Hong Kong Business High Flyers Annual 2018

ANNUAL 2018

High Flyers 2017

Hong Kong's Outstanding Enterprises 16 TOP INDUSTRIES REVIEWED THE CHANGING FACE OF HONG KONG’S RETAIL

NO CHILL: PROPERTY PRICES WILL GO UP AND UP HONG KONG BUSINESS ANNUAL 2018 1

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Contents Annual 2018

2018 OUTLOOK 6 8 10 12 14 16

Economy aspires for a new growth model, but property stands on a precipice No chill: Property prices will go up and up China-led growth boosts 2018 job market China drives growth in accounting sector in 2018 The changing face of Hong Kong’s retail 2018 is looking bright for Hong Kong’s legal sector

MOST READ IN 2017 12

A month-by-month review of Hong Kong’s top stories in 2017

COMPANIES AND INDUSTRIES

24 Air transport and express industry continues to fly high 26 No dispute: Arbitration services is one of the best 28 Banking on close economic ties for sustained growth 30 Making up Hong Kong’s cosmetics sector 32 HK cleans up to pave way for sustainable future 34 Hong Kong’s future is bright on the big screen 36 Freight forwarding industry continues to soar 38 Steady cash flows for HK fund management industry 40 Hong Kong’s giftware industry keeps on giving 42 Houseware industry faces competition from peers 44 Insurance industry reports premium gains in 2017 46 Maritime services industry navigates to success 48 Ageing population challenges the HK healthcare 50 Sea transport industry is riding on wave of success 52 Hong Kong securities scene is as lively as ever 54 Hong Kong could just start the next tech revolution

BY THE NUMBERS

56 Labour force, unemployment, and underemployment 57 GDP and its main expenditure components at current market prices 58 Nominal Wage Indices for employees up to supervisory level 59 Number of Establishments, Persons Engaged and Vacancies Analysed by Industry Section 63 Number of Regional Headquarters in Hong Kong by Country/Territory where the Parent Company was Located 63 Seasonally adjusted Consumer Price Indices 64 Population by Age Group and Sex

6 44

56

Contents Annual 7

2018

High-Flyers 2017 70 HSBC Insurance (Asia) Limited

70

76

88

74 Able Mobile Limited 76 Athena Best Financial Group 78 British Airways 80 Dorsett Hotel 82 Elite Concepts 84 FTLife Insurance Company Limited 86 GODIVA Chocolatier (Asia) Ltd. 88 Hang Seng Bank

90

90 Hang Seng Insurance Company Limited 94 LadyCode 96 Lan Kwai Fong Hotel @ Kau U Fong

104

98 Lifestyle Insurance 100 MassMutual Asia Ltd. 102 Mayfare Group 104 Mercedes-Benz Hong Kong Limited 106 PrimeCredit 108 Shama Serviced Apartment 110 Standard Chartered Bank (Hong Kong) Limited 112 Towngas Telecommunications Co. Ltd. 114 TMA 116 WTT 118 Zchron Design

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ANNUAL 2018

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ECONOMy OUTLOOK

Economy aspires for a new growth model, but property stands on a precipice With a recovery in retail, low tax rates, and increasing connectivity, Hong Kong holds a promising future.

W

hen Hong Kong finishes its ambitious pipeline of infrastructure projects that seek to connect the island to other vibrant cities in mainland China, it should be able to unlock an invigorating spring of growth in 2018 and beyond. Hong Kong seems to have made the call to invest for the future and turn itself into a so-called smart city, with Chief Executive Carrie Lam allocating HK$700m in projects such as a landmark bridge to Zhuhai and Macao and universal broadband coverage.

For analysts, the message is clear: Hong Kong will try to evolve into a new growth model powered by innovation, technology, and connectivity to stay ahead of the curve in attracting investment and generating high-paying jobs.

But in doing so, it must not forget to address the critical concern of

6 HONG KONG BUSINESS ANNUAL 2018

“Hong Kong’s 2017 GDP growth is expected to exceed 3.5%”

soaring property prices that has worsened over the past decade and made the territory one of the least affordable housing markets in the world.

Infrastructure rennaissance Despite its mounting property risks, optimistic observers believe HK is treading a robust growth path that will strengthen in the coming years as its infrastructure investments and innovation initiatives become fully implemented. HK’s economy will be buoyed by the tailwinds of an ongoing global rebound, and will be anchored by a still-strong professional services sector.

