for market intelligence customized for business decision-making
CHARITABLE FOUNDATION
34 In Celebration of Contributing to Hong Kong’s Local Charities This year, amidst the 10th anniversary of a partnership with American Women’s Assocaiton (AWA), AmCham’s Charitable Foundation has approved a donation of HK$230,000 in support of five local charities dedicated to helping the underprivileged and needy
biz.hk 6 • 2016
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22
Industry experts Carla Arellano, Vice President and Global Client Leader of Organization Solutions of McKinsey & Co, and Charlotte Relyea, Partner and Global Leader of McKinsey Academy, discuss the critical issue of agility in the context of business performance where speed plays a role
INDUSTRY FOCUS
39 Real Estate, Infrastructure & Construction The latest developments in technology, sustainability, innovation and megastructure despite the current economic climate shaped by the slowdown of China’s economic performance, lowered commodity prices and sluggish growth in economies across the globe AECOM Asia Pacific Properties Black & Veatch CBRE Limited Cheung Kong Property Holdings Ltd CITIC Pacific Colliers International Compass Offices Cummins DTZ Cushman & Wakefield Engel & Völkers Green Island Cement Hang Lung Properties HOK International HK Shanghai Alliance Holdings Ltd HK Sotheby’s Int’l Realty Hongkong Land Hysan Development Co Ltd JBA Consulting Engineers Jones Lang LaSalle Knight Frank Lan Kwai Fong Group LORD Asia International Ltd Marmon Engineered Wire & Cable Marubeni-Itochu Steel Mitsui Fudosan Co Ltd New World Development Savills (Hong Kong) Ltd Sino-Singapore Guangzhou Knowledge City Investment and Development WSP Parsons Brinckerhoff United Technologies Corp
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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 Sara Yang Bosco 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 Joyce Wong 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
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biz.hk Editorial
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n a public consultation paper, “Proposals for Enhancing the Use of Port Back-up Land in Kwai Tsing,” published a year ago by the Transport & Housing Bureau, many of the pressing issues faced by the port and logistics industry, in particular the severe shortage of land and dedicated barge berths, were clearly identified. It was a positive first step in responding to the challenges operators of Hong Kong’s global shipping business have had to endure as a result of the growing problem of port congestion in recent years. There are a number of reasons for the congestion: one is the rising share of transshipment throughput of containerized cargo in Hong Kong (from 44.9 percent in 2005 to 60.2 percent in 2014) for which port operators are required to have sufficient facilities in order to handle a large number of ocean-going vessels (OGVs) and to transfer containers in and out of nearby terminals; another is a shift from land- to river-based container traffic in the Pearl River Delta (2 million TEUs in 2005 to 3.1 million TEUs in 2014). The Port of Hong Kong – which includes Kwai Tsing’s nine privately-run container terminals where nearly 80 percent of all containerized cargo in Hong Kong are handled – is praised one of the most competitive in the world, with an average annual throughput of 23.1 million twenty-foot equivalent units (TEUs) over the past decade. The port and related sectors, more importantly, are directly responsible for 1.1 percent (HK$24 billion) of Hong Kong’s GDP and 2.4 percent (88,000 jobs) of the total employment.
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OPTIMIZATION OF BACK-UP LAND: REVIVAL OF MARITIME LOGISTICS As containerized cargo in Hong Kong is estimated to increase by 1.5 percent yearly up to 2030, there is an urgent need for additional terminal yard space and barge berths as operational efficiency can drop quickly without further optimization. In fact, Hong Kong’s competitiveness as a port has already dropped significantly – from the world’s number one in the early 2000s to fourth place in recent years. The ports of Shanghai, Singapore and Shenzhen – all within the region – have “outgunned” Hong Kong and are the top three today. Yard area is a critical component in the operation of container ports, and it is an important factor in the efficiency of any cargo terminal. For one, yard area is needed for installation of crane and quayside equipment, and there must be sufficient room to accommodate trucking, loading and unloading of containers. Once containers are unloaded onto the shore side, it is necessary to be able to move – and often times store – them before they are loaded again for their ultimate destination. Hence, more port back-up land for container stacking is key. The use of port back-up land by integrating such land in the proximity of the Kwai Tsing Container Terminals (KTCTs) could enlarge the total storage area, and it could increase the annual capacity by 3-4 million TEUs. The result is estimated to be the equivalent of an additional capacity of three or four new container berths.
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And it needs to be on a long-term basis because the procurement and installation of purpose-built equipment and rail tracks are expensive – it is simply not viable under short-term tenancies. In the implementation of recommendations outlined in the consultation paper, cargo terminal operators could make use of vacant land nearby on a short-term basis as a way to alleviate the pressure of congestion while more permanent solutions are being put to action. Rationalization of Hong Kong’s Port through more effective use of land in the vicinity will benefit the industry and the city as a whole by reducing the costs and pollution created from inefficiency, delays and idling engines of shipping lines, barge operators, truckers and port operators. It is important that not only the current proposals are expedited but that an ongoing dialog between the government and industry continues on how to maintain this momentum and proceed with the full implementation of the recommendations. The overall rehabilitation of Hong Kong’s Port, particularly in the KTCTs, and the recovery of Hong Kong’s competitive position in maritime logistics depend on what the city does today. Shipping lines will only feel confident in returning to Hong Kong if there is sufficient capacity to handle cargo efficiently.
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New
Business Contacts The following people are new AmCham members: AB
CXA Group
Marianne Johnson Regional Manager, Human Capital
Douglas Lau Business Development Director
Acuma Hong Kong Limited
Deloitte Touche Tohmatsu
Mark Everitt Chief Executive Mark Plummer Director
Arkadin Tony Reno Event Sales Specialist
Bloomberg LP Vicky Cheng Government Affairs, Asia Pacific
Brooks Brothers Hong Kong Limited Susan Leung Head of Marketing
Steve Smart Partner, Audit
Emerson Electric Asia-Pacific Vicki Lin Dawkins President, Asia Pacific
Citi Paulus Mok Head of Markets & Securities Services, Greater China & Country Treasurer, Hong Kong
Dennis Duessler Consultant
Old Mutual International Isle of Man Limited Ian Kloss Area Sales Manager
Prudential Hong Kong Limited Crystal Lee
French International School Arnaud de Surville Chairman
Global Philanthropic Ember Deitz Goldstein Senior Consultant
Harbour School, The
Saatchi & Saatchi HK Ltd Cyril Drouin Chief E-Commerce Officer
Sears Holdings Global Sourcing Ltd Laurent Madelaine Head of International Sourcing
Christine Greenberg Principal
Standard & Poor's Hong Kong Ltd
Churchill Finance Limited Catherine Le Bourgeois Director
Koehler Group
Hong Kong University of Science & Technology Tanya Menzel Assistant Director, Career & Professional Development-Experienced Professionals, MBA/MSc Career & Professional
Simon Jin Managing Director/Head of Greater China
The Fred Hollows Foundation Anson Wong Head of Hong Kong
Hung Lok Trading Limited Coach A (Hong Kong) Co., Ltd Michelle Leung Executive Coach
Sylvia Lam General Manager
Vida Group Executive Search Tim Vida Chief Executive Officer
Jefferies Hong Kong Ltd CRIF Hong Kong Limited Galina Ho General Manager, Asia
Conor O'Mara Equity Sales - Asia Pacific Lily Xiong Head of Corporate Access, Asia Ex
Withers Wei Zhang US Attorney
View our other members at: www.amcham.org.hk/memberlist
biz.hk 6 • 2016
7
COVER STORY
Through the Complexities of
OBOR The “One Belt, One Road” (OBOR) initiative is one of China’s most sizeable and ambitious commercial undertakings in recent times and is poised to add fuel to the steady rise of the “Silk Road” region as the world’s center of economic gravity. Ben Simpfendorfer, Founder and Managing Director of Silk Road Associates and previously a senior China economist at RBS and JP Morgan based in Hong Kong, explains the commercial implications and how your business can be a partner of a national strategy in response to real market opportunities
By Wilson Lau and Kenny Lau
8
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Source: Silk Road Associates
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T
he “One Belt, One Road” (OBOR) initiative, or simply Belt and Road, is one of China’s most sizeable and ambitious commercial undertakings in recent times. It is an intercontinental business strategy across a plethora of different countries with significant commercial implications, and “it will add fuel to the steady rise of the ‘Silk Road’ region as the world’s center of economic gravity.” “The strategy will drive China’s commercial and political relations with its near neighbors, from Asia to Europe, over the coming decade,” says Ben Simpfendorfer, Founder and Managing Director of Silk Road Associates, an advisor on commercial strategy and business intelligence for multinational corporations operating across Asia. “The strategy is still evolving, and it has created some uncertainty in the business community,” he points out. “But, in short, if you partner, supply or compete with Chinese companies in the region, then the strategy matters.” “There are two key reasons that the strategy has real business implications,” Simpfendorfer believes. “The first is that Chinese companies have been increasing their investments in the Silk Road region for almost a decade in response to real market opportunities. In other words, Belt and Road is underpinned by market forces.” “Secondly, Beijing’s financial and policy backing will only accelerate the change,” he adds. “There will be plenty of policy misfires and parts of the strategy may fail outright. But the country’s sheer commercial scale and the tendency of Chinese companies to align themselves with official policy will result in a meaningful impact on the region.” The strategy – which makes a historical reference to an ancient network of trade routes connecting China with the Middle East, Central Europe and as far as
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parts of Africa – comprises the “Silk Road Economic Belt” and “21st Century Maritime Silk Road,” and is collectively known as “Belt and Road.” It covers more than 60 countries and 62 percent of the world’s total population, including Asia, the Middle East, and East Africa as well as Europe. “Chinese President Xi Jinping has made the strategy a centerpiece of his policy, so it has support at the highest level,” Simpfendorfer explains. “Beijing’s policy support for the strategy is still evolving, but leading Chinese companies can be expected to enjoy greater support for any commercial activity that falls inside the country’s Belt and Road strategy.” “The strategy is not a trade agreement,” he says. “It is best viewed as a mission statement describing China’s commercial and political engagement with its neighboring countries.”
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Commercial implications Belt and Road can be considered China’s re-focus on its investment flows when opportunities here in Asia have somewhat been overlooked due to the overshadowing rush to Africa. “The commercial belt which runs from China to Indonesia, India and Turkey accounts for 35 percent of the world’s urban spending,” Simpfendorfer notes. “That’s the real commercial prize of the next decade, and Belt and Road recalibrates China’s focus on that prize.” “As a specific set of policy initiatives, it’s President Xi’s timely reminder of the opportunities in countries closer to home. It does not set any new precedent,” he says. “For instance, I was in Dubai recently and met
Key Aspects of
Belt and Road There are two components to the strategy: the “Silk Road Economic Belt” and “21st Century Maritime Silk Road.” Together, they are called “Belt and Road.”
The narrowest measure of the strategy covers more than 60 countries and 62 percent of the world’s population, including Asia, the Middle East, and East Africa. It also includes Europe in the broader measure. The strategy is not a trade agreement and is best viewed as a “mission statement” describing China’s commercial and political engagement with its neighboring economies, spanning from Asia all the way to Europe.
Chinese President Xi Jinping has made the strategy a centerpiece of his policy – so it has support at the highest level.
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with 45 Mainland Chinese companies; all argued that that they had been there even before the initiative was announced, and they’ll remain in Dubai whether Belt and Road is successful or not.” “To put it another way, the initiative taps into a strong free-market dynamic and the return of the Silk Road economy,” he explains. “Chinese companies have been making money on this economy. Belt and Road simply formalizes their activities by providing policy support.” Although critics have argued that Belt and Road is China’s solution to the problem of industrial overcapacity, it is not entirely a case of simply selling excess supply. “China’s GDP growth has slowed to its lowest rate in 20 years, and Beijing is trying to rebalance the domestic economy and find new markets for overall growth,” Simpfendorfer explains. “The Silk Road countries can be part of the solution as they account for 42 percent of the world’s economy.” “The Silk Road countries are also near some of China’s least developed provinces in the southern and western regions. By developing trade and transport links with Central and Southeast Asia, China can further spur growth Ben Simpfendorfer in those regions,” he says. “I am less optimistic, however, that the strategy will cushion domestic GDP growth from slowing much below its current rate. That might have worked in the 1990s, but not today, because China is simply too big.” Five provinces of China – Guangdong, Jiangsu, Shandong, Zhejiang and Henan – are already big enough to rank among the Silk Road’s ten largest economies; only India, Indonesia, Korea, Turkey and Saudi Arabia are on the list. The province of Guangdong alone has a GDP of some US$1,060 billion – it is larger than 60 other economies of the Silk Road region, Simpfendorfer points out.
