AmCham biz.hk Nov 2016 by The American Chamber of Commerce in Hong Kong

November 2016

BEIJING DOORKNOCK: PROSPECTS OF GREATER BUSINESS ENGAGEMENT

INDUSTRY FOCUS:

LAW FIRMS IN HONG KONG

SPECIAL SUPPLEMENT: INTERNATIONAL EDUCATION COVER SPONSOR

JOURNAL OF THE AMERICAN CHAMBER OF COMMERCE IN HONG KONG

PUTTING YOUR CHILD 1

ACHIEVING MORE THAN THEY BELIEVE THEY CAN

CAMPUS OPENING SEPTEMBER 2017! For students 5 to 18 years old

www.amcham.org.hk November 2016 â&#x20AC;¢ VOLUME 48 NUMBER 11

Individualized Learning Plans from Age 5

with its own library with over 1,000 reading programs, including leveled reading programs in Science and Engineering, giving our students access to a wealth of ďŽŽŬƐ ĂŶĚ ƌĞƐŽƵƌĐĞƐ Ăƚ ƚŚĞŝƌ ĮŶŐĞƌƟƉƐ͘

Stamford’s Outstanding Results Our students at our Singapore campus consistently achieve above the U.S. benchmark in their MAP® assessments. In Elementary, our students’ scores in Reading and Math are greater than the benchmark by one year on average. Progressing to Secondary, Stamford students perform above the benchmark in Math and Reading by two Every student at Stamford undergoes standardized

or more years on average. In fact, the average Stamford

Measures of Academic Progress® (MAP®) assessments

Grade 6 student performs above the benchmark for Grade

in Reading, Math and Science twice a year, allowing

10 students in Reading, four grade levels above the norm.

us to measure their academic growth throughout

These outstanding MAP® results combined with the

the school year and from year to year. We deliver

/ŶƚĞƌŶĂƟŽŶĂů ĂĐĐĂůĂƵƌĞĂƚĞ ŝƉůŽŵĂ WƌŽŐƌĂŵ ŚĂǀĞ ůĞĚ

individualized learning plans based on each student’s

90% of our graduates from Stamford’s Singapore campus to

ŝŶƐƚƌƵĐƟŽŶĂů ůĞǀĞů͕ ĞŶƐƵƌŝŶŐ ĞǀĞƌǇ ĐŚŝůĚ ŝƐ ƐƚƌĞƚĐŚĞĚ ĂŶĚ

acceptance to their 1st choice university.

challenged appropriately.

Leveled Reading Program – 1 in Every Classroom Mastering reading skills from a young age is not only crucial for reaching key milestones in language and ĐŽŵŵƵŶŝĐĂƟŽŶ͕ ďƵƚ ůŝŶŬĞĚ ƚŽ ŚŝŐŚĞƌ ŽǀĞƌĂůů ĂĐĂĚĞŵŝĐ performance. All Stamford students undergo regular inclass reading assessments through the Fountas & Pinnell Benchmark Assessment System (BAS), allowing us to deliver individualized reading programs based on each child’s reading level. Every classroom is also equipped

Discover more at

Open House on December 8 & 9

www.sais.hk | +852 2500 8688 Ύ^ƚĂŵĨŽƌĚ ŵĞƌŝĐĂŶ ^ĐŚŽŽů ,ŽŶŐ <ŽŶŐ ǁŝůů ĂƉƉůǇ ƚŽ ƚŚĞ /ŶƚĞƌŶĂƟŽŶĂů ĂĐĐĂůĂƵƌĞĂƚĞ ĨŽƌ ƉƌŽŐƌĂŵ ĐĂŶĚŝĚĂĐǇ ŝŶ ĞĐĞŵďĞƌ ϮϬϭϳ͘

November 2016

Contents

Vol 48 No 11

Publisher

Richard R Vuylsteke

Editor-in-Chief Kenny Lau

Assistant Editor Jennifer Khoo

Assistant Advertising Sales Manager Tom Chan

COVER STORY

Led by AmCham Chairman Walter Dias, a delegation of business leaders and senior executives was in Beijing for the annual “Doorknock” trip to meet with Chinese government officials and policymakers from October 23rd - 25th. The meetings were characterized by candid discussions on trade, investment, financial policies, US-China relations, and Hong Kong’s role in the Pearl River Delta and its status as global center of international commerce

AMCHAM NEWS AND VIEWS 04 Standardization in the Age of Global Tax Transparency

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

Hong Kong’s corporate tax landscape is poised to undergo yet another reform with the implementation of the Base Erosion and Profit Shifting (BEPS) project – designed to promote a transparent tax environment. Hong Kong’s participation in BEPS is not only desirable but necessary for the preservation of its reputation as a leading financial center

07 New Business Contacts 42 executives join AmCham’s business network this month

68 Mark Your Calendar

COVER STORY 08 Beijing Doorknock: Prospects of Greater Business Engagement Led by AmCham Chairman Walter Dias, a delegation of business leaders and senior executives was in Beijing for the annual “Doorknock” trip to meet with Chinese government officials and policymakers from October 23rd - 25th. The meetings were characterized by candid discussions on trade, investment, financial policies, US-China relations, and Hong Kong’s role in the Pearl River Delta and its status as global center of international commerce

CHINA BUSINESS

16 For Global Peace and Prosperity In a new era of Sino-US relations – signified by global initiatives such as the Paris Climate Agreement but also disputes in other areas – former Secretary of State Henry Kissinger reflects on his experience and puts the bilateral relationship in perspective in a webcast for the 10th annual CHINA Town Hall organized by the National Committee on US-China Relations (NCUSCR)

biz.hk 11 • 2016

16 CHINA BUSINESS In a new era of Sino-US relations, former Secretary of State Henry Kissinger reflects on his experience and puts the bilateral relationship in perspective in a webcast for the 10th annual CHINA Town Hall organized by the National Committee on US-China Relations (NCUSCR)

TRADE & INVESTMENT Accounting for roughly half of the official GDP over the last two decades, and largely responsible for the country’s remarkably low unemployment rate, Thailand’s shadow economy – one of the world’s largest – appears to be not so much a concern for the country as it does a necessity

TRADE & INVESTMENT

20 Land of Smiles and Shadows

Accounting for roughly half of the official GDP over the last two decades, and largely responsible for the country’s remarkably low unemployment rate, Thailand’s shadow economy – one of the world’s largest – appears to be not so much a concern for the country as it does a necessity

APPAREL & FOOTWEAR

26 2016 and Beyond: Challenges in the Global Supply Chain Rick Helfenbein, President and CEO of the American Apparel & Footwear Association (AAFA), shares with AmCham his perspectives drawing upon his Washington, DC perch and his insights into the current political world which will define the commercial realities for those in the industry

AMERICAN TOPICS

30 US Presidential Election of 2016 More than 600 people, including members of the Hong Kong community, students of local and international schools and representatives of media outlets, showed up to watch the 2016 US presidential election at AmCham’s Election Central as results of the electoral votes from each of the 50 US states rolled in live on CNN

EDUCATION

34 Shaping Curious, Critical Minds The American School Hong Kong (ASHK) opened its doors in Tai Po last month under the stewardship of John Jalsevac, School Director. Under its STEAM curriculum, ASHK boasts an innovative teaching approach combined with a rigorous daily Chineselanguage program, to equip students with the critical thinking skills necessary for success in the 21st century

biz.hk 11 • 2016

APPAREL & FOOTWEAR Rick Helfenbein, President and CEO of the American Apparel & Footwear Association (AAFA), shares with AmCham his perspectives drawing upon his Washington, DC perch and his insights into the current political world which will define the commercial realities for those in the industry

INDUSTRY FOCUS

40 Legal Briefs: International Law Firms in Hong Kong The latest on global trade, litigations, mergers & acquisitions, investment opportunities and multi-national business transactions Akin Gump Strauss Hauer & Feld AlixPartners Hong Kong Allen & Overy Anderson & Anderson LLP Ashurst Baker & McKenzie Bird & Bird Cadwalader, Wickersham & Taft Clifford Chance Davis Polk & Wardwell Deacons Debevoise & Plimpton LLP Dechert LLP DFDL DLA Piper Hong Kong Dorsey & Whitney Eversheds LLP Freshfields Bruckhaus Deringer Gibson, Dunn & Crutcher Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP Hogan Lovells Jones Day K&L Gates Keesal Young & Logan LLP Kobre & Kim LLP Linklaters Loeb & Loeb LLP Loyens & Loeff Mayer Brown JSM McMillan LLP Morrison & Foerster LLP Nardello & Co. Oldham Li & Nie Solicitors O'Melveny & Myers Paul, Weiss, Rifkind, Wharton & Garrison Proskauer Rose Ropes & Gray LLP Sandler, Travis & Rosenberg Limited Simmons & Simmons Skadden, Arps, Slate, Meagher & Flom Squire Patten Boggs (formerly Squire Sanders) Sullivan & Cromwell LLP Tanner De Witt Troutman Sanders Solicitors Vinson & Elkins LLP White & Case Wilkinson & Grist Winston & Strawn Withers Zhong Lun Law Firm

Board of Governors Chairman Vice Chairman Treasurer

Walter Dias Steve Lackey Owen Belman

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

Peter Levesque Richard R Vuylsteke

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

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

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

biz.hk Editorial

he corporate tax landscape of Hong Kong is about to undergo another reform for compliance with international standards necessitated by the Group of Twenty (G20) and the Organisation for Economic Co-operation and Development (OECD). This time, it is on the protection of tax revenue by combating cross-border tax avoidance and tax evasion perceptually prevalent among certain multinational corporations (MNCs). And Financial Secretary has indicated that “Hong Kong is obliged to implement the project…against base erosion and profit shifting.” Base erosion and profit shifting (BEPS) simply means exploiting the difference in tax rates and rules between two (or more) jurisdictions – presumably one has a higher tax rate and the other lower – and artificially moving profits made in one location to another where a company has very little or virtually no commercial activity so that lower or no taxes would incur. BEPS “tax planning” strategies are by no means illegal in most cases but are, strictly speaking, a form of tax avoidance. Some say BEPS is statistically insignificant; others estimate losses range from US$100 billion to US$240 billion per year, which equal 4-10 percent of global corporate income tax revenue. It does, however, undermine the fairness and integrity of individual tax systems, and further tilt the level playing field on a global scale, especially for those without foreign subsidiaries. In fact, countries and jurisdictions are called upon “to work together to restore public confidence in tax systems and ensure fair competition.” So, why should Hong Kong care about BEPS? Or, why should Hong Kong sign up to be part of the BEPS “Package” initiated by G20 and OECD in a concerted effort to improve the coherence of international tax rules? The answer is: Hong Kong has a simple and low tax regime that is

biz.hk 11 • 2016

STANDARDIZATION IN THE AGE OF GLOBAL TAX TRANSPARENCY territorial-based, and it is an international finance and business center where many MNCs have a corporate presence. It means Hong Kong must adhere to international standards and participate in the review and monitoring mechanism to promote a transparent tax environment. The “Inclusive Framework for Implementation of the BEPS Package,” endorsed by G20 Finance Ministers, is a first step to “allow interested countries and jurisdictions to participate on an equal footing with OECD and G20 countries.” Countries which decide not to join the inclusive framework may be identified as “jurisdictions of relevance,” and whether they commit to the BEPS package, they will be “subject to monitoring and review by OECD.” Hong Kong is one of the 80-plus jurisdictions, including Australia, Canada, China, France, Germany, New Zealand, Singapore, Switzerland, United Kingdom and the United States, which have so far joined the inclusive framework. Hong Kong has certainly made the right choice of becoming an “OECD BEPS Associate” because of the need to uphold a high standard and because it simply cannot afford to be left behind in the global fight against injustice in tax matters. And it has been reassured that the implementation model of the BEPS package in Hong Kong will “meet the international standard without compromising our simple and low tax regime, which is widely recognized as a cornerstone of Hong Kong’s success and competitiveness.” The challenges of implementing the BEPS package, however, should not be under-estimated, partly because of the need to amend Hong Kong’s current tax laws entailing changes affecting the financial sector and partly

biz.hk 11 • 2016

because of a very tight implementation timetable. Moreover, because BEPS is cross-border by nature, business transactions will fall under heavy scrutiny by tax authorities across different jurisdictions; explicit documentation and disclosure of commercially sensitive information may be required under the new rule to facilitate an audit or investigation, and are a source of great concern for multinational business entities. Exchange of information between governments is indeed a key priority of the BEPS package, particularly in the corporate area of transfer pricing. Like BEPS, transfer pricing – which refers to “the setting of prices for transactions of goods, services and intangible property between associated enterprises” (i.e. subsidiaries under the same parent company) – is not illegal; despite existing transfer pricing rules in place to dictate a fair allocation of profits in these “internal” transactions, there are cases where transfer prices are manipulated to shift profits of one subsidiary to a low-tax jurisdiction where another subsidiary is located. The general rule of thumb in transfer pricing is what’s called the “arm’s length” principle, and it mandates transfer prices in intra-group transactions to be comparable to those charged when dealing in a similar transaction with an outside company or person – a principle incorporated in OECD’s Model Tax Convention (MTC) and Transfer Pricing Guidelines (TPG). All Hong Kong needs to do is “to codify the international transfer pricing standard such that enterprises are required to transact with their associated enterprises at arm’s length.”

THE AMERICAN CHAMBER OF COMMERCE IN HONG KONG

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

ACTIVITIES Members can access more than 400 programs, seminars, and conferences each year featuring top business and government leaders, industry experts and professional facilitators who address timely and relevant business issues. MEMBERS Over 1,700 members (40 different nationalities) from over 800 organizations, including multinational firms, small and medium enterprises, entrepreneurs, and non-profit organizations. COMMITTEES Our members can join and access up to 28 different committees covering industry sectors, professional service sectors, and special segments of the membership.

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

BUSINESS NETWORKING

INFORMATION

VISIBILITY AND CORPORATE EXPOSURE

ADVOCACY

ACCESS

New

Business Contacts The following people are new AmCham members: Accenture Co. Ltd.