“Benefitting from the global economic recovery, Hong Kong’s 2017 GDP growth is expected to exceed 3.5%. We foresee that the economic outlook for 2018 will maintain a cautiously optimistic

trend, with GDP growth about 2% to 3.9%,” said Ivan Au, divisional president, Greater China at CPA Australia. He said this growth outlook considers three positive factors that will uplift Hong Kong’s economy next year: steady growth and a foreign expansion mindset in mainland China, a simple and low tax rate, and increasing transport connectivity and cooperation with Greater Bay Area cities.

Mainland China’s GDP growth will stable in the short term, following a 6.8% expansion in the third quarter of 2017, Au reckoned. He said Hong Kong can take advantage not only of the increasing opportunities from China’s Belt and Road Initiative, but also attract more mainland Chinese enterprises and investors that are looking abroad to start and maintain a presence in Hong Kong.

One of Hong Kong’s important

ECONOMy OUTLOOK competitive advantages in drawing the interest of mainland Chinese firms as well as supporting homegrown startups will be its simple and low tax rate system. “In the face of new dynamics arising from economic restructuring and global competition, we are delighted to hear the new taxation policies announced in the Policy Address that the profit tax rate would be reduced to 8.25% for the first HK$2m profit of enterprises and the proposal of introducing tax deduction for research and development (R&D) expenditure,” he said. “These measures will certainly benefit the SMEs and encourage more R&D investment by enterprises.”

Hong Kong is also pursuing greater cooperation and connectivity with key cities in the Greater Bay Area. In 2018, it is commissioning transport infrastructure such as the Hong Kong-Zhuhai-Macao Bridge and the High Speed Rail link to Guangzhou, which Au reckoned will enhance the collaboration with mainland Chinese cities and further encourage inter-regional travel.

He also expects the cooperation framework of the development plan for a Guangdong-Hong KongMacao Bay Area city cluster likely to be implemented in 2018. This infrastructure boom should boost the tourism and logistics sectors, as well as other related industries.“We foresee that given the right policy settings and coordination, the Greater Bay Area will grow to take on a significantly more important role in the global economy and in China’s Belt and Road Initiative over the coming years,” said Au. “Hong Kong businesses will benefit from the new opportunities and closer cooperation with core cities such as Shenzhen and Guangzhou.”

The current infrastructure pipeline that is deepening connectivity with China are investments into the future, said Chris Leung, analyst at DBS. “In the short run, they will continue to ramp up the investment component of GDP. Over the long run, the intangible positive externalities could be astonishingly huge,” he noted.

Leung explained that the projects are neither redundant or driven by political objectives. More so, each one opens up a new connectivity channel

into a new geographical area. He said the new rail line will link Hong Kong to Guangdong and the rest of China’s high-speed network, whilst the construction of a third runway at Chek Lap Kok airport which began in 2016 will serve to increase capacity in HK’s airport.

“Once the physical connectivity with China deepens further, efficiency gains from shortened traveling time will stimulate crossborder trade in goods and services.

Mobility of key factors of production will also improve,” said Leung. “Thus, connectivity is a big theme anchoring long-term optimism in Hong Kong.”

And whilst it would take years to determine the exact magnitude of these tangible economic gains, he reckoned that not doing so would have kept HK growth stagnant.

Retail, innovation surge The retail sector has been battered in recent years due to pullback in tourist arrivals, but looking ahead, Leung forecasts retail sales to bounce back as inbound tourist spending eventually catches up with local spending. He said commercial rental adjustments have already made their way into the market, which should encourage retailers to start ramping up their presence, and there are signs that Chinese tourists are starting to come back. Meanwhile, Au reckoned the innovation and technology industry will also start to rise in prominence and will eventually become a key driver of economic growth in the long term. “We echo the Chief Executive’s vision that innovation and technology is the new model of development that will lead to new industries, create wealth, improve lifestyle, and, most importantly, bring about greater, more diverse and interesting employment opportunities for the young generation in Hong Kong,” he said.

Au was referring to Chief Executive Carrie Lam’s maiden policy address in October that highlighted innovation and technology as HK’s fountain for creating a sustainable stream of quality jobs, entrepreneurial opportunities and a strong engine fuel for the territory’s future economy.

To reach this ambitious plan to crank up innovation and technology, Lam committed to adopting policies,

investing resources, and connecting with talents and renowned research institutions.