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“If Guangdong can’t solve China’s overcapacity problems, it’s tough to see how exporting the country’s excess automobile or steel products, for instance, to smaller economies such as Kazakhstan (GDP of US$195 billion) or Pakistan (GDP of US$270 billion) will,” he says. “Even some Chinese companies might find that foreign markets, while profitable, just aren’t large enough. The Belt and Road region itself is large, but marketing and distribution to so many individual countries are a challenge even for foreign MNCs.” But individual Chinese companies, he says, will be able to benefit from an additional source of revenue, and a number of Chinese global champions will likely emerge as they learn to identify viable joint venture partnerships and to market and distribute their products across emerging markets. “So far, some leading state-owned firms are good at doing these, but it is a small number. The policy will encourage the pool of capable firms to go international.”
The scope of business It is no doubt that the engineering and construction sectors, especially those of China, will be heavily involved in projects initiated under the Belt and Road strategy. More importantly, there will also be a significant amount of activities in the finance sector in supporting many of the initiatives through capital-raising and partnerships among financial institutions on a global scale. Demand for fund management services, for example, is likely to increase, and a growing number of Mainland Chinese financial institutions will seek to tap into the pool of capital and funds across Asia Pacific and beyond, Simpfendorfer notes. And the Asian Infrastructure Investment Bank (AIIB), a multilateral financial institution which supports the building of infrastructure across Asia. “Chinese firms have been very competitive providers of the type of construction and engineering services for projects under Belt and Road; it won’t be a surprise if Chinese firms are involved in many of the deals,” he says. “However, it isn’t just about China, and we should not forget about Japan or the US. They are also very competitive providers and may get involved in some of these projects, even though they are not Belt and Road countries. What’s important is that they can win deals.” In other words, China isn’t the only country which will benefit from the region’s rise despite all of the global
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Will OBOR matter to my business? The strategy will help shape China’s commercial engagement with the Asia region. If you supply, partner, or compete with Chinese companies in the region, then the strategy matters.
Beijing’s policy support for the strategy is still evolving, but leading Chinese companies can be expected to enjoy greater support for any commercial activity that falls inside the country’s Belt and Road strategy.
headlines about Belt and Road, Simpfendorfer stresses. “Indeed, many countries have their own well-established Silk Road strategies. Japan is the best example. Its corporate sector is already well entrenched in many Silk Road countries, and Japanese Prime Minister Shinzo Abe has been a regular visitor to the region over the past two years.” “This is especially true in Southeast Asia where Japanese companies are often the dominant foreign player,” he continues. “And Japan isn’t alone. Turkey has strong ties with Central Asia, and Turkish construction companies already contest fiercely with their Chinese peers. Korean companies are similarly tough competitors – just consider the US$20 billion nuclear deal a Korean-led consortium won in the UAE in 2009.” “Such deals are often overlooked, but they are equally impressive and underscore that foreign businesses shouldn’t be focused on Belt and Road at the expense of the broader Silk Road opportunity,” he adds. China’s own Silk Road Fund, although smaller in scale compared with AIIB, also has a global mandate. “It is ready to fund such deals as those of China National Chemical Corporation) in Europe and others in Pakistan; banks in China, particularly the big four state banks, will try to do much of the funding for these deals,” Simpfendorfer says. “The businesses I met in Karachi confirmed that China’s banks are funding deals.”
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And there is a role for Hong Kong professional services providers, he adds. “Many Chinese companies are not familiar with countries of the Silk Road region including Pakistan. When it is government-to-government deals, they are fine. But matters in private deals are equally complicated, and I foresee rising demand from Chinese companies for good professional advice.” The challenge for Hong Kong-based companies and MNCs, he says, is how they can develop good strategic alliance across these markets. “For instance, how do they get their colleagues in Indonesia or Kazakhstan to be aware of Belt and Road, be sufficiently interested to source intelligence and share that with their offices in Hong Kong. As many MNCs are geographically siloed, it presents a real challenge in terms of how they conduct business and their ability to connect with colleagues across these distinct markets.”
Hong Kong’s role Belt and Road can be a window of business opportunities for companies from a diverse range of sectors in Hong Kong – building and construction, financial and banking services, transportation and logistics, real estate development and other professional services. The large professional services firms with presence in multiple countries are particularly well-positioned to access the untapped markets of the Belt and Road region.
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“For one, Hong Kong stands to benefit from a more internationalized Mainland China, its overseas investments as well as foreign direct investment into China,” Simpfedorfer believes. However, companies are advised not to look so far as countries like Kazakhstan because “most Hong Kong companies have limited experience in these remote countries. They would mainly be government-to-government deals.” “Hong Kong companies can set their sights on their own backyard, in particular the Mekong Region covering Thailand and Vietnam,” he says. “As an economic unit, the Greater Mekong is the largest part of Belt and Road. Its supply chain has already been tightly integrated with the manufacturing base in southern China which is a massive exporter of trim products, including buttons and zippers, as well as electronic components. Samsung’s factory near Hanoi in Vietnam is one of the world’s largest mobile phone facilities where most components assembled into phones come from China.” Infrastructure projects in Vietnam including the Hanoi light rail, Mong Duong power plant and Yun Zhong Industrial Park “are all examples of business opportunities for Hong Kong services providers, from engineering to advisory,” Simpfendorfer says. “The Mong Duong project is especially illustrative as there are three parties involved, namely Chinese, American and South Korean.” “While Kerry Logistics has been transforming road transport in the Greater Mekong region and the supply chain in connection with the Greater China region, a Hong Kong-based recruitment firm is involved in finding engineering talent for Saudi Arabia’s North South Railway project,” he says. “This is the way forward for Hong Kong companies.” Because Belt and Road covers a politically complex region, Chinese companies may find it more operable by being a part of an international consortium, especially in strategic projects like ports and railways, Simpfendorfer suggests. “Even if there are no political tensions, Chinese companies will benefit from a partnership with international parties who are well-experienced in the Belt and Road countries and can deliver best-in-class practices.” “And Hong Kong has a unique role to play because most countries in the region are happy to deal with Hong Kong, which is considered a neutral, international operator,” he highlights. “Even if it is a Chinese company working through a Hong Kong-listed entity, it makes a difference. Similarly, many companies are happy to sign contracts here because Hong Kong is a designated international arbitration hub.”
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What does Belt and Road mean for my business? How can decision-makers incorporate the policy into their strategic planning? How can they organize across the Silk Road region to make sure local offices are aligned around identifying opportunities and sharing them internally? Ben Simpfendorfer of Silk Road Associates highlights some suggested questions for your next strategy offsite
How to identify the implications for our markets? • Who is responsible for gathering market intelligence on the regional implications of Belt and Road? How is this intelligence shared with the regional leadership team? • How can we motivate our local offices from Bangkok to Karachi to identify and communicate emerging opportunities or threats with our China business lines and leadership team? Do we understand the implications for our competition and operating model? • What is the possibility that our firm will face greater Chinese competition in the Belt and Road markets? Have we communicated these risks to our local offices? • Have we engaged in strategic dialogue with our Chinese partners or suppliers about how they are responding to Belt and Road opportunities? • Have we educated global HQ about Belt and Road and its potential immediate and long-term implications for our regional business? Do we have the right management structure and capabilities? • Do we have employees with the capabilities to operate effectively across multiple Belt and Road countries? How can we make best use of them in China and elsewhere? • How might we better align the firm with China’s Belt and Road policy? In what ways can we be helpful to China’s central and local government leadership, and their regional ambitions?
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TRADE & INVESTMENT
Hinrich Foundation Launches Sustainable Trade Index To promote a meaningful discussion among policy makers, business executives and civil society leaders in managing and advancing international trade sustainably, a new index measuring 19 Asian countries and the US economically, socially and environmentally highlights the importance of a global trading system which can support the long-term goals of economic growth, environmental protection and strengthened social capital across the region
By Wilson Lau and Kenny Lau
I
nternational trade has been key to the economic growth of many developing countries across the globe and has been credited for moving hundreds of millions from poverty to middle-class income earners. The phenomenon is most pertinent in Asia where global trade has transformed countries into rising economic powerhouses in a region considered far less developed than North America and Europe just half a century ago. The progress as a result of international trade and economic growth, however, “is not without costs and risks,” according to the Hinrich Foundation, a Hong Kong-based NGO founded by Executive Chairman of trade media company Global Sources Merle A Hinrich to promote sustainable global trade by fostering international trade policy research, supporting trade-related education and training as well as cultivating export-led job creation. “The flow of goods and services across borders can disrupt labor markets, accelerate environmental degradation and contribute to worsening inequality,” it
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points out. “With the right policies, these costs can be reduced, if not eliminated, and trade can become more sustainable.” More importantly, “sustainable global trade promotes peace between nations” by driving equality in trade development in a balanced approach and supporting open, free, transparent and fair global trade. As such, Hinrich Foundation has recently commissioned the Economist Intelligence Unit (EIU) to compile an index measuring the capacity of various Asian countries in supporting the long-term goals of domestic and global economic growth, environmental protection, and strengthened social capital in the international trading system. The focus is on Asia because it includes the world’s two most populous countries and two of the world’s top three economies. Covering the Greater China area, 10 member countries of ASEAN, South Asia’s four largest economies as well as Japan and South Korea while using the US as a global benchmark, Hinrich’s first Sustainable Trade Index was born out of the notion that “Asia has proved
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Economic pillar results Rank
Country
Score/100
1
Singapore
76.5
2
Hong Kong
70.9
3
South Korea
68.3
4
Taiwan
67.2
USA
66.1
=6
Malaysia
64.8
=6
Japan
64.8
8
China
64.2
9
Philippines
57.1
Vietnam
56.4
5
10 11
India
56.0
12
Thailand
55.0
13
Sri Lanka
54.5
14
Indonesia
53.7
15
Bangladesh
50.4
16
Laos
49.7
17
Cambodia
48.2
18
Pakistan
42.4
19
Brunei
38.5
20
Myanmar
35.1
Source: The Economist Intelligence Unit
beyond a doubt the power of trade in raising people out of poverty – contributing far more than its fair share of the billion-plus people in the past generation whose incomes have risen above the poverty line.” “Countries understand the importance of trade to their economic prosperity, and they put a great deal of effect into preparing for the infrastructure needs of trade. But a country’s decision to become more successful in global trade should not be at all costs,” says Hinrich, founder of the Hinrich Foundation. “This index seeks to identify the full effects of trade-oriented economic expansion on a country, including the social and environmental preparations countries should make in order to expand their trading capability.”
The Index The Sustainable Trade Index – for which numerous industry experts were interviewed – was “created for
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the purpose of stimulating meaningful discussion of the full range of considerations that policy makers, business executives, and civil society leaders must take into account when managing and advancing international trade.” The first edition of the index measures 19 countries in Asia across three recognized pillars of sustainability: economic achievement (profit), social effect (people), and environmental impact (planet). The index is more than a simple ranking or survey of wealth and economic development of countries in that it not only measures their economic conditions but also their environmental and social fronts that are “necessary for trade to be sustainable.” While a country’s performance in the index is closely correlated with its wealth, there are a number of countries found to either over- or under-perform relative to their economic status when compared with other neighboring countries. And the index is able to tell a trend about the future of sustainability in trade with past and present data for a score based on measures of how a country has
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Hinrich Sustainable Trade Index, overall scores 90 80 70 60 50 40 30 20 10
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0
Source: The Economist Intelligence Unit
performed in the past and is performing now. “It is primarily a snapshot of a country’s performance in recent years across a range of sustainability indicators, and several of these indicators can potentially suggest future performance,” notes Stephen Olson, Research Fellow of the Hinrich Foundation. The indicators on “growth in labor force” and “educational attainment,” for example, are by definition somewhat forward-looking in nature, Olson points out. “On both these metrics, Singapore outperformed Hong Kong. Singapore was ranked 8th among all the countries on their growth in labor force, compared with Hong Kong’s near-bottom 19th place. In terms of educational attainment, Singapore came in 2nd place, and Hong Kong trailed in 5th place. “Obviously, these are just two indicators, but there might be some useful inferences to be drawn,” he adds. “This year’s index is the inaugural edition, and future iterations of the index will have more to say about the trajectories that countries seem to be on for a comparison of performance in previous years.”