Google (Hong Kong) Limited

Akin Gump Strauss Hauer & Feld

Harvest Global Investments Limited

Leo Ng Hong Kong Office Managing Director and Director of Operations Sebastian Rice Managing Partner, Hong Kong

Aon Hong Kong Limited

Paul Young Chief Executive Officer, Hong Kong Aon Risk Solutions

BNY Mellon

Sammi Cho APAC COO & Chief Executive of HK Branch Christine Park Senior Wealth Director

CDP Group Limited

Jake Lucchi Head of Online Safety, Content and Social Impact- APAC Public Ruiqi Wang Head of China Sales Ashley Dale Chief Business Development Officer & Chief Marketing Officer

Hong Kong Science and Technology Parks Corporation Albert Wong Chief Executive Officer

Hongkong International Theme Parks Ltd Ivan Lee Director, Corporate Alliances

Charlie Zhai VP Solution Ross Chan Sales VP

Korn/Ferry International

Chevron Companies (Greater China) Ltd

Marco Polo Hotels - Hong Kong

Dora To District Manager - Retail and Marketing Support

Alvin Low-Thue Associate Client Partner Jason Lin Director of Sales

Cognita

MassMutual International LLC

Covestro (Hong Kong) Limited

Mitsubishi Corporation Hong Kong Limited

Michael Drake CEO, Asia-Pacific Samir Hifri Managing Director

Deacons

Edwarde Webre Partner

Diamond Registry

Elaine Sarsynski Chairman, President & CEO

Toyota Watanabe Executive Vice President Atsushi Ikeda General Manager, Planning & Business Development Dept Yoichi Shimoyama President

Pakol Wong Marketing Manager Nissan Perla Director

Paul, Weiss, Rifkind, Wharton & Garrison

GEODIS

Prophet HK Limited

Chris Cahill Regional Director, Sales & Marketing, Asia Pacific

Global Payments Asia-Pacific Ltd Shirley Ng Vice President, Strategic Solutions & Marketing - Asia Pacific

Betty Yap Partner

Seone Public Accounting Limited Phillip Han Managing Director

Skadden, Arps, Slate, Meagher & Flom Chiann Bao Attorney

Sovereign Trust (Hong Kong) Limited William Probert Senior Consultant

Spencer Stuart & Associates (Hong Kong) Ltd.

Hypatia Kingsley Managing Director, Greater China

Taipei Economic and Cultural Office Bochia Ni Director

Transamerica Life (Bermuda) Ltd. Andrew Byrne Chairman & Chief Executive Officer, Aegon Asia

University of Chicago Booth School of Business in Hong Kong Julia Herries Director - Employer Relations, Asia Career Services Ria Sugita Director of Marketing, Recruitment and Admissions - Executive MBA Program Asia

VF Asia Pacific Sourcing S. a. r. l.

Gareth Brooks Managing Director, VF Asia Ltd Lincoln Cheng Vice President & Chief Financial Officer, Asia Product Supply

Weber-Stephen Products LLC

Steven Lim Vice President / Managing Director North & Southeast Asia

Lisa Gamreklidze Director, Marketing & Business Development (Asia)

Wells Fargo Bank NA

SCAD Hong Kong

Wilkinson & Grist

Victoria Erskine Director of Communications and Marketing

Jafar Amin Regional President, Asia Pacific

Ivan Chu Partner

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

biz.hk 11 â&#x20AC;˘ 2016

COVER STORY

BEIJING DOORKNOCK: Prospects of Greater Business Engagement

By Richard Vuylsteke

biz.hk 11 • 2016

An AmCham delegation led by chairman Walter Dias, center left, meets with Wang Jinzhen, center right, Vice Chairman, China Council for the Promotion of International Trade (CCPIT) in one of many meetings during the annual AmCham Beijing Doorknock trip to Chinaâ&#x20AC;&#x2122;s capital city.

biz.hk 11 â&#x20AC;˘ 2016

or the seventh year in a row since AmCham Hong Kong reinstated in 2010 its annual “Doorknock” trip to China’s capital city, a delegation of senior business executives led by Chairman Walter Dias was in Beijing to have candid face-to-face discussions with Chinese government officials responsible for making and implementing polices that influence business development in China. Each year, delegates “knock on office doors” at various ministries, think tanks, and other official organizations for hour-long roundtable discussions, and it was no different this year. Despite Beijing’s user-unfriendly traffic, AmCham delegates successfully scheduled and attended 11 meetings with PRC officials, top executives of major Chinese companies, and both the US Ambassador and AmCham-China leadership (see box). “Thanks again to the excellent pre-trip planning by China Affairs Director William Lin and the Chamber staff, we squeezed in a remarkable number of meetings,” says AmCham Chairman Walter Dias, who led the 26-member group to Beijing (see box). This year’s delegation was the largest one yet, and included several business sectors. The highest concentration was in financial services, but it also covered law, education, transportation, and various professional services sectors. Talking points focused primarily on China-Hong Kong issues, especially items found in the sections on Hong Kong & Macau in China’s 13th Five-Year Plan.

Key Priorities China-Hong Kong-United States • Hong Kong’s current political and economic environment; • China Central Government’s mid-term policies on Hong Kong; • AmCham’s role in promoting Hong Kong’s competitiveness; • Foreign investment into China and outbound investment by Chinese enterprises; • Status of US-China BIT (Bilateral Investment Treaty) negotiations; and • Impact of the US presidential election campaign on US-China relations. Hong Kong-Pearl River Delta • Hong Kong’s integration with neighboring cities in the PRD; • Evolution of the “Guangdong-HK-Macau Greater Bay Area” concept; and • Roles of Hong Kong and Macau in China’s 13th Five-Year Plan. Trade & Investment • Current trends in China’s international trade and investments; • AIIB’s long-term vision and priorities for near-term investment;

AmCham delegates including Chairman Walter Dias, center left, in a meeting with Zhou Bo, center right, Deputy Director, Hong Kong Macau Affairs Office of the State Council

biz.hk 11 • 2016

Beijing Doorknock Meetings

AmCham chairman Walter Dias, left, and Liu Xu, Deputy Director, Department of Research Planning and Management, Academy of Macroeconomic Research, National Development and Reform Commission

• Status of the Belt and Road Initiative; • “Made in China 2025” and “Internet +” to promote industrial upgrading; and • Updates on exiting FTZs and plans for new ones. Financial Services • Priorities for expanding two-way opening of China’s capital markets • Measures for improving the Shanghai-Hong Kong Stock Connect operation;

• Zhou Bo, Deputy Director, Hong Kong Macau Affairs Office of the State Council • Liu Xu, Deputy Director, Department of Research Planning and Management, Academy of Macroeconomic Research, National Development and Reform Commission • Wang Jinzhen, Vice Chairman, China Council for the Promotion of International Trade • Joachim von Amsberg, Vice President, Asia Infrastructure Investment Bank • Yang Liu, Deputy Director General, International Cooperation Department, China Securities Regulatory Commission • Li Bo, Director General, Monetary Policy Department, People’s Bank of China • Gao Yan, Vice Minister, Ministry of Commerce • Henry Zhao Xuejun, CEO of Harvest Fund Management • Representatives of China Center for International Economic Exchanges • Ambassador Max Baucus, US Ambassador to the People’s Republic of China • Networking cocktail and dinner with AmCham China leadership and members

AmCham delegates, including Chairman Walter Dias (front row, third from right) and President Richard Vuylsteke (front row, second from left), with Vice Chairman of China Council for the Promotion of International Trade (CCPIT) Wang Jinzhen (front row, third from left)

biz.hk 11 • 2016

• Update on preparatory work for the Shenzhen-Hong Kong Stock Connect; • Orientation of China’s monetary policies over the next year; • Status of RMB internationalization and exchange rate management; and • Policies and regulations on Internet financing and emerging financial technologies.

Candid Comments What turned out to be three recurring themes in the delegation’s meetings were raised by Deputy Director Zhou Bo in the delegation’s opening meeting at the Hong Kong-Macau Affairs Office of the State Council. First, many Chinese government interlocutors mentioned the volatility in Hong Kong’s current social and political environment and stressed the Central Government’s commitment to its “one country, two systems policy” and continued support for the Basic Law. At the same time, they stressed the continuing importance of Hong Kong’s international business environment and the need for stability for continuing success. Second, Zhou emphasized the importance of AmCham’s role in facilitating Hong Kong’s positioning as a premier business and economic gateway into and out of China. He especially referenced the growing trend of Chinese enterprises investing overseas, including the United States, and the strong capabilities for assistance offered by Hong Kong’s mature service industry expertise. Taking full advantage of Chinese enterprises going global by providing international business services, Zhou said, “represents another stage of growth for Hong Kong’s service industries.” Third, Zhou promoted the concept of the “Guangdong-HK-Macau Greater Bay Area” as a China policy direction with strong business development possibilities. He encouraged AmCham to support close integration with the PRD, especially Shenzhen and Macau, to help build “a living and economic circle” like the San Francisco Bay Area in line with this policy. In response to these topics, AmCham delegates stressed the broad spectrum of services that Chamber members can offer to Chinese investors going global and mentioned the frequent trade and investment meetings now being hosted at the Chamber for Chinese government and business leaders. Chairman Dias also pointed out that the Chamber has conducted several delegation trips to PRD cities and that more are planned in coming months to provide continuing updates on city plans and provide business contacts for AmCham members. Dias said that the PRD cities each has different strengths, such as the growing reputation in Shenzhen

In a meeting with Dr Joachim von Amsberg, right, Vice President, Asia Infrastructure Investment Ban

for its R&D and high-tech manufacturing capabilities. At the same time, he noted, considerable synergy with all PRD cities is possible with Hong Kong because of the SAR’s strong universities and world-class services in such areas as finance, law, communications, branding, and transportation and logistics. Delegates also pointed out that as PRD cities continue to grow, they are expected to require expanded services expertise in such areas as healthcare, insurance, and all levels of education and training. Again, Hong Kong has much to offer, especially if market access is broadened. Another item mentioned, derived from AmCham delegation trips to Shenzhen, Qianhai, Zhuhai, and Nansha, was that despite strong city development plans across the PRD, it seemed that each city saw itself in competition with one another and with Hong Kong. A competitive and a cooperative mindset is therefore needed for successful PRD development. As one delegate pointed out, the cities currently have “terrific plans of their own” but are not adequately integrated. It was suggested that the Central Government might promote the idea of “one megalopolis, two systems” for PRD cities development, including integration with Hong Kong and Macau. This could produce stronger synergistic results, especially as closer connectivity between these cities occurs as new bridges and rails are completed. The discussion at the National Development and Reform Commission (NDRC) expanded on the possibilities from PRD integration, noting that “PRD integration of the nine cities, including Hong Kong and Macau,

biz.hk 11 • 2016

2016 AmCham Delegation

Dr Li Bo, Director General of Monetary Policy Department, People’s Bank of China

Gao Yan, Vice Minister, Ministry of Commerce

is still a work in progress. But as 60 percent of FDI and 60 percent of foreign trade of Guangdong come from Hong Kong, it has a significant foundation to build upon. The Central Government is very supportive as this is “the most active economic area of China.” NDRC further noted that “the Greater Bay Area could form a hub of the ‘one belt, one road’ as it has the strongest basis of manufacturing capacity and can therefore become a lead model for other parts of the country.”

New Visit At least half the meetings at Beijing Doorknocks typically involve excellent access to government offices relevant to financial industry interests. Included this year was a first-time stop at the Asia Infrastructure Investment Bank (AIIB), for a productive meeting with Vice President Joachim von Amsberg. The meeting was “suggestion friendly.” Von Amsberg said that the AIIB welcomed private sector input on how best to leverage their resources, such as providing relevant studies and reports on investment

biz.hk 11 • 2016

• Walter Dias, Managing Director, Greater China & Korea, United Airlines • James Sun, CEO, Harvest Global Investments • Richard Vuylsteke, President, AmCham Hong Kong • Jack Lange, Partner, Paul, Weiss, Rifkind, Wharton & Garrison LLP • Matthew Hosford, Chief Risk Officer, Asia-Pacific Region, Banco Santander • Catherine Simmons, Managing Director, Head of Government Affairs, AP, Citi • Patrick Wu, Regional Managing Director, Greater China, Duff & Phelps • Seth Peterson, Partner, Heidrick & Struggles • William Kooser, Associate Dean, The University of Chicago Booth School of Business in Hong Kong • Jenny Wong, Executive Director, Public Policy, Asia Pacific, Time Warner • Patrick Phua, Managing Partner, Beijing, Ashurst • Wayne Arnold, Executive Director, Head of Policy and Regulatory Affairs, ASIFMA • Antony Hung, CEO, Asia Pacific, Banco Santander • Rebecca Lentchner, Head of Government Relations APAC, BNY Mellon • Jack Sun, Vice President, Credit Suisse • Andrew Zhu, Managing Partner of Deloitte Northern China Tax and Legal Services, Deloitte Touche Tohmatsu CPA Ltd • Jenny Cosco, Co-Head of Government Affairs AsiaPacific, Goldman Sachs (Asia) • Ashley Dale, Chief Business Development Officer, Harvest Global Investments Limited • Jianbo Li, Executive Director, Head of International Government Relations for China, JP Morgan • James Chang, China Financial Service Consulting Leader, PwC • Ng Kok Siong, CEO, Sino-Singapore Guangzhou Knowledge City Investment and Development Co Ltd • Nee Pai Chee, Senior VP, Sino-Singapore Guangzhou Knowledge City Investment and Development Co Ltd • Christine Ip, Managing Director & CEO Greater China, United Overseas Bank Limited • Peter Tsih, CEO, Hong Kong, Global Wealth Solutions, Willis Towers Watson

In a luncheon meeting with Dr Henry Zhao Xuejun, center front, CEO of Harvest Fund Management

markets. He said that the “AIIB is happy to collaborate with the private sector as it is a new bank that truly wants to be innovative.” At the conclusion of the meeting, AmCham delegates expressed a desire to establish an ongoing working group with AIIB to carry on in-depth dialogue. It was agreed to follow up on this possibility. Von Amsberg also noted that there is an AIIB event in June 2017 in Korea that will focus on dialogue with private banks, and he urged AmCham members to participate.

Strengthened Cooperation Ever since AmCham Hong Kong reinstated the annual Beijing Doorknock trip in 2010, China Council for the Promotion of International Trade (CCPIT) has been instrumental in assisting the Chamber with appointments. CCPIT has been a tremendous asset as both organizations see positive results from collaboration and further cooperation. This delegation experienced a further upgrade as CCPIT invited nine senior executives from Chinese MNCs to talk about their business development plans. They then joined the delegation at lunch for further informal conversation. This was a new networking opportunity that AmCham Hong Kong hopes to continue. Over the past four years AmCham delegates have been building stronger networks with Chinese businesses through delegation trips to China and through invitations to Chinese government officials to AmCham’s annual China Conference as well as an expanded number of briefings and roundtables. The goal is to give members access to timely information and useful business development possibilities.

Representatives of China Center for International Economic Exchanges on the latest development of China’s economy

“We received very positive feedback from our Doorknock delegates, and now we need to look ahead on offering strong, continuing services them and our members,” says Dias. “I hope many more will join us on our upcoming PRD delegations, in-house roundtables, and future Beijing Doorknocks.” The few days in Beijing represent but one step in a year-round program of engagement on China business and economic issues. In 2017, AmCham will follow up on many of the ideas and initiatives that were raised during the Beijing meetings and will work to translate them into action. Note: The next AmCham delegation trip is scheduled for Shenzhen on 9 December 2016. Contact William Lin for details (wlin@amcham.org.hk).

biz.hk 11 • 2016

THE EXPERTS IN INTERNATIONAL BACCALAUREATE OPENING SEPTEMBER 2017

DAILY OR BILINGUAL CHINESE

STANDARDIZED MAP® TESTING

ACADEMIC STEMinn PROGRAM

OPEN HOUSE | DECEMBER 8 & 9 We are pleased to launch a new campus in Hong Kong, September 2017, following our huge success at Stamford American International School in Singapore, which today has over 3,000 students from 70 nationalities. >L VɈLY H YPNVYV\Z Z[HUKHYKZ IHZLK J\YYPJ\S\T MVY Z[\KLU[Z MYVT 5 to 18 years, graduating students with the International Baccalaureate Diploma* to 1st tier universities worldwide.