Chua Han Teng

Ivan Au

Chris Leung

Painful property But even as HK looks to a promising future, it should watch out for risks in its property sector that could leave its economy limping, according to analysts. Chua Han Teng, head of Asia country risk at BMI Research, holds a less sanguine outlook, expecting Hong Kong’s economic growth to slow in 2018 as mainland China’s economic activity stutters, the elevated property market cools down, and unfavourable base effects are factored in.“The rise in Hong Kong’s house prices is increasingly unsustainable, and it will likely face headwinds from poor affordability and rising interest rates,” said Chua.

Despite government measures to cool down the market, BMI Research said prices continue to climb and this trajectory is becoming increasingly unsustainable—and there are signs that a sentiment-jolting correction could be in the offing. Hong Kong’s Rating and Valuation Department (RVD) data showed increases in residential property prices have started to trend lower on a monthto-month basis in the middle of the year, even though price gains are still strong on a year-to-year basis, suggesting that prices could be reaching their peaks.

“Hong Kong’s housing market remains highly overvalued, and we expect the market to cool as it faces headwinds from poor affordability, rising interest rates, potential for stricter government curbing measures, and an impending increase in the supply of homes,” said BMI Research.

Hong Kong GDP growth

Source: DBS

HONG KONG BUSINESS ANNUAL 2018 7

PROPERTY OUTLOOK

No chill: Property prices will go up and up Only 1 in 10 or 11.5% of total households will be able to afford an average private housing by 2019.

T

he continuously sky-rocketing property prices in Hong Kong has given rise to a trend this year that is expected to persist in the next years: the popularity of the nano flats or residential spaces that is atleast 60 sq ft in floor area—the smallest since 2001, according to JLL research. Residential property developers are trying to lure new customers without a more expensive, heftier price tag to show in the guise

Property price lower than HK$5m will still be the most affordable to home buyers, which indicates that a flat unit size has to be under 250 sq ft.

Starting to lose momentum

Source: BMI, Hong Kong Rating and Valuation Department

8 HONG KONG BUSINESS ANNUAL 2018

of nano flats. David Ji, Knight Frank’s head of research and consultancy for Greater China noted that Hong Kong will see flats get smaller and smaller in the coming years.

Daniel Shih, director of research for Colliers International shared the same sentiment. “The supply of nano flats will remain popular with a rising property price. Property price lower than HK$5m will still be the most affordable to home buyers, which indicates that a flat unit size has to be under 250 sq ft. Developers will continue to push smaller size units to the market,” he said.

In a report by Deutsche Bank in June, forecasts outline that only about 11.5% of total households in Hong Kong will be able to afford an average private housing by 2019 from the current level of 16.9%, and coupled with the upcoming rate hikes in the horizon, overall affordability of residential properties in Hong Kong may worsen, with average selling price to decline by 48% over

the 2017-2026 period to restore the supply and demand equilibrium.

Need for reforms and regulations But whilst there is acknowledgment of the continuously rising prices of property developments in Hong Kong, industry experts sharing their views were confident that the Government of Hong Kong have a plan in place to institute reforms and regulations, as well as detailed precautionary measures for all stakeholders—realtors, regulators, financiers, and buyers—to implement.

Ji shared that whilst the Hong Kong property market is heating up fast, more land supply from the government and more market reforms will be tabled from the state to cool the market and manage asset risks and bubble fears.

“In the office sector, investors will continue to look for value-add opportunities as it is getting more difficult to underwrite core asset

PROPERTY OUTLOOK Weaker market take-up likely

David Ji

Source: BMI Research

under the current depressing yield environment,” Shih explained Repositioning of Grade B office in core and fringe central business district areas in Hong Kong Island by upgrading building specifications, or in collaboration with coworking operators, to rebrand a lower grade office building to improve its tenant profile may likely provide a template for a degree of success in increasing asset value within a short period, Shih noted. Construction activities will pick up as well to meet with an increasing housing supply target for the coming years. “The return of Chinese tourists to Hong Kong will boost [the] wholesale and retail sectors in 2018, which has been the weaker link of the economy in the past few years.” he said.

Driving a portion of the growth of Hong Kong’s property sector over the last few years are investors and money coming from mainland China. JLL research, for instance, reckons that mainland Chinese companies will remain as the most active tenants in Central’s Grade A office market and will be the key driver of growth over the next 20 years if recent numbers are to go by. For example, about 50% of all new lettings—in terms of floor area leased—in Central arose from mainland Chinese companies’ demand this year.