Key findings According to the findings, sustainable trade tracks closely with a nation’s wealth: rich countries top the index, mid-income countries fall in the middle, and low-income countries make up the bottom. But there is
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more: countries also over- or under-perform relative to their income in certain categories. South Korea, Vietnam and Cambodia can punch above their weight in terms of per capita GDP. China, on the other hand, has not performed as well, given that it is the world’s second largest economy. On the very top of the overall rankings combining all three pillars is Singapore, followed by South Korea and Japan, and these are three Asian economies with rankings ahead of the US. In fifth and sixth place are Hong Kong and Taiwan, respectively, while Mainland China comes in 12th place, ahead of the Philippines and behind Vietnam, scoring poorly in environmental protection, sustainability of labor force, and educational attainment. “Trade has been central to Singapore’s development, and no other country can match the benefits it has delivered to its citizens over the past 50 years through targeted economic policy and careful stewardship of its human and natural capital,” the report says. But, “rising levels of inequality have attracted increasing criticism, and it ranks only seventh in terms of environmental standards in trade – an issue that is biting as its air quality suffers from actions taken by its neighbors and trading partners.” The economic pillar – in which Singapore tops the rank while Hong Kong comes in second place – highlights a country’s ability to trade globally based on
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its current account openness, infrastructure, tariffs and technology, and economic resilience (exchange rate stability). Whether or not “a country’s export mix is suitably diversified in terms of markets and products” is also taken into account. Countries with the best scores in the economic pillar are noted for their ability to withstand internal and external shocks with a balance of long-term resilience and near-term goals. The Asian Tigers – namely Hong Kong, Singapore, South Korea and Taiwan – are indeed among the top four economically among all jurisdictions covered in the index. Malaysia is the best performer among emerging Asian economies, tying with Japan for 6th place in this category. Singapore and Hong Kong are known to be fierce competitors as “Asia’s pre-eminent entrepôts.” Singapore’s total trade in 2014 was over three times the country’s GDP; for Hong Kong it was more than four times. Hong Kong is a gateway to China while Singapore is a hub along a vital maritime trading route. Apart from their large ports, both economies are noted to share similarities: state-of-the-art infrastructure and logistics, world-class legal systems, low corruption, and a robust financial sector. Developing countries in South and Southeast Asia, including Bangladesh, Myanmar and Pakistan, are at the bottom of the overall rankings. Despite the fact that they are often held back for a lack of export diversification or a failure to develop human capital, each has the potential to trade more sustainably, according to the report. Myanmar, having only recently opened its economy, is in many respects a “blank slate” in this area and is in a position to learn the most from other economies. In the social pillar – where South Korea, the US, and Japan rank best – countries are scored for their levels of social inequality, educational attainment, labor standards, and political stability. These are challenges facing Asia’s poorer countries – Bangladesh, Cambodia, Myanmar, Pakistan, Sri Lanka and the Philippines – where political uncertainty and instability “played a large role in discouraging spending and investment.” The issue of inequality – of which education is named to be the single most important factor – is an important aspect of sustainable trade because it “hampers the ability of economic growth to further reduce poverty, may hollow out a country’s middle class, and might ultimately lead to political unrest,” and global awareness of labor standards among consumers in developed markets is becoming more apparent. Countries with the best scores in the environmental pillar of the sustainable trade index generally avoid over-reliance on exports of natural resources, are minimally polluted with low carbon emissions, and pursue high environmental standards according to international and regional agreements. Wealthy and
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Social pillar results Rank
Country
Score/100
1
South Korea
88.9
2
USA
88.1
3
Japan
85.7
4
Taiwan
81.6
Singapore
74.2
=6
Brunei
68.2
=6
Hong Kong
56.4
8
Malaysia
52.2
9
Vietnam
48.1
10
Thailand
45.2
5
11
Sri Lanka
44.9
12
China
41.1
13
Indonesia
40.0
14
India
39.8
15
Laos
38.7
16
Cambodia
35.5
17
Pakistan
35.0
18
Bangladesh
33.5
19
Philippines
28.0
20
Myanmar
27.3
Source: The Economist Intelligence Unit
services-focused economies such as Hong Kong and Singapore excel in environmentally sustainable trade policies and practices, while both China and India score poorly due to their enormous impact of trade on the natural environment. Although Hong Kong is notoriously known for its poor air quality due to local traffic congestion and smog flowing from neighboring China, it takes the top place in the environmental pillar largely because of its environmental standards in trade: few indigenous exports of carbon-intensive products, a good record on reforestation and acceptable standards of water pollution, according to the index. “Hong Kong does many things right and does not export environmentally unsound practices.”
China In 12th place among 19 Asian economies measured, China’s ability to maintain international trade sustainably is questionable. It has relatively high trade costs
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Environmental pillar results Rank
Country
Score/100
1
Hong Kong
93.4
2
Singapore
92.2
3
Japan
85.0
4
South Korea
83.0
5
USA
74.9
=6
Philippines
71.0
=6
Thailand
66.2
8
Sri Lanka
63.1
9
Malaysia
61.1
Taiwan
59.3
10 11
Vietnam
57.0
12
Cambodia
56.8
13
Brunei
56.1
14
Bangladesh
52.3
15
China
52.0
16
Indonesia
50.0
17
Laos
48.2
18
Pakistan
47.8
19
India
47.2
20
Myanmar
45.9
Source: The Economist Intelligence Unit
because of corruption and a weak legal system. The country faces the growing problem of an aging population with a shrinking labor force, and lags behind in educational attainment. It is also challenged on the environmental front in terms of pollution and carbon emission as a direct result of trade. What’s most interesting about China is its “rise to become the world’s biggest trader despite the tight control over flows of capital into and out of the country,” the report notes. “It belies arguments that open capital accounts are necessary for sustainable trade and economic growth” – a reason capital account openness is not considered a factor in the economic pillar of the index. However, some theories suggest that a gradual opening of capital accounts in China may help stimulate trade and economic growth. “In general, if a more open capital account were to result in increased financial sector depth and improved foreign trade and payment risk, it would certainly improve China’s standing as a sustainable trade nation,” Olson says. “Indeed, these are two of the
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indicators included under the economic pillar. The potential downside risk would be if a more open capital account resulted in greater exchange rate volatility.” Because of China’s “well-documented battle” in cleaning up its natural environment and slow progress in shifting from infrastructure- and manufacturing-led growth to a less pollution-intensive model, it is somewhat surprising that China is not at the bottom in the index’s environmental pillar, the report points out, citing the result of an “explicit decision to prioritize growth over environmental concerns over the last three decades.” “Where China would really need to improve its trade sustainability – and hence its performance on the index – would be on the social and environmental pillars, where China ranked 12th and 15th, respectively,” Olson says. “More specifically, China scored especially low on the income inequality indicator (16th), air pollution (20th) and carbon emissions in trade (18th). To the extent ‘supply side structural reform’ can address any of these issues, it would be positive for China’s performance in trade sustainability.” Although China is finding ways to tackle its environmental problems because of the massive environmental costs accumulated over the years, it may well be a “bargain” other developing countries are prepared to strike, the report adds. “It highlights that environmental sustainability becomes easier once countries evolve into wealthier service and knowledge-driven economies.” Nonetheless, China is found to have scored well in one of the many environmental indicators of the index: it is signatory to a number of international environmental pacts dedicated to conservation, including those related specifically to a balance between environmental protection and trade. “While China scored at the top in terms of environmental standards in trade, it ended up in 15th place overall on the environmental pillar, clearly suggesting that more needs to be done,” says Olson. “There is no basis however to conclude that this is solely or even primarily the result of any lack of implementation of the environmental treaties it signed,” he stresses. “From the onset, it was very important to us that the index be based on relevant and reliable data, rather than judgments or opinions. Since there really aren’t any objective and reliable data points on how well any of these countries are doing in implementing the various environmental agreements, we are limited in what we can say.” “But to be clear, true sustainability in trade requires that these environmental commitments be fully and faithfully implemented,” he adds. “We recognize that implementation and enforcement can vary widely; however, there was no objective way to capture this in the index. We view the index as a starting point for discussion – not the final word.”
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TAXATION
A Rude Awakening among Americans Abroad With the impending Common Reporting Standard, new Tax Information Exchange Agreements with the US, and well-publicized investigations and voluntary disclosures, there is clearly no shortage of information about noncompliant US taxpayers flowing to the US Internal Revenue Service (IRS). Unknown to many people before is that the IRS is now working with the Department of Homeland Security to flag, detain and interview Americans at US ports, and the Department of State can revoke existing US passports and deny applications for new ones – serious reasons for concern among Americans overseas
By Laurence Ho and George McCormick
A
merican taxpayers who live overseas have become increasingly aware of the stringent US federal tax and reporting obligations attached to their worldwide income and assets. While it is conceivable that an American may relocate abroad without a complete understanding of tax reporting requirements, a passive attitude towards US tax and reporting compliance is no longer excusable, considering the significant media attention given to bank secrecy issues and Internal Revenue Service’s (IRS) efforts taken to ensure compliance on a global scale.
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The Foreign Account Tax Compliance Act (FATCA), enacted in 2010 to increase disclosure of foreign assets owned by US citizens and permanent residents, has already resulted in many Americans getting singled out – and sometimes even being denied banking service – by non-US banks overseas. That’s because foreign banking institutions are required to report information of any US individual as a bank account holder under the law. Along with the impending Common Reporting Standard, new Tax Information Exchange Agreements with the US, well-publicized investigations and voluntary
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disclosures as well as other global developments on tackling tax evasion, there is clearly no shortage of information flowing to the IRS. Now, the IRS has turned to other new "tools" for enforcement and collection of outstanding tax debts, and Americans who are noncompliant with US reporting requirements seemingly have few places to hide. What’s little known among Americans is the ability of the IRS (since 2012) to work with the US Department of Homeland Security (DHS) to flag, detain and interview noncompliant US taxpayers to help enforce a tax debt. Further, under new provisions of the Fixing America’s Surface Transportation (FAST) Act signed into law on 4th December 2015, the Department of State is now authorized to revoke existing US passports and deny applications for new US passports to Americans with serious tax deficiencies. American expats who believe they are out of reach of the IRS simply for the fact that they do not plan to return and live in the US may be in for an unpleasant surprise. Customs and Border Protection (CBP) agents are now legally able to detain and question an American at US Customs checkpoints while traveling to (or transiting through) the US. More alarmingly is the possibility of revocation or denial of an American’s US passport – a scenario which could disrupt employment and travel plans, particularly for someone who does not hold another passport.
Detention at US Customs Historically, US immigration authorities did not have access to IRS records, and vice versa, unless tax deficiencies became a criminal matter. However, the IRS is now given access to the database of CBP, including the Treasury Enforcement Communication System (TECS). If a US taxpayer residing outside the US has a deficiency of US$50,000 or more and the IRS has filed a Notice of Federal Tax Lien, an IRS agent may flag the taxpayer in TECS or obtain the taxpayer’s travel information from the TECS database. The taxpayer, therefore, may be detained by a CBP agent for questioning upon entering or leaving the US. Here is an example of how it works as explained in the IRS's Internal Revenue Manual: a taxpayer with a balance due and an overseas address on file is contacted by an IRS agent; if the taxpayer refuses to cooperate, he
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or she is placed in TECS. Upon the taxpayer’s arrival when traveling to the US, the IRS is informed of the taxpayer’s ultimate destination, length of stay in the US and flight itinerary. At the port of entry, DHS also secures the taxpayer’s residence address and cellular phone number in the US where a domestic agent is to meet with the taxpayer and secure a payment for taxes due. The IRS can use TECS to secure payment from a taxpayer who refuses payment but travels to the US. The result may be similar under less egregious circumstances where a US taxpayer has submitted US tax filings, moved abroad without notifying the IRS of a change of address, and missed an IRS Notice of Deficiency sent to an outdated address. In such a case, the taxpayer may have no idea about a delinquent tax debt until he is detained by CBP when entering the US. In recent years, there have been numerous reports of delinquent taxpayers being detained and questioned by CBP and then contacted by IRS agents while traveling to the US. This can be avoided by staying in compliance with your US tax filings. A US taxpayer who has fallen behind in filings, with proper advice, can take steps to avoid inclusion in the TECS database, which may involve entering into an installment agreement or offer in compromise with the IRS.