:[HTMVYK (TLYPJHU :JOVVS /VUN 2VUN ^PSS HWWS` [V [OL 0U[LYUH[PVUHS )HJJHSH\YLH[L MVY WYVNYHT JHUKPKHJ` PU +LJLTILY

CHINA BUSINESS

For Global Peace and Prosperity Last year, US-China trade exceeded US$600 billion; more than 300,000 Chinese students studied in the US; and Chinese cross-border investment directly supported a combined 1.7 million US jobs. In a new era of Sino-US relations – signified by global initiatives such as the Paris Climate Agreement but also disputes in other areas – former Secretary of State Henry Kissinger reflects on his experience and puts the bilateral relationship in perspective in a webcast for the 10th annual CHINA Town Hall organized by the National Committee on US-China Relations (NCUSCR)

By Kenny Lau

he year was 1971, and it was a secret US mission to re-engage China after nearly a quarter of a century of detachment following the end of the second world war. “The United States and China had not had diplomatic relations for 25 years; there had been an embargo from

the US side for buying any Chinese goods; and we had been involved in the Korean War [as their enemy],” former US Secretary of State Henry Kissinger described in a recent webcast for the 10th annual CHINA Town Hall moderated by President of the National Committee on US-China Relations (NCUSCR) Stephen Orlins.

“There had been constant tensions between the US and China,” recalls Kissinger who served as a special envoy on behalf of President Richard Nixon on an unannounced trip to meet with Chinese Communist Party Chairman Mao Zedong and Premier Zhou Enlai in 1971. It was a time when US diplomats could only meet with their Chinese

biz.hk 11 • 2016

“you can’t do all the things you ought to do to have a peaceful world or to get the participation of an important nation when China is excluded from the international system,” he reasons. “I had a 48-hour window for the mission, and it was under great time pressure. I did not know what I was going to find; the Chinese did not know what I was going to say. Zhou and I conducted all the negotiations, and it ended with an invitation from the Chinese government for President Nixon to visit China.” The Soviet Union was also an important factor at the time: from the US perspective, “it had acted as an adversary, and we wanted to show the world that we had other options and that we were trying to broaden international contact,” Kissinger explains. “It was important for China because Soviet Union had moved over 40 divisions [of troops] to the Chinese border. The Chinese in 1969 had reasons to fear or expect a full-scale attack, and border incidents had already started. Both of us had a Soviet reason for opening discussions.”

History in the making

Henry Kissinger

counterparts in Warsaw where a total of 126 meetings took place, but each of these meetings would end in less than an hour. “In fact, it took us three years to figure approaches to China that both sides could trust and was technically feasible.” The purpose was to re-establish diplomatic relations with China because

biz.hk 11 • 2016

Throughout his career spanning decades, Kissinger has met with more Chinese political leaders than any other US diplomat, including all five generations of Chinese leadership. China was more concerned with ideology than with economics under Mao Zedong; doors opened under Deng Xiaoping; China was “brought into the international economic system” under Jiang Zemin, but “took a pause from big activities internationally” under Hu Jintao; reform more aligned to the ideology of the Mao period transpired under Xi Jinpin. “Every Chinese leader I’ve met, in a way, is more conceptual than most American leaders. They think in a conceptual way of policy as a process rather than as a program,” he notes. “A reason is that Americans believe a stable world is normal; when the world is instable, there is a problem; when

there is a problem, you solve it and go onto something else. Chinese leaders think a problem is an admission ticket to another problem. There are significant differences in that sense.” The historic meeting in 1971 between Kissinger and Premier Zhou was without script or camera. “When I first went to China, I knew very little about the country,” Kissinger says. “We would start in the afternoon and meet for five to six hours, and Zhou did not seem bothered by any other business. We had long periods of discussion; we both came to the conclusion that we should be honest with each other about our directions and purposes.” The most important lesson from the period in retrospect was that “we have to understand China has a different history and a different culture from the US,” he reflects. “We have lived securely while China has always had enemy all around it. It is important for the people of both sides to get to know each other. It is extremely important for the political leaders of both sides to understand the way of thinking of the other.” What followed was a series of events which had a critical role in thawing Sino-US relations: an invitation from the Chinese government for the US Table Tennis Team to appear in a “friendly” tournament in 1971 (famously known as Ping Pong Diplomacy); another for President Nixon to visit China in 1972; and NCUSCR co-hosting the Chinese Table Tennis Team NCUSCR in what was the first US visit by a delegation from the People’s Republic of China. “We have to understand that, prior to this, there had been no contact, no visitors from China to America, and no visitors from America to China,” Kissinger says of the historic significance of the events. “The Chinese suddenly invited the US Ping Pong Team for a tournament. It was unexpected for us and for the team. It was a symbol of having established people-to-people contact between the US and China, and it was one of the breakthroughs of that period.”

To the credit of President Nixon, Kissinger believes the fact that “we did not speak so much about differences but spoke of our objectives and of ways to see whether these objectives could be harmonized” was critically important in forming a constructive dialogue. “At these leadership meetings, we began percolating down to people and how people could have experiences and understand the way of thinking in each other’s country. That was a crucial element.”

Pivot to Asia The US relationship with the Philippines, a US treaty ally, has recently become precarious with an announcement ending joint military exercises in the Southeast Asian country. The question, however, is a matter of who gains the most from these exercises, Kissinger stresses. “The Philippines have an alliance with the US not as a favor to the US but because they think, for their own security reasons, they are safer by having a relationship with the US.” “If they have a different view, it is their privilege. It is what countries do,” he says. “I don’t consider a visit by the Philippines president to China as abrogating the US alliance. And if the Philippines want a closer relationship with China, that’s not something to which the US should object. If it goes further and affects other aspects of the alliance, then we’ll have to deal with it when it arises.” And “in the handling of issue in the South China Sea, both the US and China are making military moves,” he adds. “But when we put TV cameras on military warships when they cruise around the sea, we are sending a challenge that I think we should avoid. The Chinese, at the same time, have to consider our sensitivity.” China has also remained fairly tense with Japan, and South Korea will almost certainly be provoked to react if North Korea builds up a nuclear force and acts as a threat to the regional security. “Given the geographical proximity of North Korea and China,

any weapon we put into South Korea to help our allies can have implication for China,” Kissinger points out. “Likewise, if missiles could be removed from North Korea, countermeasures in South Korea would have a different character and could be subject to negotiation.” The acquisition of nuclear weapons by Japan and South Korea, on the other hand, would increase the level of tension and lead to a military arms race, he cautions. “We certainly should not bring it about by destroying the existing arrangement we have [with our allies] and telling these countries that they’ll have to depend on their own technology, especially they have the technology from which they could move into nuclear weapons with relative ease.” “It would lead to an outcome we should be very eager to avoid,” he adds. “It is a statement that should not have been made because it is not helpful to the situation.” Cross-strait relations are an unsettled issue that only the future can decide. That is, whether interaction developed between both sides of the Taiwan Strait will grow stronger and stronger, Kissinger believes. “When President Nixon was in China, we accepted the principal that there is only one China and that we weren’t supporting a Two-China solution. The Chinese accepted the principal that this would take time to evolve.”

Trade and public sentiments The Trans-Pacific Partnership (TPP) comprising 12 countries in a multilateral free trade agreement pending Congressional approval is an important piece of legislation because the US should be part of an organization of non-military relationships with Asia, Kissinger believes. “The US should be part of this structure through a partnership to prevent a split between Asia and the US.” “China is not yet a party of TPP, but it should be. I am convinced we are at a stage where China is rising and

where the US is evolving a new kind of policy,” he says. “If the relationship were taken as one of constant adversary, then it would lead to a crisis sooner or later. So, I favor any reasonable relations that would strengthen ties across the Pacific and create, if possible, an organic relationship between the US and China.” “If America were to become a protectionist country – which I don’t think will happen, but assuming it does and other countries follow in a trade war pattern – then the benefits of global trade will disappear,” he adds. “The standard of living everywhere will be affected. That would be an unfortunate outcome.” In a year full of campaign rhetoric leading up to the US elections in November, China has been a target of persistent bombardment of vocal attacks; while they may be discarded simply as rhetorical statements, they may also pose a risk of doing damage to the Sino-US relationship. “The Chinese understand that is political campaign on one level; but they would also question the notion that these statements get made because there must be an audience for them,” Kissinger says. “If there is a very big audience for anti-Chinese statements, regardless of what the US administration tells them, they may not be able to control it,” he further says. “Irresponsible statements about China can’t always be ignored as being campaign rhetoric, and we have to develop a national ability to bring up published statements in line with our national [interest and priorities].” What’s certain, however, is the consistency of US foreign policy towards China since 1971. “Every US administration has supported the statement that relations between our two countries are key to peace and progress in the world. There hasn’t been a big difference between Democratic and Republican administrations in the pursuit of that objective,” Kissinger says. “I am optimistic that, after the election, US policy and major goals will be pursued.”

biz.hk 11 • 2016

TRADE & INVESTMENT

Land of

Smiles and Shadows

Thailand’s shadow economy – the non-regulated, non-taxed part of its national economy – is among the largest in the world. Accounting for roughly half of Thailand’s official GDP over the last two decades, and largely responsible for the country’s remarkably low unemployment rate, the shadow economy appears to be not so much a concern for Thailand as it does a necessity

By Jennifer Khoo

biz.hk 11 • 2016

Thailand’s ubiquitous tuk tuks

All photos courtesy of Pixabay

biz.hk 11 • 2016

oadside noodle stalls littered with fold-out tables and low plastic stools. Street vendors selling packets of fresh cut fruit. Pushy tuk-tuk drivers; thronging night markets; mobile cocktail carts that disappear when the sun rises. From women touting massage services on the beach, to more aggressive propositions amid smoky nightclubs; the list goes on. Anyone who has visited Bangkok – or anywhere else in Thailand for that matter – will be familiar with many of the scenes just described. What is less often acknowledged, is that these same scenes which give the Land of Smiles its personality, are just some of which comprise the beating heart of its shadow economy.

Noviscape Consulting Group (NCG), the business landscape in Thailand is dominated by small- and medium-sized enterprises (SMEs), which – generally speaking – don’t generate enough high-income employment opportunities to attract sufficient legal workers to the formal sector. The Thai government responded in 2013 by implementing a daily minimum wage policy of 300 Baht

Dark phenomenon Shadow economies, also known as underground, black, or informal economies, are broadly defined by scholars as “those economic activities and the income derived from them that circumvent or otherwise avoid government regulation, taxation, or observation.” They refer to, in other words, the legal and illegal activities that bring in revenue “off the books.” While this phenomenon appears in every country to varying degrees, it is hugely apparent in Thailand. Shadow market activities – both legitimate and illegitimate – provide a steady source of employment and income for many Thais. This largely explains the country’s unusual and consistently low unemployment rate of less than one percent – even lower than wealthy neighboring Singapore – despite the estimated ten percent of its population who live below the poverty line. In Thailand, street vendors, tuk-tuk drivers and other informal workers of that nature are largely counted as employed under government statistics. So great is the impact of shadow activity on Thailand’s economy that it accounts for over half of the nation’s GDP. According to research published by Friedrich Schneider, economics professor at the Johannes Kepler University in Linz, Austria, income from Thailand’s shadow economy has accounted for as much as between 40 and 70 percent of the country’s overall GDP over the last two decades. The topic is a sensitive one in Thailand; deeply pervasive and yet rarely discussed. But the following questions persist: What are some of the driving forces and enablers behind Thailand’s shadow economy? What are the implications for the country and the wider business community?

Labor economics According to a 2012 report by Bangkok-based firm,

Street food markets coming alive at night

(approximately US$9), which unsurprisingly didn’t have the intended effect. Instead, the announcement was met with protests and criticism by SMEs in many private sectors who argued that they, due to their smaller sizes, weren’t generating enough revenue to bear these additional employment costs. Such conditions have provided fertile ground for shadow activity to flourish, inevitably attracting illegal immigrants from around the region who enter Thailand looking for work. Barred from official employment, willing to work for much less, and exempt from social security, these workers are funneled straight into informal employment. The demand-supply cycle of cheap – albeit illegal – labor perpetuates Thailand’s shadow market.

biz.hk 11 • 2016

Beach massage huts

benefit schemes and wage requirements, and are shunning formal employment in favor of starting businesses informally of their own. Today, informal work in Thailand is not just reserved for the poor. According to NCG, the business of street vending began attracting workers from the country’s educated middle class who were laid-off from their jobs during the 1997 financial crisis. NCG estimates that 1.1 million Thai employees were laid off between 1997 and 2001, and at the same time, many small investors transformed themselves into self-employed entrepreneurs. Former stockbroker and multi-millionaire Sirivat Voravetvuthikun did just that by becoming a sandwich vendor on the streets of Bangkok after losing his fortune to the stock market crash. His business flourished, and he slowly began to recover his losses, paving the way for other would-be entrepreneurs from Thailand’s educated middle class. Many indeed followed suit, marking the starting point of middle class street vending as an occupation.

Government response

Vendors selling fruits at Bangkok’s floating market

The middle class Possibly the biggest misconception about work in the shadow sector is that all participants have been forced into it by desperate or unfortunate circumstances. While a large number certainly are, many actively choose informal work for a variety of reasons, including the possibility of higher earnings than in formal employment, and the independence of being selfemployed. In fact, an increasing number of people from Thailand’s middle class are entering the fray. They, like the working class, have become disenchanted by the government’s continuous promises to improve pension

biz.hk 11 • 2016

Since shadow activity takes place “off the books,” naturally one would wonder how such a large percentage of the national population are able to dodge tax payments (among other legal obligations), and how the government has responded to this endemic. Ian Khoo, Director at Bangkok-based legal and business advisory services provider, ClasG, believes that rampant shadow activity in Thailand is a result of the government’s inconsistent approach to law enforcement. “Like most developing countries, tax collection [in Thailand] is not as efficient as compared to other developed parts of the world,” he says. “Thailand’s legal system is based on civil law which mainly relies on the interpretation of Codal provisions that may be widely drafted to allow for flexibility. “So authorities here probably have more discretion when it comes to interpreting and applying the law, and as a result, fiscal enforcement may not be consistent across the board,” he adds.

Implications for Thailand Many argue that Thailand’s shadow sector has not only given many underprivileged Thais a chance at a better quality of life, but also encourages entrepreneurship and fosters a healthy sense of competition among the local business community. In theory, as more competition is introduced into the shadow market, government standardization should see overall business standards rise, such as food hygiene and quality within the street vending industry.