Knight Frank’s Ji noted that the largely positive outlook for Hong Kong’s economy will permeate in majority of the territory’s sectors— including the property market— because of the stable growth of the Chinese economy and the expectation of the relatively small increase in US interest rates. This sentiment is echoed by Marcos Chan, CBRE Asia Pacific’s head of research

for Hong Kong, Southern China, and Taiwan, when he said that Hong Kong’s fundamentals will continue to improve with the retail and tourism markets stabilising, and the warming economic relations between China and the US, although comparative growth for the territory’s economy may still fall below the figures set this year.

Property rising stars In terms of the specific sectors in the property industry, Ji said the luxury residential sector will likely see the most resilience to any external factors in the next 12 months. “This is especially the super luxury end as it is not prone to general economic condition changes,” he said.

Performance figures in this segment over the past months also paint a hearty picture, which may likely spill over the next year. For instance, luxury transaction volumes in Hong Kong Island and Kowloon as well as in the New Territories reached 202 and 269, respectively, in the second quarter of 2017—representing a 44% and 55% quarter-on-quarter increase. Strong demand from Mainland China is projected to drive upward pressure on prime residential prices by as much as 7% next year, according to Knight Frank’s prime global residential forecast.

Hong Kong, in particular The Peak, is expected to post the strongest growth amongst major Asian urban markets for the next year.

The Peak is the city’s most exclusive neighborhood and popular tourist attraction for its cityscapes.

Colliers’ Shih, meanwhile, said that there is also a cause for optimism about the office and industrial property markets’ performance in the

Marcos Chan

Daniel Shih

next 12 months given both segments’ popularity to Chinese buyers and developers in Hong Kong.

“Although the office price has increased by 10.6% during the first three quarters of 2017, it remains the most popular category to investors,” he said. “With recent large en bloc transactions involving Chinese companies, we will likely see more office investments by the Chinese in 2018.”

Shih added that industrial property will continue to attract more interests following the Government of Hong Kong’s revitalisation scheme of industrial buildings, which is expected to be ready by 2018 and will likely increase significant interest in the segment. In terms of rates, he said prices will increase moderately as Hong Kong continues to enjoy a negative real interest rate in 2018, with Ji seeing rents in core office areas increasing by 3% to 5% next year.

For Chan, supply and demand movements will likely stay within manageable metrics for the residential segment, with prices expected to increase by 5%. “End-user demand will continue to support prices, whilst new supply is going to stay limited relative to demand,” he said.

For the commercial space, new supply in decentralised submarkets will take time to be absorbed, with vacancy in these decentralised submarkets set to climb, according to the CBRE official. Chan added that rental pressure is expected to be seen mainly in decentralised submarkets and prime office buildings in the core locations will continue to be sought after by investors, with office rental rates for central business district developments increasing by as much as 10% next year.

Residential Property Price Index

Source: BMI Research

HONG KONG BUSINESS ANNUAL 2018 9

HiRing and salary OUTLOOK

China-led growth boosts 2018 job market Junior managers and digital experts are in for an exciting year amidst a flurry of hiring activity.

R

obust and aggressive economic development in mainland China has led to a spurt in job openings and fatter paychecks across several sectors in Hong Kong, particularly in the areas of technology and cybersecurity.

More than one in four employers plan to add to their payrolls in the months ahead, up from just one in five in 2017. Salary increases also bode quite well for existing employees, with raises reaching 3% to 6%, slightly higher than that of last year.

In the meantime, banks that have been on a hiring and headcount freeze in 2017 are also beginning to open up and increase staffing levels for next year, as a result of new regulations and higher demand for fraud and investigation operations. Matthew Bennett, managing director, Robert Walters Greater China, said that businesses are expected to hire compliance professionals across all levels, in

10 HONG KONG BUSINESS ANNUAL 2018

“Chinese conglomerates have soared in hiring volume in 2017. This is primarily in the form of companies operating in the property, buyside financial services, and technology sectors.”

functions such as internal auditing, risk, and trade support.

“Hong Kong’s economy has a positive, but qualified outlook for growth that is benefitting from the ever-growing influx of Chinese capital into the territory and, in time, from its recent membership to the Asian Infrastructure Investment Bank (AIIB),” said Dean Stallard, managing director, Hays Hong Kong.