Passport revocation The concept of revoking or denying passports for Americans with outstanding tax deficiencies has previously been considered. The General Accountability Office (GAO) issued a report in 2011 on the subject and highlighted the fact that US passports continued to be issued to individuals who, at one point in 2008, collectively owed US$5.8 billion in unpaid federal taxes. It reasoned that the possible denial of US passport issuance could increase US tax compliance among Americans, particularly those residing abroad. However, in the absence of new legislation, agencies of the executive branch were restrained from acting on the report’s findings because, in part, the IRS was not permitted to share taxpayer information. The FAST Act changed all that: the IRS is now authorized to inform the Department of State about US taxpayers with tax due, and the Department of State can revoke a US individual’s passport or deny an application for a
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new passport – a reason for taxpayers living abroad to address their tax debt. Now, under the FAST Act, the IRS has the authority to disclose information to the Department of State on the ground of individual tax debt. Once informed by the IRS, the Department of State will not issue a passport and may revoke a previously issued passport to any individual who has a “seriously delinquent tax debt.” It could result in a taxpayer being denied entry to a foreign country and immediately returned to the US. For an expat residing abroad on a work permit who depends on the validity of a passport, this is a serious cause for concern. The law defines “seriously delinquent tax debt” as an unpaid, legally enforceable federal tax liability of greater than US$50,000 and either (i) a Notice of Federal Tax Lien has been filed and the IRS appeals process has been exhausted, or (ii) a levy was made due to neglect or refusal to pay a notice and demand for payment. This is a low threshold considering the tax debt includes interest and penalties assessed against a taxpayer, which can quickly accrue on modest tax deficiencies. It is important to note that the potential revocation or denial of a US passport under the terms of the FAST Act does not affect the underlying status of American citizenship. The new enforcement mechanism, instead, is intended to deny the benefits of travelling on a US passport while encouraging US tax compliance. Given all of these circumstances, it is not surprising that the number of individuals considering renouncing US citizenship has grown, but that assumes the individual has a second passport. Moreover, the renunciation process itself should not be undertaken lightly as it requires careful consideration, clear intent and a formal interview with the nearest US Embassy or Consulate. Importantly, the expatriating individual must certify his US tax compliance under penalties of perjury. The global trend towards transparency means that information regarding noncompliant US taxpayers will flow to the IRS, and the IRS is arming itself with new enforcement and collection tools. Americans with tax issues have a limited window of opportunity to come into compliance under various voluntary disclosure programs before the IRS finds them. There is no better time to take a proactive and diligent approach to US tax affairs. Otherwise, they may be given a rude awakening the next time they step off their long transpacific flight.
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Laurence Ho is a partner in the US Wealth Planning department of Withers and focuses on international tax, trust and estate planning for families with US connections or investing into the US. More specifically, he advises individuals on international estate and probate planning, foreign trust and holding company structures, and tax planning related to expatriation from and immigration to the US. He also counsels individuals in connection with their IRS tax audits/examinations, voluntary disclosures and foreign bank account reporting issues. He holds a BBA from the University of Michigan and a JD from Boston College Law School, as well as an LLM from New York University’s School of Law.
George McCormick is a Hong Kong-based registered foreign lawyer with Withers and provides tax, trust and estate planning advice for individuals and families from a US and international perspective. He also advises on tax compliance, expatriation and pre-immigration to the US. McCormick holds a BA in Economics from the University of Florida, a JD from Washington and Lee University’s School of Law, and an LLM in Taxation from New York University’s School of Law. He is co-author of an article titled Bank Leumi account holders under IRS Scrutiny, published in Jewish Times Asia, April 2015.
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BUSINESS MANAGEMENT
Organizational Agility: Key to Survival in the 21st Century The building blocks for an agile ecosystem in an organization are complex, and recent research also indicates that speed plays a role. Industry experts Carla Arellano, Vice President and Global Client Leader of Organization Solutions of McKinsey & Co, and Charlotte Relyea, Partner and Global Leader of McKinsey Academy, discuss the critical issue of agility in the context of business performance
By Nan-Hie In
I
n the current age of rapid changes driven by technological innovations, demographic shifts, and globalization, among other forces, it has never been more crucial for businesses to remain agile. Agility is generally defined as the ability to be flexible and to adapt quickly – it is not only one of the top trends in business management today in a competitive environment where speed is key but, more importantly, a key attribute to business performance. “It’s never been more important for human resources leaders to have a real grasp on how organizations can create value, drive performance and link that back to what it means to people whom you are leading, hiring, training and developing within your organization,” says Carla Arellano, Vice President and Global Client Leader of Organization Solutions at McKinsey & Co, speaking at an AmCham seminar in a panel with Charlotte Relyea, Partner and Global Leader of McKinsey Academy.
26
What are the key ingredients businesses must embed in their offices to achieve this competitive advantage? And how can companies assess their organizational health to identify areas where changes are needed? Over a decade ago, McKinsey embarked on extensive research to find out the answers by analyzing differentiators of well-functioning companies from those seen as dysfunctional.
A diagnostic framework McKinsey’s Organizational Health Index (OHI) is a result of years of data-mining by tracking the elements closely correlated to company performance, and 37 “behaviors, actions and processes” are identified to be relevant to the measuring process. These 37 management practices (see chart) are grouped into nine parameters, namely a company’s direction, accountability, coordination and control, external orientation, leadership, innovation and learning, capability, motivation, plus culture and climate.
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Organizational Health Index: An analysis of 37 "Behaviors, Actions & Processes" critical to corporate performance Direction 1. Shared Vision 2. Strategic Clarity 3. Employee Involvement
Leadership 4. Authoritative Leadership 5. Consultative Leadership 6. Supportive Leadership 7. Challenging Leadership
Culture & Climate 8. 9. 10. 11.
Open and Trusting Internally Competitive Operationally Disciplined Creative & Entrepreneurial
Accountability 12. 13. 14. 15.
Role Clarity Performance Contracts Consequence Management Personal Ownership
Coordination & Control 16. 17. 18. 19. 20.
People Performance Review Operational Management Financial Management Professional standards Risk Management
Capabilities
Motivation 25. 26. 27. 28. 29.
Meaningful Values Inspirational Leaders Career Opportunities Financial Incentives Rewards & Recognition
Innovation & Learning 30. 31. 32. 33.
Top-Down Innovation Bottom-Up Innovation Knowledge Sharing Capturing External Ideas
External Orientation
21. Talent Acquisition 22. Talent Development 23. Process Based Capabilities 24. Outsourced Expertise
34. 35. 36. 37.
Customer Focus Competitor Insights Business Partnerships Gov’t & Community Relations Source: McKinsey & Co
“We’ve not just created norms around those nine elements, but we’ve created norms around 37 management practices or behaviors you would want to see at an organization that is high-performing,” explains Arellano. A large number of CEOs, staff and scholars are interviewed, and concrete data including financial metrics of those sampled are examined. Staff of companies worldwide are asked to rank how well each of these dimensions operate in their respective firm. The composite score – an average of these nine elements – is a measure of an organization’s health. To date, it has generated a database with over two million in user responses from over 1,500 organizations, thus establishing a pattern of norms on what a healthy organization should look like. According to the data, there is a strong relationship between how well a firm is run and its business performance. Those considered “healthy” outperformed their “unhealthy” peers by three times in terms of their
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stock value in the market, Arellano points out. Companies which have successfully adopted ways to improve on their organizational health also generated a nine percent annual increase in EBITA (earnings before interest, taxes, depreciation, and amortization). The surveys also reveal three key factors Charlotte Relyea commonly found in a healthy organization: staff are aligned to the company’s vision and strategy; employees can execute according to the overall goal; and the organization can swiftly respond – and adapt – to changes in the external environment.
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Agility: A key to organizational health and a driver of performance
Strong
Agile
Bureaucratic Median
Strong
(Stability Index)
Weak
Trapped
Percentage of organizations associated with top quartile health
23%
Agile 70%
5%
17%
Median
Start up
(Dynamic Index)
Strong
Organizations designed to be agile are likely to achieve higher performance and be healthier.
Distribution of companies by Dynamic (Speed) and Stability Indices
Median Weak
(Dynamic Index)
A range of companies and corporations are found to fall in all quadrants.
Median
Strong
(Stability Index)
Source: McKinsey & Co
In the China sample of 80,068 respondents in 2015, for example, McKinsey’s analysis uncovered that Chinese companies most often struggled with motivation and that Chinese firms with a low score of organizational health had a tendency to resort to throwing money at a problem. “At a certain point in time, financial incentives can only go so far to get you additional motivation and enthusiasm from your employees,” Arellano says. Arellano advises using other levers in the “motivation” cluster within its 37 management practices with which high-performing companies are associated. That includes “Meaningful Values” (whether people are connected to what you are doing), “Inspirational Leaders” (whether staff are led and encouraged for high performance) and “Rewards and Recognition” (whether
28
the efforts of employees are acknowledged and rewarded).
Speed vs stability In the research on organizational health, agility is found to be a significant challenge among companies looking to drive performance, largely because of the stability and scale inherent in fixed organizational structures and processes, Arellano notes. “One thing that frequently comes up with agility is the notion of speed and the notion of control or stability.” McKinsey’s report Why Agility Pays, released in December, reveals that organizations anchored purely on speed can sometimes be trapped in what Arellano dubs a “startup leap space” where too much speed with
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little foundation leads to diminishing momentum beyond a certain point. The phenomenon is showcased in a matrix featuring a “speed axis” and a “stability axis,” where different companies tracked in the OHI can land differently along these two indices. Around eight percent are dotted in the “startup” box (healthy companies with speed but a lack of stability); 14 percent are “trapped” (slow and unstable firms with poor organizational health); eight percent are in “bureaucratic” box (slow and stable firms in poor organizational health); and only 12 percent are in the most coveted section of the “agile” – these companies had high scores in speed, stability and overall organizational health. The results also show that few companies could grasp speed or stability. “Our goal is to get the companies in the ‘agile’ box, which means you have enough control and process foundation in place so that you can be fast in certain areas and not have to reinvent the wheel or fall into chaos of everything in every direction,” Arellano says. The research also finds that 70 percent of firms that were found to be agile are very likely to be at the top quartile of organizational health and, therefore, business performance. “[That means] it is hard to be agile if you aren’t healthy as an organization,” explains Arellano, adding that organizational health is not just a trend but a key force that relates back to business performance.
Skills & behaviors Today, agility in businesses means management and leadership capabilities are required deeper within the organizations. “The world is changing so fast that you not only need leaders in C-suite and executive teams, but all the way down to the frontline for people to be able to think on their feet and be more agile on things like problem-solving, based on the studies we have seen,” says Relyea. According to McKinsey’s research, differences between top-quartile performers versus the others in leadership effectiveness are directly influenced by four sets of behavior: support is essential in making decisions and changes; a strong result-orientated approach helps faster decisions; a difference of perspectives allows for closer collaboration; and effective problem-solving brings about better results. It is also noted in the research that 40 percent of executives are not satisfied with the existing level of training and development of staff, particularly further down to the frontlines, Relyea notes. China, for example, is a case where there is much demand for highly skilled labor, and by 2020 there will be a shortage by 23 million, according to China’s National Bureau of Statistics and McKinsey’s Global Institute Analysis. “What we are seeing globally and in places like
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China is that other technical skills such as those in design, computer science and programming are needed as much as skills in problem-solving and leadership,” says Relyea.
Modes of learning
Carla Arellano
As learning is an integral part of building company agility, companies are also evolving in the way they train and build capabilities in staff, particularly in the digital era combined with a trend driven by the rise of tech-savvy millennials in the workforce. With advancing technology, along with a shift in employee behavior, e-learning has become a cost-effective way of providing training and spurred the delivery of business and tech courses in virtual classrooms. General Electric, for instance, has launched an online education catalogue that was curated by top online education providers, and around 180,000 staff were able to self-select their learning pathways. Recommendation for courses were made based on the stage of an employee’s career development, Relyea points out. Other companies use similar platforms such as e-libraries, giving their staff access to on-demand content on a digital education plaftorm. Similarly, McKinsey Academy has developed “edX” with Harvard University, Stanford University and Massachusetts Institute of Technology, a digital platform of capability-building based on the latest research for “blended learning journeys.” The learning experience can be anchored on a company’s business context, and be embedded in the day-to-day schedule of employees, Relyea notes. She adds that true behavioral change requires multiple modes of learning, including in-person workshops, digital courses, or group projects plotted on real world issues. “Using a whole different range and modes of learning can be most effective,” she says. And the multiple modes of learning apply to top leaders as well as every employee within an organization. “A lot of these courses, in our case, are based on McKinsey’s tool kit; it is on how we train our consultants throughout their careers to become leaders,” Relyea points out. “Externally, courses are shaped by the needs of our clients in training their staff on communications, problem-solving, and being nimble – skills that are required for an organization to be agile.”