Economic penumbra Shadow economy as % of official GDP* 0

Nigeria Thailand Egypt Philippines Mexico Russia Malaysia South Korea Brazil Greece Hungary

Implications for foreign businesses

Italy Spain Belgium Argentina Sweden Denmark Canada Czech Rep France Germany Australia Netherlands Britain Hong Kong Austria United States Japan Switzerland

*Developed economies 1999, estimated using the currency-demand approach. Emerging economies various years 1900-95, estimated using the physicalinput method.

Source: The Economist

Many hope that progress at grassroots level will have a ripple effect across other layers of the economy, which will help to drive Thailand forward. Practically speaking however, players in the shadow market still have a long way to go before they become key economic drivers that induce government participation. “Businesses in the shadow economy do not have access to credit from banks, and usually have no choice but to resort to loan sharks for financing. So it’s very hard to grow and build scale within the shadow economy. What you are left with is a business landscape that is littered with ‘mom and pop’ style players, compared with so called ‘first world’ economies in which the business landscape is much more institutionalized,” says Khoo. Whatever opinions people may have about the shadow sector, the reality is that it has provided a crutch for Thailand, without which the country wouldn’t be where it is today, economically and characteristically. It is blindingly apparent that many businesses operating within the shadow economy are helping to support the “official” economy. “Take tourism as an example, a huge industry here, which is being supported by a range of businesses from famous street food vendors to various recreational outlets,” says Khoo.

For foreign businesses looking to enter the official Thai market, Khoo reassures that the country’s shadow economy is of little consequence. “In general, the shadow economy should not have too much of an impact on foreign businesses and investors looking to legally do business in Thailand. The Foreign Business Act of 1999 regulates all foreign business activity in Thailand, listing out which business activities allow for foreign majority participation,” he points out. “What you find is that many of the business activities found within the shadow economy do not allow for foreign majority participation anyway. Thus, any impact between overlap of shadow and formal business activities will be largely felt by local Thai businesses,” he adds. Although the shadow economy has played an enormous role in shaping Thailand’s current economic landscape, no one can say for sure how long it will continue to hold a key place in the country’s future. But uncertainty following the Thai king’s recent passing, piled heavily on top of the nation’s deeply divided political atmosphere, will likely continue to generate negative consequences for the country’s overall economic performance; in which case it will need all the help it can get. For now, at least, it pays to do business in the shadows.

biz.hk 11 • 2016

APPAREL & FOOTWEAR

2016 and Beyond: Challenges in the Global Supply Chain With the Trans-Pacific Partnership (TPP) “hanging on a limb” at the tail-end of a two-year congressional session amid a US presidential election, it is not a good day for the world of international trade. Rick Helfenbein, President and CEO of the American Apparel & Footwear Association (AAFA), shares with AmCham his perspectives drawing upon his Washington, DC perch and his insights into the current political world which will define the commercial realities for those in the industry

By Kenny Lau Rick Helfenbein

he landscape of the global supply chain and international trade is about to undergo a drastic shift of momentum. That is largely because of the US elections in November and subsequently a change of US administration promising to revamp the current national policies on global trade. At the time of writing, it remains unknown which direction US policy is likely headed; what’s clear is how campaign rhetoric has already “hurt” trade. For those engaged in the business of sourcing and manufacturing of textile, apparel and footwear for the US market, “it’s best for you to pick up the pieces, not

expect any new legislation, and figure out how you can best utilize what the USA already has in place,” suggests Rick Helfenbein, President and CEO, American Apparel & Footwear Association (AAFA), speaking in a recent AmCham luncheon two weeks before the US election day. “This is an unusual election,” he says. “I actually know Donald Trump and I actually know Hillary Clinton. The Trump you see on TV is the same Trump you meet in person; there is no difference. The Hillary you see on TV is not the same Hillary you meet in person. Hillary is warm and friendly. When she gets on TV, she needs to be tougher, and a lot of people don’t like that.”

biz.hk 11 • 2016

The political environment The question is why trade has suddenly become such an important part of an election cycle. “Essentially, we’ve got a lot of empty buildings and a lot of people looking for jobs in the US,” Helfenbein explains, noting China has been a target of presidential campaign rhetoric over and over in the past months. “Everybody has been led to believe that the word ‘trade’ is synonymous with the words ‘job loss’ in America. That bodes well in campaign rhetoric because people see it with their own eyes.” “But that’s not what’s happening in America,” he points out. “Essentially, an economy matures and gets industrialized, and then it goes onto the next stage. America is at level three right now, and we have become a services-based economy. The fact is that jobs have left and have been replaced by different jobs. Unemployment is below five percent, and that is not so bad. But many are led to believe it is bad, and it has gotten a lot of attention from people.” The Trans-Pacific Partnership (TPP) is a free trade agreement among 12 countries along the Pacific Rim and is by far the most comprehensive on international trade to date. It is an agreement pending Congressional approval – something President Barack Obama has been pushing for several years. Were Secretary Clinton elected, she would most likely continue to work with environmental and labor groups on the issue of TPP, Helfenbein notes. “The whole point is, she is going to be tougher on trade and will take a trade time-out. What she’s saying is, let’s slow down and see if trade deals are being enforced.” he explains. “That’s because we have a lot of trade deals but sometimes lack enforcement. Hillary wants a trade prosecutor to look at the trade deals if there are violations, and she wants to make sure that rules are enforced.” “Trade deals aren’t perfect; they are never perfect,” he stresses. “But at least you can make them work. That’s what Hillary is saying. She talks about being a smart trader who wants fair trade, and she’s got a pro-fair trade voting record. Particularly on TPP, she says it must create jobs for America and raise wages for Americans.” On the other hand, if Donald Trump were elected, it would mean “trade deals are going into the garbage can,” Helfenbein believes. “He talks about fair trade, but he has never been in office; he says TPP is simply a horrible deal, and he says we are going to stop this. These are words that would not help the world of trade.” “Trump also likes to talk about things like the North American Free Trade Agreement (NAFTA), and that it was the worst thing that happened in America,”

biz.hk 11 • 2016

he adds. “What happened under NAFTA was: trade between the US, Canada and Mexico quadrupled in 23 years, and US exports tripled. Yes, we lost jobs; but we also gained as many jobs as we lost.”

The significance of TPP AAFA has been a strong supporter for the congressional ratification of TPP. That’s because it would provide “significant benefits” to American families every year by reducing the costs of buying necessities for items as simple as clothes and shoes. From a business standpoint, it would mean much lower tariffs for the US footwear, apparel, and travel goods industry in what proponents say is a “once-in-a-generation opportunity to reduce costs and open new markets for US brands and retailers.” Comprising 12 economies – Australia, Brunei, Top Ten Apparel Canada, Chile, Japan, Export Countries Malaysia, Mexico, New Zealand, Peru, Singapore, to the US the US, and Vietnam – TPP 37% China would mean a single regional trade area of 800 million 11% Vietnam consumers and more than 6.5% India 40 percent of the world’s GDP. According to AAFA, Bangladesh 5% duty savings from reduced 4.6% Indonesia tariffs for the US apparel and footwear industry 4.1% Mexico would be more than US$1 billion in the first year 2.4% Honduras alone, and there would be 2.3% Cambodia even more savings over time as more TPP provisions are 2.1% Pakistan gradually phased-in. 1.8% Sri Lanka On the consumer side, it would mean savings from Source: AAFA “price breaks” following a deduction of more than US$2.8 billion of duties that are currently levied on US imports of footwear, apparel, and travel goods; for more than four million American workers in the industry, it would mean a much broader market and increased US competitiveness on a more level playing field – which could lead to more US jobs throughout the supply chains of all US brands in the forms of “distribution centers, design houses, retail stores, as well as company and regional headquarters.” An important aspect of TPP is the protection of the rights of workers in signatory countries. That is to “ensure the safety and empowerment of workers who make the products, and to source products in a sustainable manner.” These are provisions of TPP strongly supported by AAFA, because they are good for the

environment and for the welfare of laborers. More importantly, they are aligned with the values of sustainability as well as corporate social responsibility many brands have made a core part of their business models. So, what are the chances of ratification of TPP in the lame duck session of the 114th Congress? The short answer is, not very likely. It is now a piece of proposed legislation “hanging on a limb” at the tail-end of a two-year congressional period. “Each congress lasts two years, and everything gets erased and you start all over again,” Helfenbein points out. “Lame duck sessions come really fast, and they have thousands of things that they have to do, including financing the government.” “If TPP doesn’t have everything lined up and all the controversies solved, you can’t ram it down the throat in a four-week period; it is just not going to happen. It is a whole world of realization that there are unsolved issues and that there isn’t a lot of time to get it done,” he says. “Would you say it is impossible? It is possible, but there will be major deal-making. And keep in mind that some candidates running for Congress will have lost, and it will not be easy to get something done.”

Market outlook In terms of source countries from which apparel is destined for the US market, China remains on the top (37%) while Vietnam is second (11%); together they make up nearly half of the US market share. Others include India (6.5%), Bangladesh (5%), Indonesia (4.6%), Mexico (4.1%), Honduras (2.4%), Cambodia (2.3%), Sri Lanka (1.8%). In other words, almost 80 percent of all apparel in retail stores across America come from 10 countries.

“China and Vietnam will remain as major exporters of apparel to the US market, although the makeup between the two will adjust. The difference TPP will make is a further shift from China to Vietnam,” Helfenbein suggests. “The question is, when you can get everything you need from China and Vietnam, why would you want to source from all over the world? China and Vietnam have had the market to the US, and it hasn’t changed in the last five years.” The key to the value chain, he explains, is productivity, and it is a critical reason that China has been dominant in the world of apparel and footwear manufacturing. is the word productivity. “We source from different countries around the world and often chase the lowest costs possible to see who’s cheaper. But ‘cheaper’ doesn’t matter anymore. As you are dealing globally, it is not just where you sell but, very importantly, how you sell.” “Let’s suppose that in China you are paying a worker 28 dollars a day, and if I go to Bangladesh, I can make it 6 dollars a day. The worker in China, however, can make 40 pieces of garment a day; the worker in Bangladesh can only make 10 pieces. And your lead time is two months in China vs four months in Bangladesh. That is simple math, and that is what some people don’t understand. Cheaper is not always better, and that’s why China is so powerful.” Another major issue in the global apparel industry is the protection of intellectual property (IP) rights. “Counterfeit goods cost our industry billions of dollars every year,” Helfenbein says, noting a new report from the Organization for Economic Cooperation and Development (OECD) that the manufacture and sale of counterfeit goods today is almost a half-trillion-dollar industry. Footwear, apparel, and fashion accessories are also among the most seized counterfeit goods in the world. According to a recent report by the US Customs and Border Protection (CBP), clothing, footwear, and travel goods made up 22 percent, 10 percent, and seven percent, respectively, of all of CBP’s seizures of counterfeit products in the fiscal year of 2015. “Counterfeit product hurts sales and counterfeit products made in questionable working conditions can damage a brand’s reputation, putting both consumers and workers at risk,” Helfenbein emphasizes. That’s because “facilities that make knock off shoes, clothes, and accessories do not typically meet the high standards or comply with the regulations upon which [reputable brands] insist to ensure product safety, worker safety, and workers’ rights.” “It is not a good day for retail if lots of products are counterfeit,” he stresses. “We understand the whole thing about America losing jobs to China as highlighted in campaign rhetoric, but if you are trying to steal our IP, you are going to have a big fight, and we are not going to sit down and let that go easily.”

biz.hk 11 • 2016

AMERICAN TOPICS

US PRESIDENTIAL ELECTION OF 2016

More than 600 people, including members of the Hong Kong community, students of local and international schools and representatives of media outlets, showed up to watch the 2016 US presidential election at AmChamâ&#x20AC;&#x2122;s Election Central as results of the electoral votes from each of the 50 US states rolled in live on CNN. Organized by AmCham and made possible by the generous support of sponsors, Election Central is a signature event once every four years promoting American democracy and an opportunity for the local community of Hong Kong to experience the journey of selecting the next US president as American voters cast their ballots.

biz.hk 11 â&#x20AC;˘ 2016

VENUE SPONSOR

NEWS PARTNER

biz.hk 11 â&#x20AC;¢ 2016

EXCLUSIVE MEDIA PARTNER

IN-KIND SPONSORS

TRANSPORTATION SPONSOR

SUPPORTING ORGANIZATIONS

biz.hk 11 â&#x20AC;¢ 2016

EDUCATION

Shaping Curious, Critical Minds The American School Hong Kong (ASHK) opened its doors in Tai Po last month under the stewardship of School Director John Jalsevac. Under its STEAM curriculum, ASHK boasts an innovative teaching approach combined with a rigorous daily Chinese-language program, to equip students with the critical thinking skills necessary for success in the 21st century

By Jennifer Khoo

here’s a new kid on the Hong Kong international school block. Opened in October this year, the American School Hong Kong (ASHK) is an American-style international school run by Dubai-based group Esol Education, the world’s largest operator of international American schools. ASHK’s day-to-day operations are overseen by School Director, John Jalsevac, who tells us more about the latest addition to Hong Kong’s international school scene. Jalsevac, a Canadian with over 30 years of education experience in Hong Kong and abroad, is a keen advocate of a balanced, holistic approach to education, i.e. that learning enjoyment goes hand in hand with achieving academic excellence. This philosophy is strongly reflected in ASHK’s teaching methods and environment. “We aim to build a vibrant school community with strong student-teacher relationships, and recognize the importance that genuine happiness has in advancing the learning process,” says Jalsevac. “At the same time, we are aware that a considerable body of research centered around effective schools has demonstrated that these schools are characterized as having high standards and high expectations,” he adds.

Man on a mission With over three decades of experience at reputable schools both in Hong Kong and abroad, Jalsevac was a

biz.hk 11 • 2016

natural choice for the position of School Director – one he clearly feels passionate about. While his role predictably involves tasks associated with building ASHK’s brand; establishing a strong sense of community within the school; ensuring that students are successful; developing ASHK’s curriculum and program plans; and supervising the business and operations tasks, Jalsevac says that his role fundamentally is to “get people to go with you where normally they wouldn’t go without you.” Jalsevac’s motivation to instigate change started with an internal recognition that “all individuals have talents, knowledge and skills and are capable of offering meaningful contributions toward a desired goal.” With this in mind, Jalsevac says he has all he needs to enable or empower people – staff and students – in whatever they wish to achieve on behalf of the school. Jalsevac feels the role of School Director requires him to be a jack of all trades. “To lead and provide guidance, but also act as a role model, celebrate success, lend support with all types of tasks or challenges, challenge where necessary, and find opportunities in all situations,” he says.

biz.hk 11 • 2016

Skills for the 21st century From his many years of experience, Jalsevac has gleaned a wealth of insights about schools in the traditional education sector, including about what has worked well, and areas for improvement. Referring to some of the schools where he previously worked, Jalsevac says he has witnessed considerable

John Jalsevac

and successful focus on the development of the whole child – academically, socially and emotionally. “I would argue that these schools have also paid significant attention to the development of higher order critical thinking skills in students such as creativity, analysis, synthesis and application,” he says. “But for some schools, holistic development is still a growth area, as they transition from a majority focus on knowledge to a more integrated program that combines 21st century skills, such as critical thinking, with knowledge,” Jalsevac explains. The goal, he says, is to channel students into becoming self-actualized, critical thinking problem solvers. Schools that focus on these skills, including, and especially, creativity and innovation, are preparing students for life after education, he believes. ASHK intends to do just that, via its STEAM program, which encourages critical thinking by students and a practical, hands-on approach. “We are committed to providing a program of study that connects students to their learning so that they see themselves in what is taught, how it is taught and how it applies to them and the world at large,” says Jalsevac.