However, employers will not only be looking for the candidate with the perfect technical skillset. The mainland’s aggressive economic policies require employees who are up to the task with a first-hand knowledge of China and the language skills to boot. Employers will also be looking at candidates who have had an experience of working on an international platform, for example, external auditors who finished secondments overseas.

“Chinese conglomerates have soared in hiring volume in 2017. This is primarily in the form of companies

operating in the property, buy-side financial services, and technology sectors. The insurance space in Hong Kong has also gone through a rejuvenation in 2017, with a significant number of new senior and mid-level talent appointments being made,” said Sharmini Wainwright, managing director, Michael Page Hong Kong.

Juniors take lead Over the past months, recruitment has been the most difficult in terms of hiring and retaining staff in retail sales management roles. Connie Leung, career information solutions business leader, said that mid-career professionals in marketing functions and experienced para-professionals in supply and logistics functions continue to be in high demand.

“Despite the general high costs of employment talent in Hong Kong, we have seen a significant increase in volume hiring projects or new hubs being set up in Hong Kong for areas

HiRing and salary OUTLOOK such as customer service, onboarding, and phone-based sales teams. This is due to the fact that most local talent are proficient in at least 3 languages and the high education levels of most candidates in Hong Kong,” Wainwright said.

According to Robert Walters’ most recent survey, salaries across the board will generally be stable, with job movers probably expecting 10% to 20% increments. Digital experts with specialised skills can even command up to 30% increases when moving from one job to another.

However, marketing managers might experience paycheck slashes of up to 20%, amounting to HK$180,000 for an average annual salary of HK$900,000.

Hiring for top management positions such as senior executives will be at a snail’s pace. Organisations have been meeting up to fifteen candidates for each position, stretching the hiring period up to six months. According to Wainwright, this is very different to activity during the peak hiring stretches.

The composition of the job market is also changing. Demand and supply imbalances prevail as firms begun opening jobs at a massive scale.

Wainwright said that companies in Hong Kong have had to move talent from overseas in order to fulfill roles, such as fintech business development experts, IT developers (web and app developers), aviation leasing operators, food and beverage frontline talent, and company secretarial experts (due to the rise in Chinese corporations who have listed in Hong Kong). Moreover, many of these roles are project-based and under short-term and flexible contracts.“The contracting market in Hong Kong continues to strengthen, Hiring intentions across industries

Source: ManpowerGroup Employment Outlook Survey

Matthew Bennett

Connie Leung

Dean Stallard

Sharmini Wainwright

gaining momentum in both the broader financial services sector as well as the commercial sectors. For a number of multinationals, this has become their preferred way of hiring in Hong Kong, and they typically transition 1 in 4 temporary resources to permanent status after the contract duration. This particularly appeals to the younger workforce,” Wainwright added.

Digital: the name of the game A shortage in digital talent persists to hound Hong Kong, with one in three firms admitting that they have a severe lack in technical manpower, according to Hong Kong Wireless Technology Industry Association’s (WTIA)’s Hong Kong Mobile Apps Industry Survey 2017. This begs the question as to where the needed skills will come from, considering increasing demand for cybersecurity experts, digital marketing professionals, front-end developers, and compliance professionals.

In the meantime, firms in the city have been hiring the necessary digital talent from mainland China and nearby countries in the region. Fastpaced developments in the digital landscape have also led to firms saying goodbye to lower-tech roles such as manual testing and helpdesk, which are moving to cheaper labour markets overseas. “Professionals in Hong Kong need to constantly think about the value they deliver in their role. Anyone who is delivering just the bare basics to get through the job and daily routine is highly likely to get replaced by automation,” she said.

It is important for employees in the digital age to not only know how to be able to work with technology, but to interact with it. Stallard said that it is important to be able to embrace, understand, and implement new technologies as well as to facilitate effective interactions with intelligent assistants. According to him, candidates also stand a better chance if they have prior experience of creating new sales channels and expanding market share via new technology.

To date, many employees have not yet fully embraced the idea that technology is an opportunity and not a threat. “For example in recruitment, I see an opportunity for AI to take on a lot of the ‘administration and search’ related tasks, leaving recruiters with more time to develop strong relationships with both candidates and clients to help manage the recruitment process,” Bennett said.

However, not all digital experts can heave a sigh of relief. Stiff competition in the city is expected to weed out candidates that have the digital know-how but lack the soft skills to easily adapt to changes and handle the pressure of a challenging and dynamic environment.