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INFORMATION TECHNOLOGY
The Market for Information Gathering Information can be easily found everywhere nowadays. However, as the common saying goes, don’t believe everything you read. Peter Snell, CEO of Ipsos Business Consulting who has been in the market research industry for over 30 years, reveals the past, present and future of working with the right information for market intelligence customized for business decision-making
By Leon Lee
Peter Snell
30
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biz.hk: How did you get started in the market research industry? What was the market like then? Snell: I actually started out in the marketing of precious metals in London in the 1970s. I was a precious metals dealer for four years but there wasn’t much marketing involved, and I really wanted to get into marketing. So I went to work for AGB in the UK, which was probably the first truly global research player. My whole career developed in market research after that. After having worked for them in London for six years, I transferred to Hong Kong where I used to run the TV audience measurement system for ATV and TVB. When I came out to Hong Kong, it was like a transfer of skills from the UK, and there was really a limited amount of research here. The market research industry was very embryonic here while it was highly developed in Europe. Initially, our work was primarily focused on Hong Kong but expanded to cover the region as businesses started to grow in Asia. biz.hk: How has the industry evolved over the last 30 years? Snell: You have to remember there was no Internet and there were no fax machines in the very early days. When I moved to Thailand, we got a fax machine and it was amazing because you could send questionnaires almost in real time from one hub to another. Before that, you would have to depend on a courier for an overnight delivery. Since the advent of the Internet, more specifically e-mail, it sped up all the transfers of information. The digitalization of data collection has transformed the industry as well. You can collect information digitally, send it back to the central server, and have it processed in real-time. So the
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whole cycle has been compressed. Before the rise of the Internet, you would also have to go to libraries and industry bodies, and scan through publications and back issues of newspapers. Nowadays you just sit there and Google search, and there are subscriptions to all sorts of things making secondary research much quicker and the range of information much broader. biz.hk: With the amount data out there, how do you separate good information from the bad? Snell: It’s screening. It’s actually knowing what you need and then screening out the stuff you need from the stuff you don’t need. That’s a critical issue and a reason for analysts and researchers to understand the objectives, go out to find the information and then process that information to give clients a good recommendation about what they should do to enhance their business. You’re really trying to give them good quality information and direction in their decision-making to enable them to progress ahead of their competitors. At Ipsos, for example, we have a system called the full circle analysis. Unlike consumer research, you don’t go out and interview 300 businessmen to get the answers. Instead, you get the client to share all their data as a background, then go out and do a whole load of secondary research before doing a load of expert interviewing. If you want to find out about a specific industry or a specific element of an industry, you don’t just interview from one angle but a number of different angles. For example, when I ask somebody in the business about the size of the market and who the major players are, I’ll get a set of answers; when I repeat the same questions with a distributor
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or a competitor, I’ll get a series of answers. I can then look at the distribution of answers along the different vectors and where the answers intersect. By the time I get to five or six different points of view about the industry, I pretty much know where the truth lies, and the truth is where all the lines intersect. It’s how we validate our information. biz.hk: What sets you apart from your competitors? Snell: Over the past five years, we’ve refined our offering to clients quite considerably by looking at what we’ve done historically and then codifying it into a suite of products that will answer their questions. Also, we rely not on models or a partner coming in from America saying this is what you should do. The underpinning for our offering is fact-based consulting for the fact that markets can be very different from one to another location. We actually go into the marketplace and find out what the latest conditions and situations are. And when we come to make recommendations for our clients, we can be very specific about what they need to do. biz.hk: Can you elaborate more on how that works? Snell: This is the difference between us and the research side. They will say, “In order to answer this question, we will do a survey of 100 or 1,000 individuals.” Ours is not based on the same criteria because ours is a combination of data provided by the clients, secondary research that we get from a load of sources and then expert interviews. We tend not to operate on sample sizes because it depends how much information you get from a given person. Let’s say if I go to see a person who’s responsible for a trade body and
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he gives me a huge amount of data that’s been collected from their members on production figures, we’ll have a huge data trove and we probably won’t need to do too many more interviews to verify the information before we can get a very clear picture of the market. In cases where data is really hard to find, we have to interview a lot of people. There is no minimum sample size; it’s however many people you have to interview in order to get to the truth. biz.hk: Has Hong Kong or Asian businesses grasped the effectiveness of business information to their operations? Snell: They are getting more and more accustomed to data-driven decisionmaking. In the old days, particularly amongst smaller, medium-sized enterprises, people would make decisions based on their assessment of the market without any reference to an independent view of things. In the big companies, decision-making has increasingly been fact-based. In small and medium enterprises, more and more people are looking for guidance in their decision-making to make sure they’re making the right choice. As you have a generation of executives educated in business schools, they’ll often go, “How do we know this is the truth? How do we know this is really where the market is? We really need to get some more information.” They’ve grown up in an information age. Competitive insight or intelligence is an area that will grow. More people want to know what their competitors are doing. It’s not just observation but getting a bit more details and understanding their strategy and how it is being implemented. It is about understanding their strengths and what you can do to counter them.
biz.hk: You have a focus on six main sectors – Agribusiness, Automotive, Construction, Energy, Healthcare and Industrial. Which do you see will have the biggest impact in Asia in the next five to 10 years? Snell: You can forget energy at the moment. The market for energy is [just not there]. Three years ago the market was flooded with solar panels, and prices collapsed. That’s good if you want to make green energy or get power to an island or rural areas. But it’s not so good if you’re in the business of manufacturing and selling solar panels. With the current prices of oil, there’s not much to do in energy at the moment. The one where we do the most business right now is healthcare, not least because the population in Asia is aging rapidly. Although Indonesia, India, Vietnam, and the Philippines have very young populations, Japan has one of the oldest populations in the world while those in China, Hong Kong and Singapore are getting older. The combination of an aging population and a high level of affluence will lead to better healthcare. Infrastructure and construction is another and is driven by a number of factors. Most of the countries have had relatively poor infrastructure and will need to build on that. The infrastructure in China has gone ahead dramatically since 1996 but that’s not the case in the Philippines or Indonesia. In Thailand, it’s better but still not great, especially outside of the big cities. Another major driver is urbanization. Most of these places still have a high degree of rural populations, and these people are going to migrate into the urban areas where demand for infrastructure will continue to rise. biz.hk: What are your thoughts on the future of the market research industry?
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Full Circle Analysis: Approaching the subject from different angles gets a more accurate picture Customers Academics
Competitors
Bank/ Financial Analysts
Trade Associations
Raw material suppliers
Full Circle Analysis™
Government/ Regulatory Bodies
Advertising/ PR Agencies
Distributors/Agents/ Wholesalers/Retailers
OEM
Suppliers of Complimentary Goods Logistics Partners Source: Ipsos
Snell: The research industry is going to face a very hard time because information is becoming readily available. You’re going to be able to collect data passively without having to ask questions in a survey so much anymore. You’ll be able to collect a lot of data, and it’ll come down to computing power. The tools to collect and process data are becoming ever more sophisticated. There will still be a space for customized survey work where you have to go out and ask people specific questions, but I think the industry is going to consolidate more. If you look at the turnovers of all the major research companies over the last five years, it’s been either static or in decline. For us in the B2B sphere, I think the future is still pretty bright because other than the top-tier companies, we haven’t penetrated down into the smaller,
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medium-sized enterprises. I’m still very optimistic. I’ve been running this business for about 10 years and we’ve had continuous growth. We have a pretty comprehensive coverage in Asia with 14 of our 20 global offices. We’re entering the market in Sub-Saharan Africa at the moment as we see it to be the next Asia. In Sub-Saharan Africa, it’s an emerging market with very low levels of sophistication in the industries there, both the ones our clients are in and the one we’re in. We’ve got three offices now in Sub-Saharan Africa and we’ve got an office in the Middle East. The other place where I think we could do a lot of business in the next few years is Iran – big country, 80 million people, relatively sophisticated, biggest oil reserves on Earth, wealthy, sanctions coming off because they want to be engaged with the rest of the world.
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CHARITABLE FOUNDATION
At AWA's Awards Tea Ceremony: (from left) AmCham Charitable Foundation Chairman Peter Levesque, AWA's Charitable Donations Committee Chair Andrea Roth, AmCham President Richard R Vuylsteke, AmCham Charitable Foundation Trustees James Sun and Jon Zinke
In Celebration of Contributing to Hong Kong’s Local Charities The AmCham Charitable Foundation, founded in 1985 and governed by a Board of Trustees composed of AmCham’s past chairmen currently residing in Hong Kong, aims to support philanthropic and other charitable projects as a way of giving back to the community of Hong Kong. This year, amidst the 10th anniversary of a partnership with American Women’s Assocaiton (AWA), AmCham has approved a donation of HK$230,000 in support of five local charities dedicated to helping the underprivileged and needy
By Johnson Moon
T
his year marks the 10th anniversary of a very special partnership between the American Women’s Association (AWA) and AmCham’s Charitable Foundation in supporting local charities across the community of Hong Kong where AmCham’s commitment to giving back to society has made a significant impact by providing financial assistance to smaller, lesser known charities focusing on helping children, elderly, and disadvantaged groups with special needs. Each year, AWA accepts grant proposals from local charities and conducts a vetting process to identify
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those that correspond with the core mission of supporting philanthropic, medical, education, and other charitable projects in Hong Kong, while a board of trustees of the AmCham Charitable Foundation reviews a list of charities recommended for a donation. In 2016, AmCham approved a grant of HK$230,000 to support five local charities. It was made possible by the generous support of AmCham members and friends through various fundraising events, including the AmCham Ball and annual Charitable Foundation Dinner, during the year. Awards were presented at a ceremony where AWA President Marcy LaRont highlighted a total
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AmCham charitable grant recipients:
grant of over HK$1 million to 23 charitable projects. “What brings us together is the awardees, and I want to mention that the US Consulate has the honor to work with many of the awardees here,” US Deputy Consul General Tom Cooney says, reflecting on the purpose of the celebration and what it means for the US Consulate. “I was able to realize just how much effort and work goes into vetting charities for donation and how much work it takes to put together such a wonderful event like this,” says Peter Levesque, Chairman of AmCham Charitable Foundation and COO of Modern Terminals, noting the value of AmCham’s partnership with AWA. The award ceremony was filled with excitement and sincere gratitude for the support. Here are the five local charities which have received funding from AmCham Charitable Foundation in 2016.
Bethune House Migrant Women’s Refuge The Bethune House Migrant Women’s Refuge is devoted to providing shelter services (food and
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accommodation), emergency relief and medical assistance, guidance, counseling and psycho-social activities for Asian migrant women, mainly foreign domestic helpers. The grant will be used directly to support The Health Program, which ensures the total wellbeing of the migrant women. “We have a Filipina who was indecently assaulted by her employer. She got sick because of a polyp in the brain and she was in coma for several months,” Edwina Antonio, Executive Director of Bethune House, recalls. “While in the shelter, she was able to finally recover, and she was even able to develop her artistic side – painting and photography. Janet Pancho Gupta is now a well-known artist and she has an ongoing photo exhibition entitled Finding Inner Space at the Culture Club.” Gupta attributes her success to Bethune House, highlighting the dedication to assisting foreign domestic helpers in crisis, helping to cope with problems and empowering their psycho-social, health and spiritual welfare by offering holistic care services. “Having a support system coupled with health seminars and sports may very well be the key to holding
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on to hope and faith in life, in themselves and their peers,” Antonio says, adding that migrant workers are an integral part of Hong Kong and deserve care, respect and the protection of their rights.
Enrich Personal Development Enrich Personal Development is another local charity dedicated to migrant women, specifically the promotion of economic empowerment among them by providing financial education, life guidance, and one-to-one counseling tailored to the needs of those in financial crisis. The grant will fund the Financial Mentoring Programme, which provides in-depth, professional and long-term financial guidance for migrant women. The idea was born out of the realization that many migrant women in Hong Kong are faced with important financial decisions and even debt crisis but lack the practical knowledge to address those issues. Enrich aims to equip them with tools to become financially capable, achieve their life goals and create positive long-term impact for themselves, their families and their communities. “The first thing I focused on with my mentor was to get my debts all paid off,” recalls Marivic Castillo, a participant of the Financial Mentoring Programme which ran for six months with 10 mentor-mentee pairs. “Once I paid off my debts, I opened a savings account. I learned to stick to my budget using a formula of taking my salary, setting aside money for my savings and then using the rest for my expenses. I am now able to keep track of my expenses every day.” “Through the Financial Mentoring Programme, Marivic was able to work on concrete steps towards her financial goals,” says Project Officer Victoria Ahn. “At Enrich we believe that through financial education, many migrant domestic workers can get out and stay out of debt and achieve their goals.”