Full STEAM ahead ASHK’s STEAM program is an integrated approach to learning that uses Science, Technology, Engineering, the Arts, and Mathematics to guide student inquiry, collaboration, and critical thinking. Under this program, ASHK’s curriculum provides activities that foster true innovation that comes with combining the mind of a scientist with that of an artist. Jalsevac says the approach is very hands-on in

nature and requires students to be active and engaged, including being frequently called upon to gather supplies, construct models, and test designs. Through STEAM, students will develop ownership and responsibility for their education as they face many time management and decision-making challenges. Another aim of the STEAM program is to help students become effective at teamwork, flexible thinking, and creative problem-solving. Emphasis will be placed on student collaboration, based on the rationale that teams tend to innovate faster, see mistakes more quickly, and find better solutions to problems – observations supported by various studies on the subject, says Jalsevac. Giving a few examples of how STEAM principles will be practically implemented at ASHK, Jalsevac says, “Using an inquiry approach, teachers will begin a lesson by discovering what students already know about a given topic. Students will then be placed in teams and presented with a problem that may require a design solution, construction of a model, or fabrication of a final product. “For example, in first grade, students will be able to provide evidence that vibrating materials can make sound and that sound can make materials vibrate,” he continues. “To accomplish this objective, students participate in activities that show the effect of sound on

biz.hk 11 • 2016

various materials. Students will then use their observations to create instruments.” “Fifth grade students will be able to support the argument that the gravitational force exerted by Earth on objects is directed down. Students will use their knowledge to design parachutes and measure how well they delay gravity’s force,” he adds.

Language of the future In addition to a holistic teaching approach with a focus on STEAM principles, ASHK’s US Common Core curriculum is supplemented by a daily Chinese (Mandarin) program offering both Traditional and Simplified Chinese writing options. Explaining the rationale behind ASHK’s emphasis on Chinese language learning, Jalsevac says, “We believe that meaningful and early exposure to more than one language will provide our students with

biz.hk 11 • 2016

advanced cognitive development. Mastery of Chinese and English is the goal for every student.” Additionally, fluency in a second language indicates aptitude, which could help a student stand out during the university admissions process. Many university admissions officers tend to prefer well-rounded candidates who can demonstrate their interests outside of school, says Jalsevac. ASHK’s focus on the Chinese language has as much to do with its geographical relevance as it does with its global relevance. Officially the world’s most widely spoken language, Mandarin is certainly useful to know today, and in the future.

Speaking of the future, Jalsevac shares upcoming plans which include the introduction of ASHK’s high school program, and launch of the International Baccalaureate Diploma (IB DP) program within the next two years. “It is our view that the IB DP is the best university preparatory program in existence and provides for students a gold-standard passport for admission into highly selective universities and colleges worldwide,” says Jalsevac.

Working smarter Jalsevac says the ability to memorize facts and information is not the most important skill in today’s world. Instead, students need to have a greater understanding of how to obtain and make sense of information, i.e. placing less emphasis on “what we know” and more on “how we come to know.” To do this, students should be involved in the construction of knowledge through exploring, questioning, experimenting, collecting data, making predictions, testing theories and finding solutions. Active student engagement is key during the education years, he believes. Finally, Jalsevac advises parents to look for a school that is student-centered and inquiry-based, like ASHK, where students can develop those ever-important critical thinking skills for success in the 21st century. Quoting an old adage to drive the point home, Jalsevac says, “Tell me and I forget, show me and I remember, involve me and I understand.”

biz.hk 11 • 2016

Untitled-1

How do you define an AWA Woman?

You don’t. We come from more than 30 different countries. We’re artists, athletes, moms, lawyers, soldiers, bookworms, entrepreneurs, adventurers, doctors, dragon boaters, foodies, hikers, students, scuba divers, bankers, young and not as young. It’s hard to describe an average AWA woman because we’re anything but average. We are glad to reach out a helping hand, either to the local charities we support or to each other when the need arises. Whether you want to save the world or just make some new friends, there’s a place for you in AWA.

We can’t wait to meet you!

Join Today

http://awa.org.hk

Untitled-1 1

6/5/16 8:20 pm

INDUSTRY FOCUS

Legal Briefs: International law firms in Hong Kong on global trade, litigations, mergers & acquisitions, investment opportunities and multi-national business transactions By Jennifer Khoo

Akin Gump Strauss Hauer & Feld Akin Gump partners specializing in global trade, Stephen Kho and Tatman Savio, have spoken on the Trans-Pacific Partnership (TPP) trade agreement in an article by The Asian Lawyer, “TPP’s Uncertain Prospects Weigh on Asia-based Lawyers,” which noted that if the United States were to not ratify the TPP, it would render the trade deal a failure. Savio said that a failed “Akin Gump partners TPP would be a lost opporspeak on TPP prospects tunity for Vietnam and Malaysia, given that neither in trade journal The country has a bilateral trade agreement with the United Asian Lawyer.” States, but also noted that the impact on countries with which there are existing trade deals, such as Australia and Singapore, would be less. “China’s regional strength may be emboldened, if the TPP is not ratified,” Savio points out. “At a minimum, China may capture opportunities and relationships that the US might have otherwise leveraged to the extent that TPP had entered into force.” However, Kho believes, “The Asia region will continue to be a dynamic area for future global trade, and the setback of TPP non-implementation will not change this.”

AlixPartners Hong Kong According to a new study by AlixPartners, restaurant chains and their suppliers across the world are facing complex, often-conflicting demands from today’s evermore health- and technology-conscious consumers who are also, in many cases, more value-conscious than in recent times. At the same time, opportunities await those in the industry who can uncover international growth opportunities, focus on the right technology and maximize supply chains to help them profit from such trends today, such as “on-the-go” dining and a growing demand for sustainable ingredients and supply practices. “Restaurant chains The report includes a face complex demands survey of 4,600 diners from nine industrialized from today’s diners, countries – Brazil, China, AlixPartners finds.” France, Germany, Italy, Japan, South Korea, the United Kingdom and the United States (where 515 diners were surveyed). Also, more than 60 C-level executives from more than 40 different restaurant concepts based in the US (with total revenues over US$90 billion in 2015) provided their insights on international restaurant development as well as global consumer issues.

biz.hk 11 • 2016

Allen & Overy Allen & Overy Hong Kong partner and Global Head of Arbitration, Matt Gearing QC has been elected as the new chairperson of the Hong Kong International Arbitration Centre (HKIAC). He will take on the role in 2017, succeeding Teresa Cheng SC who has served as HKIAC Chair since 2014. Gearing has been actively involved with the “Allen & Overy HKIAC for a number of Hong Kong partner years and is currently an HKIAC Council member elected as HKIAC and Chair of the HKIAC’s Executive and Proceedings Chairperson.” Committees. He also led the revision of the HKIAC Rules as head of the drafting committee. Commenting on his election, he said, “It is a privilege and an honor to be elected Chair of the HKIAC. Teresa has done a fantastic job taking the HKIAC to a new level of success over the past three years, and I will continue to build on her great work in ensuring the HKIAC and Hong Kong continue to be a leading center of international arbitration.”

Anderson & Anderson LLP On 26th and 27th September, Anderson and Anderson LLP presented at a two-day intellectual property rights seminar entitled, “Technical Assistance Program on Commercial Law: A Look at Intellectual Property Rights in Mongolia,” hosted by the American Chamber of Commerce (AmCham) in Mongolia, in cooperation with the US Department of Commerce and the US Embassy in Mongolia. The two-day seminar also featured insightful presentations by international experts from the US Department of Commerce and the US Department of Justice, and case study presentations by AmCham members. Anderson and Anderson LLP is an “Anderson & international law firm with over 100 years of Anderson LLP experience since its presents at IP rights opening in 1885. Currently, it represents seminar in clients in the US, Mongolia.” Greater China including Hong Kong and Macao, Mongolia, India and Israel. With over twenty years of experience operating in Mongolia, the firm has worked with and represented some of the country’s biggest players in various sectors of business, both domestic and international.

biz.hk 11 • 2016

Ashurst Ashurst advised the joint bookrunners and lead managers, Deutsche Bank, Investec, JP Morgan, Morgan Stanley and UBS, in India’s first high-yield green bond issuance. The seven-year bond, in an aggregate principal amount of US$500 million, was issued by Greenko Investment Company in August earlier this year to address the financing needs of Greenko Energy Holdings’ Indian “Ashurst advises operating subsidiaries. underwriters in Greenko Group is one of the largest clean energy India’s first green independent power producbond offering.” ers in India, with more than one GW of projects across hydro, wind and thermal energy. Huge demand for the bond came in from 275 accounts from Asia (59%), US (20%), Europe/Asia (21%); clients included fund managers (89%), public sector banks (8%), insurers and private equity players (2%), and the rest from others. With experience spanning almost 200 years, global law firm Ashurst currently have 25 offices in 15 countries, with over 400 partners and a further 1,450 lawyers working across 10 different time zones.

Baker & McKenzie At the conclusion of its annual partner meeting held in Barcelona last month, international law firm Baker & McKenzie announced a number of changes to its leadership teams with immediate effect, including the appointment of Paul Rawlinson as the new and 15th “Baker & McKenzie chairman of the firm. Gary Seib and Michael announces changes Wagner have taken over the chairing role of the in leadership firm’s Asia Pacific and following annual North American regional councils, replacing Bruce meeting.” Hambrett and Jim Holloway. The firm has also announced two new Executive Committee members: Ai Ai Wong from Singapore and Duane Webber based in Washington DC. In addition, it was decided that a new industry group – Global Consumer Goods – will be created, and led by Alyssa Gallot-Auberger, while Fiona Carlin will be taking over as Global Chair of the firm’s Antitrust & Competition Group from Samantha Mobley; and Simone Musa will be taking over from Duane Webber to lead the firm’s Tax Group.

Bird & Bird Bird & Bird has advised Shanghai-listed Beijing Xinwei Technology Group Co Ltd (“Xinwei”) on its acquisition of the full share capital of Space-Communication Ltd (“Spacecom”), for a consideration of US$285 million. The deal was signed on 24 August 2016. “Bird & Bird Spacecom, an Israeli advises Chinese tech global fixed satellites operator listed on the Tel firm on US$285 Aviv Stock Exchange, million acquisition.” provides broadcasting and communications services through the marketing of space segments on its satellite fleet to DTH operators, TV broadcasters and programmers, government and corporate organizations including the Israeli government and VSAT network operators. Xinwei, a Chinese conglomerate with global operations providing solutions to telecom providers, is active in the cellular communication field, equipment sales, and communication satellites. Upon completion of the transaction, which includes the need for approvals from the Israeli government and nonobjection from US government, Spacecom’s shares will be delisted from the Tel Aviv Stock Exchange with it being converted to a private company fully owned by Xinwei.

Cadwalader, Wickersham & Taft Cadwalader successfully advised New Century Asset Management Limited, manager of the Hong Kong-listed New Century Real Estate Investment Trust (New Century REIT), on its €28.9 million (US$32 million) acquisition of Holiday Inn Eindhoven in the Netherlands. The transaction closed on 9 August 2016. This is the first time “Cadwalader advises that a Hong Kong-listed on first property REIT successfully acquired acquisition outside of overseas property situated outside of Greater China. Greater China for a The Cadwalader team was Hong Kong REIT.” led by corporate partner Stephen Chan, and included associate Denise Tsui and trainee solicitor Jacqueline Foo, all based in Hong Kong. Cadwalader has been advising clients in China and across the Asia- Pacific region for over a decade, providing legal services to global financial institutions and multinational companies doing business in Asia. The firm also serves Asia-based entities in their international business activities and investments into the United States and throughout the world. Cadwalader’s Hong Kong team has worked together for the past 25 years, advising on some of the most complex transactions in Hong Kong and China.

Clifford Chance International law firm Clifford Chance was the advisor to China Merchants Securities on its US$1.4 billion IPO and listing on the Hong Kong Stock Exchange in September this year. This deal is noted to exemplify Clifford Chance’s stature as the firm of choice and a major provider of professional services for PRC securities firms’ Hong Kong IPOs. The team was led by partners Fang Liu and Amy “Clifford Chance Lo. They were supported by consultant Xiang Tianning; assists China senior associates Corey Zhang Merchants and Liao Yufei; associates Jennie Lau, Liu Dandan and Securities on Emma Bao; and legal USD$1.4 billion assistants Catherine Zhou and Vicky Xiang. IPO.” China Merchants Securities is one of the top ten integrated securities firms in China. The lead underwriters include China Merchants Securities (HK), JP Morgan and Morgan Stanley. Clifford Chance’s Greater China team has advised on some of Hong Kong’s most significant listings. Earlier this month they advised on Postal Savings Bank of China’s US$7.4 billion IPO, the largest globally thus far for 2016 and in Hong Kong since 2010.

Davis Polk & Wardwell Davis Polk has advised Morgan Stanley in connection with its SEC-registered global offering of €2.75 billion (US$3.04 billion) aggregate principal amount of senior notes, consisting of €1.25 billion (US$1.38 billion) floating-rate notes due 2022, and €1.5 billion (US$1.6 “Davis Polk provides billion) 1.375% fixed-rate notes due 2026. Morgan Stanley with The Davis Polk corporate legal support on team included partner Christopher Schell and associate €2.75 billion senior Vidal Vanhoof. The tax team notes offering.” included partner Po Sit and associates Andrew Smith and Mahalia Burford. Associate Colleen Blanco provided 1940 Act advice. All members of the Davis Polk team are based in the New York office. Davis Polk (which includes Davis Polk & Wardwell LLP and its associated entities) is a global law firm. For over 160 years, its lawyers have advised industry-leading companies and global financial institutions on their most challenging legal and business matters. It currently has approximately 900 lawyers in offices in New York, Menlo Park in California, Washington DC, São Paulo, London, Paris, Madrid, Hong Kong, Beijing and Tokyo.

biz.hk 11 • 2016

Deacons Deacons has advised The Wharf (Holdings) Limited on the sale of its telecoms unit, Wharf T&T Limited, to private equity firms MBK Partners and TPG, for a total consideration of HK$9.5 billion in cash. Wharf T&T is Hong Kong’s largest purely enterprise-focused telecoms service provider, with an extensive fiber optic network covering approximately 90 percent of the commercial market. “Deacons The sale of Wharf T&T is a result of Wharf’s strategic represents The review of its communication, media and entertainment Wharf on HK$9.5 (CME) business segment. billion sale of its After the sale, Wharf’s CME business will primarily telecoms unit.” consist of i-CABLE Communications Limited, a pay-tv platform. The transaction is expected to complete on or before November 23 2016. Wharf is a subsidiary of Wheelock and Company Limited, and the companies are expected to gain HK$4.5 billion and HK$7.4 billion, respectively, from the sale of the telecoms business. This is the largest M&A deal in the Hong Kong telecommunications industry since the acquisition of CSL New World Mobility Limited by HKT Limited in 2014.

Debevoise & Plimpton LLP Debevoise & Plimpton LLP unveiled in September the launch of the Business Integrity Group – a multidisciplinary practice to help clients manage the risks of 21st century business. The Business Integrity Group combines Debevoise’s market-leading expertise in public international law, anti-corruption, corporate investigations, investment management, high-stakes transactions, international disputes, human rights and environmental law to develop “Debevoise & integrated solutions to complex Plimpton LLP corporate responsibility challenges. These challenges are legal, launches Business financial and reputational – Integrity Group.” managing the array of integrity risks efficiently depends on robust systems of calibrated policies, structured due diligence and targeted remediation. The Business Integrity Group provides structured, risk-sensitive guidance on leading integrity standards, including the UN Guiding Principles on Business and Human Rights, UK Bribery Act, UK Modern Slavery Act, and US Foreign Corrupt Practices Act as well as human trafficking regulations. Each of these standards affects corporate governance systems, M&A due diligence, non-financial disclosure, compliance risk assessments, complex investigations and high-profile disputes.

biz.hk 11 • 2016

Dechert LLP A Manhattan federal judge has awarded Dechert LLP’s pro bono client, Mashud Rana, US$922,597 from the former Bangladeshi consul general in New York and his wife. Monirul Islam and Fahima Tashina Prova brought Rana, a young man from Bangladesh, to the United States in September 2012 to work as a domestic servant, promising him a monthly salary of US$3,000 and days off. After arriving in the United States, accord“Human trafficking ing to Rana’s claims, Islam and Prova confiscated his victim and Dechert passport and immigration pro bono client documents and reneged on all their promises. awarded nearly A damages hearing was held on September 7, 2016, US$1 million.” at which Rana, his physician Dr Allison Schachter and clinical psychologist Dr Chitra Raghavan testified regarding the physical and mental distress that Rana has suffered as a result of his experience. Based on the testimony and evidence at this hearing, the Court ordered Islam and Prova to pay US$922,597 to Rana for violations under New York and federal labor laws, breach of contract and emotional distress.

DFDL DFDL Myanmar Partner and Managing Director William D Greenlee, Jr and DFDL Cambodia Deputy Head of Corporate and Commercial Practice Group and the regional China Desk Robin Teow have jointly published an article entitled “Cambodia and Myanmar to ride ‘OBOR’ wave” in the July 2016 edition of the Asia Business Law Journal. One Belt One Road (OBOR) is an initiative launched by Chinese President Xi Jinping in 2013 to address “DFDL authors the country’s overcapacity and structural weaknesses, article on effects of and redirect capital for Chinese foreign trade regional infrastructure development. policy in Cambodia It is noted in the article and Myanmar.” that infrastructure projects in ASEAN member states, including Cambodia and Myanmar, are emerging as major beneficiaries of the OBOR strategy, with Chinese investors accounting for 17 percent of all infrastructure investment across the region in 2015, according to Citibank. Due to Cambodia’s and Myanmar’s strategic locations, strong natural resource bases and, more importantly, close relations with China, the two countries will continue to attract a high proportion of China’s outbound investment, most of which is expected to be directed towards large-scale infrastructure projects.

DLA Piper Global law firm DLA Piper has advised the Australian Football League (AFL) on the landmark acquisition of Melbourne’s Etihad Stadium. The deal involved the acquisition of the operating business at Etihad Stadium, the freehold ownership of the stadium, acquisition finance, and the unwinding of several original development arrangements. The DLA Piper team was led by Melbourne-based “DLA Piper advises Corporate partner David Hallam, together with senior the AFL on associate Dylan Burke, acquisition of solicitor Alex Moores from the Corporate team, Real Etihad Stadium in Estate partner Arthur Chong, Melbourne.” Finance & Projects partner Monique Stella, special counsel Lisa Hornsby and solicitor Isabella Barnes. “The purchase is a significant investment in AFL’s future – delivering a major financial boost for their tenant clubs, as well as offering a range of other revenue streams for the AFL,” David Hallam said. It is expected the AFL will take control of the 53,000-seat stadium early next month. The AFL will continue to operate Etihad Stadium as a multi-purpose venue, hosting other major sports and a range of entertainment events.

Dorsey & Whitney International law firm Dorsey & Whitney LLP said in August that it has achieved ISO 27001 certification of its information security management system. ISO 27001 certification provides Dorsey clients with third-party validation that the firm’s information security policies, processes, and controls meet international standards for best practices. “Protecting client data “Dorsey & Whitney and confidential information is as important to Dorsey as achieves ISO it is to our clients. To that end, Dorsey has attained certification for ISO 27001 certification to information security.” demonstrate the firm’s commitment to maintaining the security of client information,” says Ken Jorgensen, Dorsey & Whitney Ethics Partner. Dorsey’s Chief Information Officer Paul Miller says, “We are pleased to reach this important information security milestone. ISO 27001 is a globally recognized standard for information security management requiring that an organization show a systematic and ongoing approach to managing confidential information. To maintain certification, you must show continuous improvement over time. It’s more than just a point-in-time assessment.”

Eversheds LLP In July this year, the Hong Kong office of Eversheds advised Datang International Power Generation Co, Ltd (Datang Power) on the disposal of its coal-to-chemical business with net assets of RMB7,132 million (US$ 1 billion). Datang Power is one of the largest state-owned power producers in China and is also one of a handful of Chinese companies to be triple listed in Hong Kong, Shanghai and London. The “Eversheds advises group is principally Datang on US$1 engaged in the construction and operation of power billion disposal.” plants, the sale of electricity and thermal power, maintenance of power equipment and provision of power related technical services. The disposal is designed to optimize the company’s asset structure while increasing the focus on its principal business of power generation. The restructure comes at a time when regulations governing the Chinese power sector are undergoing dramatic changes, including official approval for direct trading between power generators and industrial and commercial users.

Freshfields Bruckhaus Deringer Freshfields Bruckhaus Deringer LLP (‘Freshfields’) has advised a consortium of 14 bookrunners on the US$1.8 billion global offering of China Resources Pharmaceutical Group Limited (CR Pharmaceutical), acting as US and Hong Kong counsel to the underwriters of the deal. The shares commenced trading on the Hong Kong Stock Exchange on 28 October 2016. The initial offering contained 1,543,141,500 shares at a price of HK$9.1 per share and is the second “Freshfields counsels largest IPO to take place in Hong Kong during 2016. on China Resources CR Pharmaceutical, Pharmaceutical an integrated pharmaceutical company, is the Group’s US$1.8 second largest pharmabillion global ceutical manufacturer and pharmaceutical distribuoffering.” tor in China, and the largest manufacturer of OTC drugs in China. It also has three listed subsidiaries in the PRC. The group primarily plans to use the net proceeds to make strategic acquisitions globally, as well as improving its existing logistics network. The Freshfields team was led by corporate partners Teresa Ko, Calvin Lai and Richard Wang.

biz.hk 11 • 2016

Gibson, Dunn & Crutcher In March, Gibson, Dunn & Crutcher represented AP Renewables, a unit of Philippine energy company Aboitiz Power, in the issuance of a landmark climate bond worth P10.7 billion (US$225 million) for the Tiwi-MakBan geothermal power facilities. Certified by the Climate Bonds Initiative, the project bond is the first of its kind in the Asia-Pacific region and marks the first time that such a bond was issued for a single project in an emerging market. In addition, it is the first local currency project bond in the Philippine power sector and the first credit-enhanced project bond in Southeast Asia (other than Malaysia) since the 1997 “Gibson, Dunn & Asian financial crisis. The project bond model Crutcher leads on could serve as a template for landmark Asian similar future activity in the region, as it allows issuers in climate bond.” developing Asian countries to tap into domestic debt capital markets for projects that would otherwise be ineligible for financing. It also allows more investors to gain exposure to emerging market infrastructure.

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP Global law firm Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP has recently highlighted the Terrorism Art and Antiquity Revenue Prevention Act of 2016 (TAAR Act) which was introduced to Congress earlier for ratification. The proposed legisla“Grunfeld highlights tion is intended to prevent ISIS stolen antiquities from the Terrorism Art being trafficked into the United States. The new law and Antiquity would also have broad Revenue Prevention impact on the criminal enforcement of all cultural Act of 2016.” property regardless of origin. The TAAR proposes amendments to the National Stolen Property Act which is a criminal statute that makes it a crime to transport, possess or sell stolen property. The proposed legislation would, if passed, allow for “cultural property” with a value of US$50 or more “that has been removed or excavated in violation of local law considered to be stolen.” As written, this would apply to cultural property of any origin and would not be limited to antiquities from Iraq or Syria. Under this new law, any person who simply possesses or transports an artifact knowing it had been removed or excavated contrary to local law can be prosecuted.

biz.hk 11 • 2016

Hogan Lovells Hogan Lovells, together with Innovate Finance and EY, last month published a new report titled Blockchain, DLT and the Capital Markets Journey: Navigating the Legal and Regulatory Landscape. The document provides an overview of how blockchain and other distributed ledger technologies (DLT) fit into the current regulatory and legal regimes governing capital markets. According to the report, regulation needs to keep pace with evolving technologies, or “New report risk hindering innovation. It recommends princioutlines ples-based guidance, rather than set requireopportunities for ments, to enable much regulators to adopt needed flexibility. Regulators are urged to foster a blockchain.” supportive environment by consulting on key issues such as authorizations, transitions and security of DLT and to promote a culture of collaboration with the industry. The report further outlines that Brexit creates an opportunity to implement legislation more accommodating of DLT in a way that allows the UK to be more flexible than under EU law.

Jones Day Sushma Jobanputra, Partner-in-Charge of Jones Day’s Singapore office, was quoted in an article for The Peak, a magazine for Singapore’s entrepreneurs, professionals and C-suite executives, addressing the challenges for successful women of balancing work and family. “In my experience, men are much less concerned about asking for help than women. We feel that if we ask for help, we will be seen to be incompetent. I think it takes confidence to say that there is too much and I need help. Women need to be confident enough to ask for help. Sometimes good “Jones Day enough is good enough,” partner offers Jobanputra said in the interview. inspirational Jones Day is a global advice to young law firm with 44 offices in major centers of business women leaders.” and finance throughout the world. Jones Day provides significant legal representation for almost half of the Fortune 500, Fortune Global 500, and FT Global 500.

K&L Gates K&L Gates LLP has selected Michael S Caccese and James R Segerdahl to succeed Peter J Kalis in the positions of Chairman of the Management Committee and Global Managing Partner, respectively. Caccese and Segerdahl will assume their responsibilities on 1st March 2017, upon the conclusion of Kalis’ term in February, and will work with him to ensure a smooth transition in leadership during the coming months. Caccese, who will serve as a non-executive Chairman of the Management Committee, currently holds the position of Vice Chairman for Practice Management and is a global leader of the firm’s “K&L Gates financial services practice. announces new Caccese served in both in-house and governmental leadership capacities prior to his joining roles.” K&L Gates’ Boston office in 2001. As Global Managing Partner, Segerdahl will serve as the firm’s chief executive officer. For the past decade, Segerdahl has acted as K&L Gates’ General Counsel and Secretary to the Management Committee, with the additional duties for the firm as Vice Chairman in 2013.

Keesal Young & Logan LLP U.S. News & World Report and Best Lawyers this month published its 2017 “Best Law Firms” rankings in which Keesal, Young & Logan (KYL) has been named to several National and Metropolitan Tier lists. The 2017 rankings are based on the highest number of participating firms and highest number of client ballots on record. To be eligible for a ranking, a firm must have a lawyer listed in The Best Lawyers in America, which recognizes the top 4 percent of practicing “Keesal, Young & attorneys in the US. Over 10,000 attorneys provided Logan named to more than 800,000 law 2017 “Best Law firm assessments, and over 10,000 clients Firms” list by U.S. provided more than 90,000 evaluations. News & World Ranked firms, Report.” presented in tiers, are listed on a national and/or metropolitan scale. Receiving a tier designation reflects the high level of respect a firm has earned among other leading lawyers and clients in the same communities and the same practice areas for its abilities, its professionalism and its integrity.

Kobre & Kim LLP Michael S Kim, co-founder of Kobre & Kim LLP and a member of the Seoul-based Government Enforcement Defense team, led a discussion at the International Bar Association’s November Asia Pacific Regional Forum on anti-corruption compliance and enforcement in South Korea. The panel focused on the rise of whistleblowers in “Michael Kim the workplace, whistleblowmoderates panel at er protections laws in various jurisdictions, and Anti-Corruption how companies should Conference in South handle whistleblower reports. Topics of the Korea.” conference included recent trends and updates on anti-corruption regulatory and enforcement environment in the AP region, M&A and anti-corruption due diligence including third party risks, and the rise of whistleblowers and implications to corporations – managing your own employees. There was also discussion on how to set up effective compliance programs and robust controls, update on the latest US FCPA investigations and changing landscapes of global cooperation, and whether it is possible to draw a fine line between hospitality and bribery in terms of gift and entertainment practices.

Linklaters Linklaters Tokyo has received a Gold Award as part of the Pride Index prescribed by non-profit LGBT organization Work With Pride (wwP). Linklaters is one of only three law firms in Japan to receive an award, and the only internationally headquartered global law firm. The result was announced at the wwP Conference held in Tokyo on October 26th. “We are delighted to receive the Gold Award from Work With Pride. It’s an important acknowledgement of our commitment to create a workplace where everyone feels “Linklaters Tokyo welcome,” says John Maxwell, Japan Managing Partner, receives Gold Linklaters. Award in Japan’s The aim of the Pride Index is to evaluate how accomplished first LGBT Pride companies in Japan are in terms Index.” of their LGBT policies and initiatives. The Pride Index looks at five elements including policy, representation, inspiration, development, and engagement/empowerment. “We value diversity of all kinds, whether in sexual orientation, gender, faiths or beliefs. We believe workplace diversity leads to a more vibrant and innovative firm,” says Kozo Sasaki, Partner, Linklaters.

biz.hk 11 • 2016

Loeb & Loeb LLP Loeb & Loeb LLP represented the American Academy of Adoption Attorneys in an important case affecting the parental rights of same-sex couples. The New York State Court of Appeals on August 30 held in Brooke S.B. v. Elizabeth A. C.C., and in the companion case Estrellita A. v. Jennifer L.D., that non-biological, non-adoptive parents have standing to seek custody and visitation of children who were conceived and born into relationships in which both individuals had agreed to co-parent. The unanimous decision reversed a 1991 ruling in the matter of Alison D. v. Virginia M., which denied parental “Loeb & Loeb helps rights to many people in non-traditional families who secure landmark are raising children. victory protecting In overturning Alison D., the Court held that the fact the parental rights that the unmarried parties in of same-sex Brooke B. had reached a preconception agreement to couples.” “conceive and raise a child” together was sufficient to establish standing for the non-biological parent to later assert custody or visitation rights. The case has been remanded to Family Court for further proceedings.