Hong Kong Society for the Blind The Hong Kong Society for the Blind (HKSB) aims to facilitate the equal participation of people with visual impairment in Hong Kong, with services in rehabilitation, educational support, employment guidance, information technology applications and residential care. The grant will be used for the acquisition of vibration training platform and recumbent stepper to enhance the training for people with multiple disabilities (MDVI) as a treatment and preventive measure against osteoporosis. The story of a 46-year-old patient previously diagnosed with mental retardation and visual impairment and later with osteoporosis following an accident in which his left femur was fractured is an example of the challenges faced by people with multiple disabilities,
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US Deputy Consul General Tom Cooney
notes Wilson Lam, a physiotherapist at HKSB, depicting how disruptive osteoporosis can be to one’s life. “He is now under rehabilitation and can only walk with a walking frame and with the help of an assistant,” Lam points out. “His mobility is limited, and his daily routine and quality of life are affected since the fracture. He can’t work in his job as a shopkeeper because he is physically unable to stand independently for a period of time. We are now trying to provide rehabilitation training to bring him back to his normal life.” Lam believes prevention and proper management of osteoporosis for patients can greatly alleviate their hardship. Although osteoporosis has been shown to occur with high prevalence among people with developmental disability, exercise is proven form of effective management. HKSB therefore anticipates to establish a training platform with adequate equipment to improve the bone density and muscle strength of those diagnosed with the medical condition.
Fragile X Hong Kong Fragile X Hong Kong is dedicated to providing support and advocacy in the community Hong Kong for individuals with fragile X syndrome, a genetic disease associated with damage to an X chromosome and intellectual disability. The grant will be used to sponsor a series of workshops designed for those affected by the disease as a way to provide accurate and timely information and to foster a sense of community among participants.
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Recognizing a lack of access to experts and care specific to fragile X syndrome, Fragile X strives to build a community of affected families and to connect them with healthcare professionals and researchers in order to provide the most accurate and reliable information, helping to facilitate a positive mindset throughout their journey of coping with the disease and to raise awareness and understanding about the medical condition across Hong Kong. One of the many families who have attended the support groups provided by Fragile X Hong Kong says they can now share resources and mutual encouragement with other families living with fragile X. Additionally, through the network, they are able to establish a firm connection with a fragile X expert who can provide them with professional advice and treatment. With the upcoming workshop series, Fragile X hopes to build an even stronger network among the affected families through interactions which will lead to a greater amount of emotional support and a better sense of community. The organization also expects the workshops to further bridge those affected with experts in the medical field for access to up-to-date information.
Integrated Brilliant Education Trust Integrated Brilliant Education Trust (IBET) is a
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provider of high quality educational support services to underprivileged children in Hong Kong for ethnic minority groups through afterschool Cantonese programs at IBET’s Education Center. The grant will help the center employ qualified teachers to supervise and manage these programs. The IBE Center, which has gone through rigorous education assessment, is a place for an affordable, high quality supplementary education to fulfill the educational needs and to provide equal opportunities for ethnic minorities in Hong Kong, with a special focus on Cantonese language proficiency for underprivileged ethnic minorities in schools across Hong Kong. “IBEC is one of the finest tutoring centers where ethnic minority students are getting help with their everyday homework,” Thapa Sunita, a parent whose daughter attends the center, reflects. “Teachers are qualified, friendly and helpful to the students. My daughter has opened up herself, speaking and expressing herself more than before. She is very happy during her classes. As a mother, I am also very happy and grateful.” “Our work at the center provides an insight into the problems facing ethnic minority students in schools of predominantly Chinese medium,” Founder Trustee of IBET Manoj Dhar believes. “It also provides us with valuable feedback on their various challenges which we can help tackle at the earliest stage possible.”
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INDUSTRY FOCUS
Real Estate, Infrastructure & Construction: The latest in technology, sustainability, innovation and megastructure By Jennifer Khoo
AECOM AECOM, an integrated infrastructure and construction firm, has launched a pilot program with Trimble to apply the world’s first use of Microsoft HoloLens “mixed-reality” technology for engineering and construction in projects on three continents. Through a lightweight headset, HoloLens technology adds holograms of 3D objects into a user’s view, allowing interaction with these virtual objects as if they were present. The technology allows users to feed 3D “AECOM to use 3D engineering models into the HoloLens world, technology in including models of large engineering and or complex projects, and it supplements convenconstruction projects.” tional working practices and improves communication, collaboration and visualization. It also makes it possible to physically point out potential difficulties or unforeseen conflicts in an evolving design. As part of Trimble’s Mixed-Reality Pilot Program, AECOM is deploying HoloLens devices in London, Hong Kong and Denver. Engineers and architects across different continents can share the same holographic models simultaneously, with their movements and interactions linked together via the Internet connected by Trimble solutions.
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Asia Pacific Properties According to a market report released by Asia Pacific Properties earlier this year, global economic uncertainties and additional signs of slowing growth in China are continuing, foreshadowing a downturn in demand for property and rental rates. The views, however, are mixed on rental rate forecasts across Hong Kong. Recent reports suggest office rents in core business districts of Hong Kong will see a meaningful decrease and market correction throughout 2016, which may provide an opportunity for tenants to obtain Grade-A office space at attractive rates. Meanwhile, others remain “Signs of slowing optimistic and suggest there will be no signifigrowth in China may cant rental rate foreshadow a decreases in core business districts. downturn in demand.” The answer may hinge not on external economic factors but on the outcome of several substantial lease negotiations currently underway: a failure of those negotiations to achieve renewals at present space requirements may cause the return of a substantial amount of empty space to the market, and landlords may be forced to lower rents to maintain their buildings’ occupancy levels.
Black & Veatch Black & Veatch, a global company in engineering, procurement and construction (EPC) services, has been appointed to develop desalination plants in Hong Kong and Singapore. The two plants are set to establish new design and energy-use benchmarks for future water treatment plants. Black & Veatch is to design, develop and provide construction supervision across the first “Black & Veatch phase of the Tseung Kwan O desalination wins two major plant, which will have an desalination projects initial capacity of 36 million gallons per day in Asia.” and will meet about five percent of Hong Kong’s water demand. A feasibility study to identify opportunities to harness green energy and reduce consumption of electricity has been completed. In Singapore, it is to provide consultancy services for the country’s fourth desalination plant. The plant in Marina East, with a capacity of 36 million gallons per day, will be designed to treat two different sources of water: seawater from the Singapore Straits or raw water from the Marina Reservoir.
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CBRE Limited Hong Kong has been identified as the world’s most popular market for new retail entrants in 2015, according to CBRE’s ninth edition of a report titled How Global is the Business of Retail? In total, Hong Kong attracted 73 new international brands in 2015, up from 58 in 2014, pushing it up four places to take the top spot globally. Singapore followed a close second with 63 new brands, while Tokyo as the top market in 2014 slid to third place. Hong Kong ranked the seventh most penetrated “Hong Kong identified city by international retailers, with 45 percent as the world’s most of retailers surveyed popular market for new having a presence here. The city also remained retail entrants.” a popular destination among expanding European brands, seeing an increase by more than one percent in the presence of European retailers in 2015. There has been a significant focus on Food & Beverage (F&B) among retailers expanding in Hong Kong. Of the 73 retailers having entered the market last year, 37 are F&B brands, accounting for roughly half (50.6 percent) of all new entrants – with robust activity by Japanese, Korean and Taiwanese brands.
Cheung Kong Property Holdings Ltd Cheung Kong Property Holdings Limited, listed on the Main Board of the Hong Kong Stock Exchange since June 2015 following a reorganization of business structure, has allowed the Group’s property portfolio to expand significantly and become more diversified both in terms of asset type and geographical locations by combining a large number of properties previously under the Cheung Kong Group and the Hutchison Group. The newly formed “CK Property reports entity now encompasses audited profit attributable property development and investment, hotel to shareholders of and serviced suite operation and property and HK$17,113 million.” project management, in addition to three listed real estate investment trusts. It has a portfolio of diversified properties in multiple locations, including Hong Kong, Mainland China, Singapore and the United Kingdom. The Group has reported a full-year (for 2015) audited profit attributable to shareholders of HK$17,113 million, while profit before investment property revaluation was HK$15,568 million, 29 percent higher than that of the previous year, and investment property revaluation increment in 2015 was lower than in 2014.
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CITIC Pacific CITIC Limited has commenced commissioning the last two of six concentrator lines at its Sino Iron project in Western Australia, representing a major milestone of the construction and integration of a greenfield megaproject designed to process and export quality concentrate to steel-producing plants. The greenfield site in the Pilbara region has been transformed into Australia’s largest, fully integrated center of magnetite mining, processing and export operations. The infrastructure itself is the region’s first greenfield port development in 40 years, with a “Two concentrator 51-gigaliter desalination plant, a 450-megalines commissioned at watt combined cycle Sino Iron project in gas-fired power station, and a 30-kiloWestern Australia.” meter slurry pipeline. Sino Iron – China’s largest overseas investment in the resources sector and considered an important aspect of relations between China and Western Australia – is expected to contribute billions in royalties to the State of Western Australia, generate substantial export revenue for the local economy and create significant employment opportunities for the local population.
Colliers International Colliers International’s latest thematic report shows that demand for flexible workspace is rising across Asia, particularly in Hong Kong and Singapore. The domains of traditional serviced office operators and co-working operators are increasingly converging. Flexible working operators are expected to lease 20 percent more office space in Hong Kong in “Demand for flexible 2016 than what their Chinese peers took up in working office space in 2015. According to Hong Kong expected to estimates by Colliers, Chinese companies increase.” secured 400,000 square feet of office space in Hong Kong under new leases in 2015, whereas flexible working space operators have secured 252,000 square feet of space over the first five months of 2016 alone. The desire for more flexible working space will likely strengthen further, with implications for all property market players, including landlords, developers, flexible working operators, and investors. Landlords can expect higher demand for space, and developers can consider new features into building design for a new class of tenants.
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Compass Offices Despite a forecast by the International Monetary Fund (IMF) of global economic growth of only 3.4 percent for 2016 and a weakened outlook for the next six months partly due to China’s economic slowdown, an index compiled by Compass Offices shows that 51 percent of Australians remain strongly confident about their business growth this year. Australia has the highest level of optimism “Index shows relatively in the index measuring business sentiments in strong business the region, compared sentiments and growth with 43 percent in Singaand 30 percent in prospects in Australia.” pore Hong Kong. Japan, on the other hand, has the lowest level across the region, at 15 percent. The employment growth rate is also slated to slow this year. In Japan, less than 20 percent of surveyed clients plan to hire this year. The index, however, also shows that 61 percent, 56 percent and 44 percent of businesses in Singapore, Australia, and Hong Kong, respectively, plan to hire more personnel, potentially spurring the demand for serviced offices.
Cummins Cummins has won the 2016 Award of Excellence in Energy Management from the Clean Energy Ministerial (CEM), a global forum for policies and programs to advance clean energy. It has also joined the Energy Management Campaign in an effort to spur international collaboration with a goal of 50,001 global certifications by 2020. Cummins’ commitment to achieving ISO 50001 certification at a total of 40 sites by 2020 follows is the third energy goal in ten years unveiled this “Cummins receives spring, and it represents 90 percent of top global Cummins’ energy management award in footprint. It pledges to achieve a 32 percent driving clean energy.” energy intensity reduction from company facilities by 2020 (using a baseline year of 2010) and increase the portion of electricity it uses derived from renewable sources. Headquartered in Columbus, Indiana, Cummins is a corporation of business units that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems.
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DTZ Cushman & Wakefield DTZ Cushman & Wakefield, a global company in commercial real estate services, has reported that office rents in Hong Kong’s core business districts continued to rise in Q1 2016, particularly in Prime Central and Greater Central, surging 5.3 percent and 4.3 percent quarter-on-quarter to a monthly per-square-foot rate of HK$128.88 and HK$115.64, respectively. The continuous surge of rentals was underpinned by demand from Mainland Chinese financial companies, which accounted for 49 percent of the major new leases in terms of volume in the area. Insurance, “Office rents in Hong banking and financial companies were the Kong’s core business main drivers of new districts continues to lease demand in the first quarter, making rise in Q1 2016.” up 80 percent of all major new leases during the first three months of the year. Nonetheless, concerns of a global economic slowdown are prompting some retailers to seek earlier termination of their leases in an attempt to save costs. The general high street rent could see a drop of 10-15 percent from the current level if it became a broader trend.
Engel & Völkers Engel & Völkers has opened a residential property shop in the Canadian city of Markham, centrally located in the Greater Toronto Area, with special services catering to a growing class of Mainland Chinese customers looking to invest in real estate and residential property. The residential property shop is located “Engel & Völkers on Woodbine Avenue in Markham’s central expands in Toronto, business district where Canada for Chinesereal estate agents are able to broker premium speaking clientele.” residential property throughout the Greater Toronto Area. Prestigious neighbourhoods include the Devil’s Elbow and the Grandview Community, as well as Unionville. Residential property in these areas can fetch sale prices of up to eight million Canadian dollars. A large number of high-tech and sciences companies are located in Markham, drawing many skilled professionals from around the world. As a result, the city’s population of 349,000 is made up of a variety of different cultures. Chinese native speakers form the second largest population group, after English native speakers.