Loyens & Loeff The latest update from law firm Loyens & Loeff concerns the most relevant changes resulting from the General Data Protection Regulation (GDPR) in “Loyens & Loeff the European Union, applicable as of 25 May highlights updates 2018, and includes requirements relating to relating to use of the use of so-called sensitive personal “sensitive data.” The term ‘sensitive data.” data’ covers personal data revealing: racial or ethnic origin, political opinion, religious or philosophical beliefs, trade union membership, genetic and biometric data, health data or data concerning sex life or sexual orientation. The GDPR endorses the general prohibition of processing of sensitive personal data previously introduced by the Directive. As a result, data controllers are not allowed to process sensitive personal data, unless one of the justifications specified in the GDPR is applicable. This is an exhaustive list. Processing of such sensitive data performed in any other situation is therefore considered illegal.

biz.hk 11 • 2016

Mayer Brown JSM Mayer Brown has recently launched a new handbook, entitled “Cybersecurity Regulation in the United States: Governing Frameworks and Emerging Trends,” which offers insights on the regulatory frameworks applicable across key sectors of the United States economy, as well as emerging regulatory trends across sectors. The handbook’s launch coincides with the beginning of National Cybersecurity Awareness Month (NCSAM) 2016. Mayer Brown is an official Champion of NCSAM. Authored by lawyers in “Mayer Brown the firm’s global Cybersecurity & Data Privacy practice, launches new the 80-page handbook serves handbook on as a valuable resource for in-house counsel, executives cybersecurity and other stakeholders as regulation.” they work to satisfy regulatory requirements in a manner that is consistent with business needs and that complements a risk-based approach to cybersecurity across the enterprise. Mayer Brown’s global Cybersecurity & Data Privacy practice is composed of more than 50 lawyers worldwide from disciplines that include litigation, regulatory, corporate, government affairs and global trade, intellectual property, enforcement, employment, insurance and business technology sourcing.

McMillan LLP In August, McMillan LLP and IBM confirmed plans to collaborate on the development of a new software platform designed to give clients of the law firm better insight into its legal services. The platform promises to deliver improved cost-effectiveness, promote pricing certainty, and optimize workflows and staffing by standardizing metrics for a range of McMillan’s legal services. Powered by IBM’s comprehensive predictive analytics system, SPSS, and running on IBM Cloud, the platform offers advanced algorithms and techniques that aggregate, analyze and interpret McMillan’s internal data to strengthen the decision“McMillan and making process. IBM collaborate As such, the platform will assist the firm in discovto bring analytic ering new legal patterns and insights to trends, and help its lawyers build more accurate pricing clients.” models. In addition, it will improve McMillan’s ability to forecast metrics for a range of its legal services, from purchasing and selling a business to managing litigation to financing transactions, and more.

Morrison & Foerster LLP Morrison & Foerster last month published the results of its semiannual M&A Leaders Survey which found that more than twice as many dealmakers intend to accelerate tech acquisition activity during the next six months compared to respondents who predict a slowdown. Specifically, almost half of dealmakers (47%) expect tech M&A activity to increase during the next six “MoFo Survey: months, while only 20 Tech M&A leaders percent are forecasting a decrease. The survey results bullish about deal came in at a time of signifiactivity for the next cantly accelerated tech spending this summer six months.” despite a drop in the deal volume. The aggregate value of tech, media, and telecom (TMT) deals in 2016 tops US$336 billion, according to 451 Research’s M&A KnowledgeBase. In Q1 2016, there were 1,039 deals with an aggregate total of US$73 billion, while Q2 saw 1,043 deals worth an aggregate US$110 billion, and Q3 saw 910 deals worth an aggregate of US$153 billion. In Q3, an unprecedented number of big-ticket purchases with a median value of US$2.2 billion accounted for US$133 billion of deals.

Nardello & Co Nardello & Co has broadcasted earlier this year the opening of a new office in Tokyo, and the appointment of Toshinari Asano as Managing Director and Japan practice head. Ben Rowse, Head of Nardello & Co’s Asia-Pacific practice, is to relocate from Hong Kong to Tokyo in August, where he will continue to lead the firm’s operations throughout the region. Nardello & Co’s Japan practice, with an office “Nardello & Co located at East Tower 4th expands Asia-Pacific Floor, Otemachi First Square, 1-5-1 Otemachi, practice with opening Chiyoda-ku, Tokyo, will assist Japanese clients in of Tokyo office.” navigating the complex and ever-shifting challenges they face operating overseas, while also providing investigative services to local and international clients in Japan. Asano brings significant experience to his new position, having conducted a wide variety of reputational due diligence and complex investigative assignments involving fraud and corruption, asset searches, litigation and arbitration support, strategic intelligence and political risk analysis for clients in Japan and overseas.

Oldham Li & Nie Solicitors Oldham, Li & Nie (OLN) in September unveiled plans for the expansion of its Insurance Practice Group, in response to growing demand from both existing and potential clients in the changing and increasingly pervasive regulatory environment in Hong Kong. In addition, Adelina Wong (formerly Senior Legal Counsel with AIA Hong Kong for over 8 years) has joined the firm’s Insurance Practice Group, to provide advice to clients on “Oldham Li & Nie insurance-related matters. Solicitors expands OLN was founded in 1987 with offices in Hong Kong and Insurance Practice Shanghai, with a principal in Hong Kong.” focus on Corporate and Commercial, Dispute Resolution, Intellectual Property, Divorce & Family Law, Insolvency & Restructuring and Private Client Services. OLN’s Insurance Practice Group has direct experience of the legal, regulatory and practical challenges facing insurers and reinsurers throughout Asia region. Members of the Group have worked in the insurance industry and have extensive experience working in and advising insurers and reinsurers on contractual and regulatory matters and risk management issues relevant to their businesses.

O’Melveny & Myers O’Melveny partners Tony Wang and Mark Peterson, and associate Michael Reynolds co-authored the October 17, 2016 article entitled “Chinese Companies Targeting Southern California for Growth Opportunities” in the Orange County Business Journal on the prospects of Chinese investment in the area. “Chinese The authors discuss how “structural economic dynamics companies target continue to favor increased interest in US assets by Southern California investors in China” and for growth conclude that “Orange County’s diverse business landscape opportunities.” (particularly in the fields of technology, entertainment, healthcare, and real estate) offers a plethora of appealing prospects for investment, acquisition, or partnership, so this is a market dynamic to watch in 2017.” Wang is a specialist in corporate and securities law, with an emphasis on private equity, venture capital, merger and acquisition, and Asia-related media and entertainment transactions. With more than a decade of experience as a general counsel and chief legal officer, Peterson aids clients with complex acquisitions, board-level issues, and practical, business-savvy legal advice. Reynolds represents clients in corporate finance, capital markets, and mergers and acquisitions matters.

biz.hk 11 • 2016

Paul, Weiss, Rifkind, Wharton & Garrison Paul, Weiss was a sponsor of the 30% Club’s Annual Boardroom Lunch in Hong Kong, which took place on October 14 at the Asia Society Hong Kong Center. The lunch brought together an extensive and growing pool of accomplished and aspiring women directors with chairmen, board members and senior management from Hong Kong’s leading companies and their key advisors. In a simulation of boardroom discussions, guests engaged over lunch in a structured exchange of views on some of the key issues facing boards today, including innovation, succession planning and risk management. Corporate partner Betty Yap facilitated a table of clients and aspiring women directors invited by The “Paul, Weiss Women’s Foundation, which launched the 30% sponsors 30% Club Club in 2013 to address the boardroom lunch underrepresentation of women on corporate in Hong Kong.” boards in Hong Kong. Paul, Weiss is a member of the 30% Club, a group of business leaders committed to achieving gender balance at all levels of organizations, with a focus on promoting women to positions of leadership in the workforce.

Proskauer Rose In July, Proskauer represented AccorHotels in its purchase of Fairmont Raffles Hotels International (FRHI) – which is the Toronto-based parent company to the Fairmont, Raffles and Swissôtel brands – for “Proskauer US$2.7 billion. Paris-based AccorHorepresents tels is a hotel operator AccorHotels in its with nearly 500 luxury and upscale properties acquisition of that span 34 countries across five continents. Fairmont, Raffles FRHI’s portfolio includes and Swissôtel.” The Savoy in London, Raffles Hotel Singapore, Fairmont San Francisco, New York’s The Plaza and Le Royal Monceau Raffles Paris. Proskauer has represented AccorHotels for nearly 20 years in a number of transactions, including its strategic alliance with Huazhu Hotels Group to create a major hotel company in China, the sale of Motel 6 and related US economy hotel operations for US$1.9 billion, the US$1.32 billion sale of Red Roof Inns, and more than US$1.5 billion in sale-and-management-back and other transactions in the US for Sofitel and Novotel properties.

biz.hk 11 • 2016

Ropes & Gray LLP Ropes & Gray’s Women’s Forum held a client networking event in Tokyo in October at the Peninsula Tokyo. Government enforcement partner Kaede Toh brought together a group of leading female legal scholars, in-house counsel and top executives to discuss the important role that mentoring plays in helping women thrive in their careers. The Ropes & Gray Women’s Forum offers “Women’s Forum educational, professional development and networkhosts client ing opportunities for its networking event female attorneys. The forum sponsors programs in Tokyo.” that give female lawyers access to firm and industry leaders and other experts, hosting events at which clients and guest speakers are invited to address topics such as networking, marketing, mentoring, leadership training, and professional and business development. The Women’s Forum operates in conjunction with the firm’s top-rated diversity initiatives, which are consistently recognized for excellence by many of the world’s leading legal publications and rankings. This year, Ropes & Gray was named the top firm for overall diversity among US law firms in the annual Vault rankings.

Sandler, Travis & Rosenberg Sandler, Travis & Rosenberg, P.A. (ST&R) managing partner Tom Travis and Champlin Washington Strategies principal Steven Champlin have formed an alliance between their two firms in July. Steve Champlin is one of the “Sandler, Travis foremost experts on US trade & Rosenberg policy. He has played a crucial role in the implementation of partners with top every major US trade agreement Washington since the passage of NAFTA. Today, he helps corporations government adopt national and global governrelations firm.” ment policies through Champlin Washington Strategies. His experience as a former key advisor to congressional leaders, combined with his 25-year career in private practice providing guidance and insight to companies and associations on national and global government policies, makes him a great resource for ST&R’s government relations group, attorneys, advisors and clients, Travis said. Sandler, Travis & Rosenberg, P.A. also plays a crucial role in international trade-related legal and consulting services. It is the largest international trade services provider in the world and operates in North America, South America, Asia, the Middle East and Europe.

Simmons & Simmons Simmons & Simmons this year obtained regulatory approval for a Joint Law Venture (“JLV”) for Simmons & Simmons JWS Pte Ltd. Simmons & Simmons JWS will be able to offer clients both foreign and Singapore law advice and will operate starting November 2016. The establishment of the JLV responds to the growing financial services industry in Singapore, and “Simmons & it means the firm can now offer an integrated service Simmons JWS to clients across its key confirms areas of focus, particularly asset management & combined investment funds, and financial institutions. capability in Managing Partner Singapore.” Jeremy Hoyland says, “Simmons & Simmons JWS will be one of the few leading full-service law firms to be able to demonstrate true sector focus on asset management, investment funds and financial institutions, providing Singapore and international clients with specialist advice in relation to capital markets, commodities, employment, investment funds, international arbitration, investigations, transactional and regulatory matters.”

Skadden, Arps, Slate, Meagher & Flom Skadden Arps Slate Meagher & Flom and Kirkland & Ellis has advised on behalf of ZTO Express for an initial public offering (IPO) on the New York Stock Exchange (NYSE) this year. The logistics giant covers 96 percent of China, with more than 26,000 employees. The IPO could raise as much as US$1.5 billion, which would make it the largest by a Chinese “Skadden advises company in the US since on biggest China Alibaba’s US$25 billion listing in 2014. IPO since Skadden is the legal advisor to ZTO on the US Alibaba.” law aspects of the offering, while Zhong Lun is advising on Chinese law elements. Skadden Hong Kong corporate partners Julie Gao and Haiping Li are leading the firm’s team. The lead underwriters Morgan Stanley and Goldman Sachs have turned to Kirkland for US law advice, and Jun He on the Chinese law aspects. Kirkland’s team is led by corporate partners David Zhang and Benjamin Su in Hong Kong, and Steve Lin in Beijing. Offshore firm Maples and Calder is advising on the Cayman Island law parts of the offering.

Squire Patton Boggs (formerly Squire Sanders) The Squire Patton Boggs Foundation will expand its fellowship program into Europe, further extending the reach of the Foundation in supporting public service “Squire Patton Boggs initiatives. Foundation expands Working in partnerinternational ship with the prestigious College of Europe (Brugfellowship program.” es, Belgium) and the Russia-United States Legal Education Foundation, the initiative will build on the program that has operated in the US for more than a decade and in the Middle East since 2013. A new Russian studentship will be supported from the 2016-17 academic year, and the first European Fellowship will commence in July 2017. Since 2004, the Squire Patton Boggs Foundation has awarded fellowships each year to exceptional law students who demonstrate a steadfast commitment to public service. The Foundation was formed in 2000 when the firm dedicated attorneys’ fees from a 25-year pro bono civil rights discrimination case. The endowment continued to grow through the proceeds of a second large pro bono victory when the firm successfully settled a federal racial discrimination suit against a hotel resort.

Sullivan & Cromwell LLP Sullivan & Cromwell has served as national coordinating counsel for Volkswagen in a multi-national litigation and other investigations stemming from the issue of claims on “Sullivan & clean-diesel. Cromwell LLP The Sullivan & Cromwell team, led by partners Robert steers Volkswagen Giuffra and Sharon Nelles, has to a landmark achieved a resolution with the US Department of Justice, US settlement.” Environmental Protection Agency (EPA), California Air Resources Board (CARB), California Attorney General, US Federal Trade Commission (FTC) and private plaintiffs represented by the Plaintiffs’ Steering Committee (PSC). Volkswagen simultaneously resolved consumer protection claims with 44 US states, the District of Columbia and Puerto Rico in separate negotiations. Heralded by both the Court and the public for its speed, scope and practicality, the settlement puts to bed a huge swath of Volkswagen’s civil, regulatory, consumer and environmental exposure. The settlement was not only unprecedented in size, but in nature. Unlike typical settlement negotiations, Volkswagen and its counsel undertook a “hub-and-spoke” negotiation, with S&C managing multiple negotiations with parties whose interests did not align.

biz.hk 11 • 2016

Tanner De Witt Tanner De Witt partner Kim Boreham is helping to promote women’s rugby in Hong Kong in her position as Hong Kong Rugby Union (HKRU) director of women’s rugby. The story has been highlighted and published in the South China Morning Post. The Hong Kong Women’s Premiership is looking to use its first standalone corporate partnership – a three-year deal with KPMG – to raise the profile of the women’s game in Hong Kong. As a result of the recent partnership, coaches will have access to KPMG’s state-of-the-art Insights Centre for post-match reviews, and there will be opportunities for players through an “Tanner partner internship program. “Having a partner of the helps promote caliber of KPMG is a huge women’s rugby in boost for the profile of women’s rugby in Hong Hong Kong.” Kong,” said Boreham. “It is the first time that the women’s rugby league has actually had its own corporate partnership and that is a testament to the strength and increasing profile of women’s rugby in Hong Kong.”

Troutman Sanders Solicitors Troutman Sanders LLP’s Shanghai office has relocated to 25/F Henderson 688, 688 West Nanjing Road in what’s called “an exciting move for us as we head toward our 10-year anniversary in Shanghai,” highlights Edward Epstein, managing partner of the Shanghai office. Troutman Sanders’ Shanghai office has consistently received high praise from clients, with lawyers recognized for corporate, M&A and real estate by publications, including Chambers Global, Cham“Troutman bers Asia and Legal 500 Asia Pacific. Sanders moves into The lawyers in the new office space in Shanghai office work closely with the firm’s Shanghai.” Hong Kong and Beijing offices to assist clients based in North America and Europe with investments and operations in Asia, as well as to assist Asia-based clients with their domestic and US investments and operations. Troutman Sanders’ China practice assists corporate and institutional clients, as well as government bodies and high net-worth individuals in a wide variety of industries, including banking, investment banking, healthcare, hospitality, biotechnology, pharmaceuticals, telecommunications, information technology, education, e-commerce, manufacturing, distribution and services.

biz.hk 11 • 2016

Vinson & Elkins LLP Vinson & Elkins LLP has recently opened a new office in Taipei to serve the growing demand of the firm’s clientele in Taiwan and across the Asia Pacific region. V&E partners David Tsai and Christopher Kao will oversee the office, which will serve as a platform for offering a wide range of litigation, transactional and strategic legal counseling support, with an emphasis on complex commercial litigation, intellectual property, renewable energy and corporate matters. The Taipei office is “Vinson & Elkins located on the 52nd floor of opens a new office the iconic Taipei 101 skyscraper, in the city’s in Taipei.” Xinyi District. The office is V&E’s fourth in Asia and 16th worldwide. With approximately 650 attorneys, V&E is among the preeminent law firms in Asia and provides integrated US and local law advice, and offers a broad range of legal services in the Asia Pacific region through the firm’s offices in Beijing, Hong Kong, Tokyo and Taipei.

White & Case White & Case LLP has advised HSBC Bank plc and Société Générale, as global coordinators, and Citgroup Global Markets Limited, Commerzbank Aktiengesellschaft, Crédit Industriel et Commercial S.A. and Goldman Sachs International, as joint “White & Case lead managers, on Air advises on Air France-KLM’s €400 million (US$443 million) France-KLM’s bond issue. €400 million The bonds have a nominal value of 100,000 bond issue.” euros, bear interest at a rate of 3.75 percent and will mature in October 2022. Issued on October 12, 2016, the bonds are listed on the regulated market of Euronext Paris. This transaction enables Air France-KLM to lengthen its debt profile. The White & Case team in Paris which advised on the transaction was led by partner Séverin Robillard with support from associates Grégoire Karila and Adeline Poucheparadj. White & Case is a global law firm with cross-border experience and diverse teams of local, US- and UK-qualified lawyers who are trained to give insights into both established and emerging markets.

Wilkinson & Grist In its September 2016 newsletter, Wilkinson & Grist highlighted Hong Kong Monetary Authority’s (HKMA) launch of a “Cyber Security Fortification Initiative” (CFI). The initiative is aimed at raising the level of cyber security of banks in Hong Kong, following the issue of another formal circular by HKMA highlighting a supervisory requirement for banks to implement the CFI. “Wilkinson & Grist In the same month, HKMA also issued a third highlights new circular reiterating the Cyber Security requirement for Authorized Institutions providing Internet Fortification banking services to further Initiative.” strengthen their security controls, amid recent incidents involving unauthorized share trading transactions. These initiatives are the results of a previous HKMA circular issued in September 2015 for Authorized Institutions to strengthen their oversight of cyber security controls. The string of circulars is indicative of HKMA’s inclination to ensuring a safe and efficient online banking environment, emphasizing the need for banks to enhance their internal cyber security controls to protect against cyber-attacks and adhere to these increased regulatory obligations and expectations.

Winston & Strawn Winston & Strawn is representing Verizon Communications Inc as employment and employee benefits counsel in its US$4.83 billion acquisition of Yahoo! Inc. It is handling the international executive compensation, employment, labor, and employee benefit matters on behalf of Verizon. The addition of Yahoo to Verizon and AOL will create one of the largest portfolios of owned and partnered global “Winston brands with extensive represents Verizon distribution capabilities. in its acquisition of Combined, AOL and Yahoo will have more than 25 brands Yahoo! Inc.” in its portfolio for continued investment and growth. The deal is subject to customary closing conditions, approval by Yahoo’s shareholders, and regulatory approvals, and is expected to close in the first quarter of 2017. Until the closing, Yahoo will continue to operate independently, offering and improving its own products and services for users, advertisers, developers and partners. Winston’s team was led by Scott Landau, Jennifer Stadler, and Maria Fufidio. Winston & Strawn LLP is an international law firm with 18 offices located throughout North America, Asia, and Europe.

Withers Withers – which first launched its Hotels and Hospitality practice in March 2016 with the hire of Robert Williams, Justin Gross and their team – has expanded its practice by hiring corporate partner David Mallinson in Hong Kong. Mallison is recognized as one of the leading advisors of hotel operators and investors in the Asian market, representing clients on their transactions and developments in Hong Kong, China “Withers adds and across South-East Asia. Hotels and He joins the firm from Mayer Brown JSM’s Hong Hospitality partner Kong team. in Hong Kong.” The practice has been very active in the Asia-Pacific region: in the first half of 2016 alone, it advised Marriott International on a deal to establish its first JW Marriott and Edition hotels in Singapore, Pro-invest Group on an A$300 million capital raise for its inaugural Australian hotel fund, and SilverNeedle Hospitality Group on a three-hotel lease deal with the Queensland Investment Corporation.

Zhong Lun Law Firm

Zhong Lun Law Firm was PRC adviser for ZTO Express’ IPO and listing on the New York Stock Exchange (NYSE) this year. On October 27th, ZTO Express Co Ltd (ZTO) was successfully listed on NYSE by issuing ADSs (American Depository Shares) of its Cayman affiliate, ZTO Express (Cayman) Inc, at an issuing price of US$19.50 per share. ZTO raised approximately US$1.4 billion in its initial public offering. Its IPO is expected to be this year’s biggest IPO in the US capital market, the second largest US IPO “Zhong Lun since Alibaba, and the advises ZTO first offshore IPO in the Chinese express delivery Express on its industry. The legal team was IPO and NYSE led by Anthony Qiao, listing.” Michael Chen and Jim Li, partners of Zhong Lun Shanghai Office, and the team members include Jenny Zheng, Feifan Wang, Miranda Zhang and Irene Le. Zhong Lun Shanghai office has been serving ZTO since 2015, including ZTO’s receipt of pre-IPO equity investment from private equity firm Warburg Pincus and other strategic investors.

biz.hk 11 • 2016

CMY

20160825-Membership Ad biz.hk Sept 2016-4.pdf 1 25/08/2016 2:50:12 PM

CMY

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

20161101-HR-CONFERENCE.pdf 1 1/11/2016 11:46:18 AM

Presents

2016 Human Resources Conference

Human Resources, the Untapped Asset for Business Disruption December 2, 2016

All industries are experiencing disruptions that pose a risk to results. Consequently, many business are looking for new and innovative strategies to manage disruption. Yet in Asia, human resource is too often treated as an administrative function rather strategic driver of results; hence, it is under-leveraged as a business asset.

The 2016 AmCham Human Resources Conference is designed not only for HR professionals, but also business leaders, seeking insights on how to better integrate the business and HR, while optimizing people resources, to deliver transformational results.

CMY

Date & Time: December 2, 2016 (8:00am - 2:30pm)

Venue: Four Seasons Hotel Hong Kong

SPEAKERS Rosemary Goater Partner Heidrick and Struggles (Opening Keynote) NiQ Lai Chief Talent and Financial Officer & Co-Owner Hong Kong Broadband Network Ltd. (Luncheon Keynote)

Kimberly Arth, Co-Founder, Pivot Global Limited Lynne Barry, Global Head of Learning and Development, Telstra Camille Mirshokrai, Managing Director - Growth Markets, Growth & Strategy, Accenture Trevor Sunderland, Country Manager Hong Kong & Asia Operations, Agile -1 Leonie Valentine, Managing Director â&#x20AC;&#x201C; Sales & Operations Hong Kong, Google Trasy Lou Walsh, General Manager, Uber Macao ...more to be announced

PROGRAM HIGHLIGHTS (*Concurrent Sessions) Opening Keynote - Leading through Disruption, Avoiding a Talent Crisis in Asia Luncheon Keynote - Co-Ownership = More Alignment = Less Rules Disruption Track - Focuses on new people innovation trends *Disruption and Innovation-Small and Large Companies Share *The Gig Economy and a High Leverage Workforce *Disruption in China

TITLE SPONSOR

The Untapped Asset Track - Focuses on sharing of leading best practices *Flexible and Atypical Working in Todayâ&#x20AC;&#x2122;s Workplace *Working Across Generations: Bringing Millennials and Boomers Together *Building an Ownership Culture in Asia

PLATINUM SPONSOR

GOLD SPONSOR

For registration and more details http://www.amcham.org.hk/events/signature-events/human-resources-conference

BRONZE SPONSOR

MARK YOUR CALENDAR Dec Exploring Opportunities in Vietnam’s Key Economic

Regions and HR Trends

Oscar Mussons, Associate, Dezan Shira & Associates Manufacturing and processing still remain the largest sector in Vietnam, accounting for more than half of the country’s FDI. In this seminar, Oscar Mussons will explore Vietnam’s 3 key economic regions and the pros and cons of each within the manufacturing sector. He will focus on Central Vietnam as an emerging location, to which the Government has given special priority, along with recent trends on large FDI projects and the encouraged industries and tax incentives. Vietnam’s labour Laws, HR trends and hiring concerns will be analysed, including an update on regulations such as the minimum wage levels for the coming year. Oscar Mussons helps oversee Dezan Shira & Associates’ Ho Chi Minh City operations, specializing in client advisory and business development with a focus on helping North America, Latin America, and Europe based investors enter the Vietnamese market. As the Head of the Spanish Desk, he oversees Asia Briefing’s Spanish publications and manages Spanish media and business partnerships. Oscar’s areas of expertise include business-focused legal advice to international clients relating to the internationalization of companies and corporate establishment in Eastern Europe, Middle East and Southeast Asia. He focuses his practice on crossborder transactions and international trade regulation.

Dec AmCham 25th Annual Human Resources Conference -

Human Resources, the Untapped Asset for Business Disruption

Rosemary Goater, Partner, Heidrick and Struggles (Opening Keynote) NiQ Lai, Chief Talent and Financial Officer & Co-Owner, Hong Kong Broadband Network Ltd. (Luncheon Keynote) All industries are experiencing disruptions that pose a risk to results. Consequently, many businesses are looking for new and innovative strategies to manage disruption. Yet in Asia, human resource is too often treated as an administrative function rather than as a strategic driver of results; hence, it is under-leveraged as a business asset. The 2016 AmCham Human Resources Conference is designed not only for HR professionals, but also for business leaders, seeking insights on how to better integrate the business and HR, while optimizing people resources, to deliver transformational results.

Venue: The American Chamber of Commerce in Hong Kong 1904 Bank of America Tower 12 Harcourt Road Central, Hong Kong Time: 12:00pm - 01:45pm Fee(s): Member: HK$280 Non-member: HK$400

Venue: Four Seasons Hotel Hong Kong Grand Ballroom, Level 2 8 Finance Street, Central, Hong Kong Time: 08:00am - 02:30pm Fee(s): Member: HK$1,450 Non-member: HK$1,750

2016 Dec 01

Thu

Fri

Sat

Sun

Mon

Tue

Wed

Thu

Fri

Sat

Sun

Mon

Tue

Wed

Thu

Fri

Sat

Sun

Mon

Tue

Wed

Thu

Fri

Sat

Sun

Mon

Tue

Wed

Thu

Fri

Sat

CMY

Dec Year-end US Tax and Related Estate Planning for

American Expatriates in Hong Kong

Jessica Cutrera, Founder, Managing Director, Head of Operations & Compliance, EXS Capital Carlo Gray, Partner, Buzzacott Expatriate Tax Services Ellen Tong, Tax Director, Deloitte Touche Tohmatsu The financial issues faced by American expatriates differ from those of Americans living in the US in many important aspects, especially in respect to taxation and estate planning issues. Understanding the interaction of US and the various foreign tax rules is critical in managing tax exposure and avoiding double taxation, and US expatriates should be aware of simple yet effective year-end planning to minimize their US tax liabilities as a new President is elected and 2016 draws to a close. Jessica Cutrera is a Founder, Managing Director and the Head of Operations & Compliance of EXS Capital. She oversees all aspects of financial and operational control as well as regulatory compliance for the firm. She is an expert in many areas of corporate and individual financial, regulatory and tax issues, particularly in regards to Americans living in Asia. Carlo Gray is a Partner at Buzzacott, which is a top 25 UK firm of accountants head-quartered in London. Carlo specialises in providing US and UK personal expatriate tax advice and compliance to individuals, senior executives, partners in partnerships, small owner-managed businesses and companies, with a niche in the financial services field. Ellen Tong has worked for Deloitte in the U.S. and in Hong Kong. As a Tax Director in the Hong Kong office, Ellen leads the U.S. Individual tax practice. Ellen is also a specialist in China individual income tax, Hong Kong individual income tax and mobility management.

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: 04:00pm - 05:30pm Fee(s): Member: HK$200 Non-member: HK$300

Fax: (852) 2810 1289

Email: byau@amcham.org.hk

Fin

biz hk April issue ad Thomson Reuters 11053006_AMCHAM ad_210x297_03.pdf

CMY

Find out more about how we can help you: www.tr.com

26/8/16

3:56 pm

JOURNAL OF THE AMERICAN CHAMBER OF COMMERCE IN HONG KONG

www.amcham.org.hk

November 2016 â&#x20AC;¢ VOLUME 48 NUMBER 11