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Green Island Cement Green Island Cement (Holdings) Ltd, a wholly owned subsidiary of Cheung Kong Infrastructure Holdings Ltd, is named a recipient of the “Good MPF Employer Award” for 2015 by Hong Kong’s Mandatory Provident Fund Schemes Authority, in recognition of employers in Hong Kong who have placed a high value on their employees’ retirement needs. Green Island Cement was founded in 1887 at Tsing Chau (Green Island) in Macau. Today, it operates the only integrated cement plant Hong Kong, and has “Green Island Cement in two cement and concrete operations in South Ltd named a recipient China, in addition to of the Good MPF other shipping and mining activities across Employer Award.” South East Asia. Green Island Cement’s integrated cement facility in Hong Kong has a designed capacity of cement grinding and clinker production of 2.5 million tonnes and 1.5 million tonnes, respectively. Cement products are traded under the brand names of Emerald, Golden Eagle, Special Green Island, Jade in assorted packings of 45kg, 50kg and 1,000kg bag as well as in bulk.
Hang Lung Properties Hang Lung Properties has received four honors at the International Customer Relationship Excellence (CRE) Awards 2015/2016. The accolades, all in the category of property management, are “Corporate Employer of the Year,” “Corporate Social Responsibility Leadership of the Year,” “Employee Engagement Program of the Year” and “Best Use of Knowledge Management of the Year.” For four straight years, Hang Lung has “Hang Lung receives been recognized for its International Customer performance across a range of initiatives at Relationship Excellence the prestigious CRE Awards presented by Awards.” the Asia Pacific Customer Service Consortium (APCSC). Over the years, the awards have served as a platform for the advancement of the service industry and for industry leaders and professionals to share best practices for quality service. In addition, Academy 66, Hang Lung Properties’ learning and development division, has achieved the Customer Service Quality Standard (CSQS) Certification Level III Strategic Business Unit, which is the highest accreditation under the CSQS.
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HOK International HOK, a global firm specializing in design, architecture, engineering and planning, has been named one of two finalists for the Radical Innovation Award 2016 in a competition where the hotel industry is challenged to advance progressive thinking in design and operations. Driftscape is a mobile, self-sustaining hotel made up of several modular units allowing guests to roam or touch down in previously unreachable travel locations through the use of drone technology. Components include community units and single guest room units which provide 360-degree views of the outside “Driftscape Hospitality world and are fitted for untethered excursions Project named a of two to three days. finalist for Radical Driftscape, a hospitality concept Innovation Award.” designed by HOK’s Toronto office, was selected from a pool of entries submitted by more than 20 countries, and was highlighted for its creativity, design quality and potential to impact the industry. Finalists will present their ideas to the jury onstage at the New Museum where a vote by audience members will determine the grand-prize winner in October.
HK Shanghai Alliance Holdings Ltd TVSC Construction Steel Solutions Limited (TVSC), a joint venture between VSC Steel Processing Limited, an indirect wholly-owned subsidiary of Hong Kong Shanghai Alliance Holdings Limited (HKSHA), and NatSteel Holdings (NatSteel), has launched Hong Kong’s first automated steel reinforced bar (rebar) processing and assembly plant. The newly built plant is strategically “HKSHA launches Hong located in Tsing Yi, with Kong’s first automated access to piers facilitatrebar processing and ing the transportation of construction rebar. It assembly plant.” aims to lead the transformation of Hong Kong’s construction steel supply chain where steel reinforced bars for building construction are processed on the construction site – a model which can create safety hazards for on-site workers, high inventory pile-up, high scrap and inconsistent quality as well as cash-flow constraints for contractors. By moving the process off-site and with automated processing, it creates a safe, efficient and cost competitive solution, allowing Hong Kong to catch up to other regions like Singapore in the use of automation while addressing safety issues and challenges deriving from a labor shortage.
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HK Sotheby’s Int’l Realty Inquiries among Chinese buyers about Australian homes have fallen by nearly 25 percent in 2016, according to Hong Kong Sotheby’s International Realty. The drop-off in appetite among investors of Mainland China for property in Australia could possibly be the result of restrictions on cross-border capital flows in China. The Chinese government is reported to have taken a number of steps to stem the outflow of capital “Appetite among across the country’s Mainland Chinese inves- borders after more than US$1 trillion left China tors for Australian pro- last year amidst growing over the stabilperty drops 25 percent.” concerns ity of the Renminbi, China’s currency. Measures, both formal and informal, have been making it more difficult for Chinese private individuals and small companies to buy expensive homes overseas. In a report by Sydney’s Daily Telegraph, a representative of Sotheby’s International Realty, which specializes in high-end luxury homes is quoted saying “when we used to have new projects, more than enough people would register before we even pre-sell. Now, most projects are lucky to even sell 20 percent; it’s very slow.”
Hongkong Land Hongkong Land’s 11th Central Rat Race will take place on Sunday, 16th October 2016, and it promises the most exciting, fun-filled race yet with new challenges, more runners, bigger crowds and a host of creative activities for families and the wider community. The Race, since its inaugural year in 2006, has annually drawn hundreds of participants to compete in a relay-style race where they dash through the “Central Rat Race streets of the Central highlights the importance Business District, clad in fancy costumes and of work-life balance and carrying a briefcase as a baton. The Race is a mental health.” parody of the corporate lifestyle and highlights the importance of work-life balance. Through the streets and commercial space of Central, it showcases the district’s excellence as a world-class business hub. All proceeds go to MINDSET, a charity that supports mental health organisations in Hong Kong and Mainland China. A maximum of 60 teams will be enrolled on a first come, first served basis. Children between the ages of five and 10 are eligible to compete in the Junior Rat Race.
biz.hk 6 • 2016
Hysan Development Co Ltd Hysan has awarded the building contract of Lee Garden Three, Causeway Bay’s latest commercial project worth HK$1.6 billion, to Gammon Engineering & Construction Company, a subsidiary of Gammon Construction Ltd well known in Hong Kong and across Asia. Latest construction technologies such as Building Information Modeling, 4D modeling and 3D scanning will be adopted to enhance the project’s environmental friendliness and construction efficiency. The project will be the second major partnership between Hysan and Gammon in recent years. The iconic and “Hysan and Gammon popular Hysan Place in Causeway Bay is a in second major commercial complex partnership for Lee developed by Hysan and constructed by Garden Three.” Gammon. Lee Garden Three will include 20 floors of spacious Grade A offices sitting atop a five-level retail podium of shops and an exhilarating range of food and beverage establishments. There will also be a five-level basement with around 200 parking spaces. The entire project is expected to be completed in the fourth quarter of 2017.
JBA Consulting Engineers The new Las Vegas City Hall – a project by JBA Consulting Engineers – is a case in which green design has proven its worth in sustainable development. The new seven-story building is now using less than half of the energy once consumed by the old facilities – and is potentially saving the city more than US$500,000 per year in utility bills. The old building “New project showcases was made for a closed, very limited facility with significant cost savings relatively few windows and reduction in energy heavily tinted to keep out the heat and save on consumption.” cooling costs. The new design is not only bright and open but also conducive to significant energy savings, with tall steel structures known as “solar trees” standing prominently in the main plaza, each featuring a photovoltaic (PV) array on top. Other green features in the building include highefficiency pumps with variable frequency drives, condensing boilers and chillers, waterside economizers, LED task lighting, high-efficiency glass for windows, sensors for electronic systems, and the extensive use of daylight harvesting.
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Jones Lang LaSalle Secondary home sales in March surpassed the 3,000-level for the first time since August last year, according to JLL’s latest report Monthly Hong Kong Residential Sales Market, highlighting figures released in April by the Lands Registry showing a rebound of home sales by 89.7 percent month-on-month to 4,494. The total value of all home sales in March surged 101.6 percent to HK$34.5 billion, with the secondary market accounting for 3,200 sales, up 85.2 percent. In the primary market, Sun Hung Kai Properties’ “Annual private Ocean Wings and Wheehousing supply to reach lock Properties’ Savannah have so far managed 18,700 units between to sell over 70 percent of the 628 units and 55 2016 and 2019.” percent of the 804 units, respectively. But competition is also increasing: the number of residential units pending pre-sale consent in April rose 29.4 percent to 12,937, the highest level in seven months. JLL estimates the average annual private housing supply between 2016 and 2019 should reach 18,700 units, about 68 percent higher than the annual average of the last 10 years.
Knight Frank Knight Frank, an independent global property consultancy, has launched an Asia Pacific Prime Office Rental Index for Q1 2016 as a gauge to monitor prime office rents in 19 cities across Asia Pacific, of which 12 cities registered positive rental growth in the first quarter of the year, up from eight cities in the previous quarter. Results of the first quarter according to calculation in the Index show a mere growth of one “Asia Pacific prime percent – it has accelerated from 0.2 percent office rental rates in the previous quarter register positive growth while the average vacancy level has fallen in the first quarter.” by 0.2 percentage points. Going forward, Knight Frank expects rents in 14 cities to increase or remain steady over the next 12 months. Locally, although the Grade-A office supply pipeline is strong in Hong Kong, it is mostly concentrated in decentralized areas. Rents in Central continued to rise, however, as a result of limited available space. In markets overseas, Tokyo saw the highest rental growth in Q1 2016 as the prime vacancy rate remained at a multi-year low.
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Lan Kwai Fong Group Lan Kwai Fong Group has won a number of awards in architecture as it continues to build premium and innovative property projects across cities in Mainland China. The Group’s Shanghai DreamCenter, a collaboration with DreamWorks Animation, China Media Capital, and China Development Bank, was named the winner for “Best Chinese Futura Mega Project” at the MIPIM Asia Awards in 2014, and is due to open in 2018. The jury examined 126 projects from 13 countries and shortlisted three projects in each of 11 competition categories. The Shanghai DreamCenter beat out the Kunming Jungfa “Lan Kwai Fong Dongfeng Square and Mapletree Business City & Group’s award-winning Vivocity. The DreamCenter Shanghai Dreamis poised to become a shining landmark of HuangCenter to open in 2018.” pu River in Shanghai’s Xuhui District and is the leading element of the “West Bund Media Port” project, which will position the area as a vibrant cultural hub. One of the largest cultural investment projects in China, DreamCenter will bring an integrated cultural & lifestyle landmark featuring world-class entertainment, international performing arts, premium restaurants and bars, fashionable retail and creative media.
LORD Asia International Ltd LORD Corp, a specialist in the management of motion and vibration control systems, is unveiling a variety of expanded sensing offerings for the oil and gas industry, building on the acquisitions of two companies, namely MicroStrain and Stellar Technology, over the past few years. Technology acquired from Micro- Strain and Stellar are now both “LORD unveils an branded under the LORD Sensing master brand. expanded portfolio of The acquisition of Stellar Technology, a sensing offerings for the privately-held sensing oil and gas industry.” solutions company headquartered in Amherst, NY, was completed in 2014. Its pressure, load, force, torque, displacement and temperature sensing products were highly complementary to LORD’s existing capabilities in sensing systems and motion control technologies. The acquisition of MicroStrain in 2013 has helped strengthen LORD’s sensing portfolio through the addition of inertial measurement systems, micro-displacement transducers, wireless sensor networks and energy harvesting technologies. Upcoming advanced products will support applications across the entire oil and gas industry.
biz.hk 6 • 2016
Marmon Engineered Wire & Cable Comtran Cable, a member of Marmon Engineered Wire & Cable and a manufacturer of standard and ruggedized specialty data and signal transmission cables including category cables for structured cabling as well as telecom, fire safety, circuit integrity and other high performance applications, has announced a line of X-Link communications cables designed for nuclear power production facilities as a long-term solution to data communications, security, and environmental monitoring systems. Comtran’s engineers “Comtran announces new have designed a line of line of communications communications cables cables specially designed that will guarantee a specified category data transmisfor nuclear power sion and will stand up to harsh installation methods production facilities.” and environments, as other commercially available off-the-shelf products are insufficient for nuclear environments due to their proximity to machinery, fluids, and hazardous waste. The newly developed cables, featuring a shield and a thermoset insulation and jacket, are designed to reduce effects from electromagnetic interference and to provide enhanced thermal stability, all while maintaining resistance to fluids and radiation. Hence, they are physically robust, with the ability to meet high transmission rates.
Marubeni-Itochu Steel Al Gharbia Pipe Company, a joint venture of JFE Steel Corp, Marubeni-Itochu Steel Inc, and Senaat GHC (a private joint-stock general holding company owned by the government of the Emirate of Abu Dhabi), has recently held a ground-breaking ceremony for a large diameter welded steel pipe plant in the Khalifa Industrial Zone “Marubeni-Itochu Steel of Abu Dhabi (KIZAD). The joint-venture in JV for manufacturing company in Abu Dhabi plant of steel pipes in was established for the manufacture and sales of UAE.” high-grade large-diameter welded steel pipes designed mainly for the energy sector in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, which are the six member countries of the Gulf Cooperation Council (GCC). With the development and production of oil and gas forecast to be robust in these countries, the demand for high-quality steel pipes for pipelines to transport these resources is expected to remain stable. JFE Steel will participate in the joint venture under the Abu Dhabi-Japan Business Promotion Initiative of the Japan Cooperation Center for the Middle East.
biz.hk 6 • 2016
Mitsui Fudosan Co Ltd Mitsui Fudosan, a Japanese property developer with subsidiaries in Europe and North America, has started the full-scale sales of residential housing of the London Television Centre, a large-scale urban redevelopment project by the group in London following an acquisition from the BBC in July 2012. The project is set to transform the site into a multi-use facility comprising residential housing, offices, restaurants, a hotel and cinema, as well as other facilities, while the residential housing complex has retained the original building and some “Mitsui Fudosan starts other details associated as iconic features sales of residential of the BBC broadcasthousing in Television ing network in an effort to create new Centre, London.” charm and value while maintaining a British heritage. Combined with the redevelopment project at the adjacent White City Place acquired from the BBC in June 2015, the total site area measuring approximately 1,338,000 square feet and a total floor space of roughly 4,263,000 square feet is the largest-ever city development in London by a Japanese company.
New World Development For the second year in a row, New World Development Company (NWDC) has been named one of the “Best Companies to Work for in Asia 2016” by HR Asia, one of the trade journals on human resources in the region. In addition to a “NWDC named one of flexible healthcare benefit scheme for the ‘Best Companies to employees, NWDC has introduced various Work for in Asia’ for family-friendly initiasecond year.” tives including family care leave, flexible working hours and seminars on parenting, as well as the “Inventing Your Future Education Sponsorship Scheme” for children of their employees. Other large-scale, company-wide activities in an effort to promote family bonding include Group Fun Day, Family Open Day and employee tours. The “Best Companies to Work for in Asia 2016” awards, organized by HR Asia, are intended to promote talent training and development. Entries are evaluated by a panel of judges based on extensive employee surveys. A total of 21 companies were honored with the awards.
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Savills (Hong Kong) Ltd Savills, a global real estate services provider, has highlighted in a recent research paper that Hong Kong’s short-haul tourist market has experienced a modest recovery as mid-range retailers including those in F&B are making a comeback following a significant drop in inbound tourist arrivals and local retail sales in 2015. Rents of prime street shops in traditional tourist districts dropped by five percent in the first quarter of 2016 after having tumbled by 30 percent last year. The steep drop in the Chinese market was somewhat offset by “Market activity picks growth in other short-haul markets, which went up by up amid a modest nearly 14 percent in January recovery in short-haul and February this year. As a result, market activity tourist markets.” has increased, with highstreet fashion brands, active wear retailers and F&B operators all taking up space previously occupied by watches and jewellery and other Mainlandfocused trades. It’s been noted that landlords are now beginning to subdivide units while owners on the high street are returning units to their original size after years of subdivision.
Sino-Singapore Guangzhou Knowledge City Investment and Development Singapore-based companies venturing into China are now able to leverage a one-stop service platform at The Singapore Centre, which is part of Sino-Singapore Guangzhou Knowledge City (SSGKC), opened in July last year and located within an integrated business park called Ascendas OneHub GKC. The Centre is designed for companies “One-stop service using SSGKC as a strategic platform to platform open for establish a foothold in Singaporean companies the China market by venturing into China.” bringing together key agencies and resources of Mainland China and Singapore, facilitating business entry and growth in China, and offering high-quality business workspace, including plug-and-play facilities for the convenience of visitors. The Singapore Centre is a collaborative effort managed by Ascendas, with the support from IE Singapore, SSGKC Administrative Committee, Sino-Singapore Guangzhou Knowledge City Investment and Development Co Ltd (GKC Co), and Action Community for Entrepreneurship Ltd (ACE) to assist in areas of investment consultancy, government facilitation, business matching as well as streamlined company registration and set-up.
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WSP Parsons Brinckerhoff In a bid to extend its project management services and capture more infrastructure project opportunities, Canadian-headquartered WSP Parsons Brinckerhoff has announced plans to acquire Sweett Group, a London Stock Exchange AIM-listed project management firm, valuing it at GBP24 million (US$34 million). Sweett is a provider of professional services for the construction and management of building and infrastructure projects, covering quantity surveying/cost management, project management, building surveying and other specialist and advisory services. It operates in both the public “WSP Parsons and private sectors: education, healthcare, retail and Brinckerhoff to acquire mixed use, government/local project management authority, housing and transport and infrastructure. firm Sweett.” The acquisition will create an opportunity to grow the range of advisory skills of WSP, expand its scale and management strength in the UK and Europe with a complementary client base for cross-sell services, and broaden its offerings to existing and new clients on a solid foundation from which WSP can achieve growth through a strong program as well as extended project and management capability.
United Technologies Corp As population growth and urbanization as two megatrends continue to reshape many of the world’s cities, United Technologies Corporation (UTC) has highlighted the need for a global dialogue on sustainability through its Distinguished Sustainability Lecture Series, most recently in Beijing and Singapore. The Series has reached more than 3,200 attendees through 29 lectures in 14 countries since it was “UTC hosts Distinlaunched in 2011. Both China and Singaguished Sustainability pore are two major cities with significant demand for Lecture Series in Beijing green buildings, according and Singapore.” to the 2016 World Green Building Trends report, and hence they were chosen as the latest locations in a forum with international thought leaders and sustainability experts. China, in particular, is expected to see the highest level of growth in new commercial buildings as well as high-rise residential complexes and communities where protection of natural resources and minimization of environmental impact are increasingly becoming critical factors. Singapore, meanwhile, is positioned to be a global leader in building retrofits and new construction of commercial, institutional and high-rise residential infrastructure.
biz.hk 6 • 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 the best practice of doing business in 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
CONFIRMED SPEAKERS Dr. Fu Yuning Christopher Johnson Dr. Stephan Kothrade Lincoln Leong Neil Shen Ryan Stork
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 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
Stay tuned! More speakers to be announced… Gold Sponsor
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For more details including speakers, program and sponsorship: http://www.amcham.org.hk/China-Conference.html
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Ivey Consortium Programs Buck the cyclical trend – invest in and add value to yourself with Ivey
Think. Learn. Network. Asia.
In a volatile and uncertain environment, companies and leaders need to invest for a sharper vision, greater sensitivity, more diverse networks, and an expanded horizon. The Ivey Consortium Programs is a value-creating platform to connect leading companies, provide rich cross-learning opportunities among executives, and discover actionable business solutions through Ivey’s renowned learning-by-doing methodology.
Ivey Consortium Executive (ICE) Program
Accelerating Management Talent (AMT) Program
s Leadership & Management of Change
s Leading High Performing Teams
3-day module (September 26 - 28, 2016)
s Strategic Marketing Planning 3-day module (October 17 - 19, 2016)
s Optimizing Financial Performance to Achieve Business Success
2-day module (September 29 - 30, 2016)
s Competitive Advantage Through Marketing 2-day module (October 20 - 21, 2016)
s Managing Financial Resources for Business Decisions 2-day module (November 17 - 18, 2016)
3-day module (November 14 - 16, 2016)
s Strategic Analysis & Action
s Strategic Planning & Execution 2-day module (December 15 - 16, 2016)
3-day module (December 12 - 14, 2016)
s Innovation & Revitalization Through People 2-day module (January 12 - 13, 2017)
s Leading Change 2-day module (February 9 - 10, 2017) Fee: USD 10,800 per participant (4 modules)
Fee:+USD 7,200 per participant (4 modules) USD 9,000 per participant (5 modules) USD 10,800 per participant (6 modules)
Discount applicable for early bird registrations before July 15, 2016 OR ≥3 registrations from the same company. Participants will be conferred the consortium program certificate by Ivey Business School upon completing at least 4 modules of the same program. In case of deferrals, participants are expected to complete all selected modules within two years. Dates subject to final confirmation.
For more information, call us at +852-2135-2242 or email executives@ivey.com.hk Ivey Business School at Western University Cheng Yu Tung Management Institute Hong Kong Convention and Exhibition Centre, Phase 1 Room S422, Level 4, 1 Harbour Rd., Wanchai, Hong Kong Phone: +852-2808-4488 | Fax: +852-2808-4433 | www.ivey.com.hk Every effort has been made to ensure the accuracy of the information provided. However, the information is subject to change without prior notice.
Nominate a
Woman
of Influence CALL FOR ENTRIES: www.amcham.org.hk/woi DEADLINE: Monday, September 19, 2016 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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Japan: Lost Decades or Bought Time and Stability? Kuninori Matsuda, Consul-General and Ambassador, Consulate-General of Japan in Hong Kong Ken Chikada, Chief Representative - Hong Kong Representative Office, Bank of Japan (BoJ) Following opening remarks by Mr Kuninori Matsuda, Consul-General of Japan in Hong Kong, Mr. Ken Chikada, Chief Representative in Hong Kong for the Bank of Japan will address the factors behind decades of the Japanese economy’s stagnation; how the Bank of Japan has tried to tackle the problems; where the Japanese economy stands now, and its challenges and potential going forward. Ken Chikada is Chief Representative in Hong Kong for the Bank of Japan since June 2015. His office is responsible for collecting on-the-ground information about Asian economies as well as liaising with national authorities and Japanese firms and institutions operating in the region. He joined the Bank in 1994 and assumed pivotal managerial positions in Financial Systems and Bank Examination Department, Financial Markets Department, and Secretariat of the Policy Board. Outside the BoJ, he also worked for the International Monetary Fund as Senior Economist from 2010 to 2013, and was a regular contributor to its flagship publication, Global Financial Stability Report (GFSR). His contributions can be seen in every issue of GFSR from September 2011 to April 2013. Mr Chikada received his MA in Economics from the University of Michigan, Ann Arbor and his BA in Economics from the University of Tokyo.
What brand owners should know about domain name protection in China Dennis Cai, President, Policy and Compliance, Dot Trademark TLD Holding Company Limited Registering and protecting Chinese domain names is attracting increasing attention from brand holders. It is therefore extremely useful for trademark owners and IP practitioners to be up-to-date with the regulatory framework and recent developments in the domain name space in China, so as to be able to develop and implement effective domain name protection strategies as part of their wider brand strategy. Dennis Cai is President of Policy and Compliance at Dot Trademark TLD Holding Company Limited, the registry for “.商標” (trademark in Chinese) Top Level Domain (TLD) accredited by ICANN. He is responsible for developing and revamping registration rules and rights protection mechanisms the “.商標” TLD. Dennis Cai has 12 years of experience in international domain name dispute resolution and Online Dispute Resolution (ODR). Until recently, Mr. Cai was Assistant Secretary-General of the Hong Kong International Arbitration Centre (HKIAC) and Secretary-General of Asian Domain Name Dispute Resolution Centre (ADNDRC) where he oversaw IP and domain name dispute resolution proceedings and the setting up of different policies for several new gTLDs. He holds LLMs in WTO Laws and MA in Arbitration and Dispute Resolution.
Building a Pipeline of Leaders in the 21st Century
Terrance Leung, Managing Director, Hong Kong, Progress-U It’s vital to take a fresh look at your strategy, with key steps for recruitment and leadership development to fill the pipeline of leaders in the 21st Century. During this meeting, Terrance will share his insights on effective tools for recruitment and leadership development; resources to identify and build enduring strengths for leadership roles and finally, how to ensure success with continuous support and monitoring. Terrance Leung is the Managing Director in Hong Kong at Progress-U, a leading player in Asia recognised for its coaching centric and innovative approaches to people and organizational development. Terrance brings over 20 years of international leadership experience with global corporations such as IBM, Oracle and Check Point Software Technologies in the North Asia region to his coaching and leadership development practice. He supports corporate leaders in global and regional organizational culture development and communication strategy, with an approach based on his extensive experience in the Asia regional markets and business culture. An International Registered Corporate Coach (RCC) and Facilitator, Terrance facilitates leadership development workshops, and works with senior executives for immediate business results and long-term personal improvements to effectively meet their leadership challenges.
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: 8:00am - 9:30am Fee(s): Member: HK$180 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: 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: 8:00am - 9:30am Fee(s): Member: HK$180 Non-member: HK$300
Fax: (852) 2810 1289
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