Stallard added that entrepreneurial flair is an asset in order to put businesses to the forefront. “It is important to remember that automation cannot replace relationships, therefore building strong communication channels will be important regardless of the function you are in,” Wainwright added.

HONG KONG BUSINESS ANNUAL 2018 11

ACCOUNTING OUTLOOK

China drives growth in accounting sector The Belt and Road Initiative will open more opportunities for businesses that require skilled accountants.

W

hen Hong Kong and China launched the development of the Guangdong-Hong Kong-Macao bay area, they did not expect immediate aggressive growth amounting to 15% of the entire Hong Kong GDP. With predictions that the area’s GDP will surpass that of all bay areas in the world by 2030, the already huge talent shortage in the accounting sector is

PwC has already begun recruiting talent with backgrounds in science, technology, engineering, and mathematics (STEM).

Salary range - Finance and Accounting

Source: Robert Half Hong Kong 2017 Salary Guide

12 HONG KONG BUSINESS ANNUAL 2018

also expected to increase.

China’s Belt and Road Initiative will also be a major driver for growth and transformation in the sector, pushing accountants in the city to step up their game lest they trail behind others in the region. With a potential market that includes half of the world’s population, 75% of known energy resources, and 40% of global GDP, the Belt and Road Initiative will further increase the demand for topnotch accounting services well beyond the usual audit and assurance spaces.

Fresh blood Robust economic growth in Hong Kong and the huge development plans underway have transformed Deloitte and other accounting firms to offer consulting, financial and risk advisory, as well as tax and legal services. However, they will be challenged once more to go beyond these in the age of big

data and analytics. Derek Lai, vicechairman, Deloitte China, said that big data for accounting has some very important implications. First of all, big data will improve the quality and relevance of accounting information, thereby enhancing transparency and facilitating the decisionmaking process. “When it comes to reporting, big data can help create and refine accounting standards, and make sure that the accounting profession will continue to provide useful information in response to changes in the capital market and global economy,” Lai added.

In particular, advances in automation services such as selfservice data retrieval could lessen routinary work for accountants and finance professionals so they can have more focus on strategic insight as well as statistical and predictive modelling.

As a result of the increase in crossborder initiatives in the region, new hires have to have enough knowledge

ACCOUNTING OUTLOOK Salary range - Finance and Accounting

Derek Lai

Source: Robert Half Hong Kong 2017 Salary Guide

of China and its economy. The mainland’s rapid growth will remain to put pressure on the labour force for accountants and non-accounting finance graduates who can work efficiently in an international setting.

Skills upgrade Accounting graduates will also have to brush up on language and communication skills considering more negotiations and interactions outside of their base. For PricewaterhouseCoopers (PwC), new developments also mean new fields of work. In fact, PwC has already begun recruiting talent with backgrounds in science, technology, engineering, and mathematics (STEM) as well as new blood skilled in food supply and integrity and cybersecurity. “The key attributes that we look for include integrity, professionalism, and the ability to apply and uphold the highest professional standards, analytical mind and strong problem-solving skills, and good communication and interpersonal skills,” Lai said. He added that integrity and professionalism are particularly important for Deloitte because of the firm’s commitment to professional independence and regulatory compliance, which is the cornerstone for building public confidence in the accounting profession.

KT Tam, practising director, CK Yau and Partners CPA, agreed that audit firms are in extreme need of manpower, and several industries such as banks, financial institutions, securities brokers, and insurance brokers will need more accountants and finance professionals as they need to comply with the strict rules, laws, and regulations. Tam said that the compliance department, in

particular, has been understaffed for quite some time. On the other hand, stricter accounting standards and legal requirements are also making it harder for those who are already in the rolls. IFRS 9 or Financial Instruments and IFRS 15 or Revenue from contracts with customers, in particular, will have substantial effects on clients and audit functions.

New standards “The 2018 IFRS 9 is the latest attempt to get a more realistic and comprehensive standard and a more or less understandable sets of requirements. It will affect financial institutions mostly but other business and their auditors will have to deal with its new ways of classifying and measuring financial assets (including a new way at looking at impairment) require significantly more and different sets of judgements,” said Paul Phenix, consultant, Baker Tilly Hong Kong.

On the other hand, IFRS 15’s new title on revenue recognition will change the focus of when and how much to recognise in revenue. Phenix added that the new IFRS 15 changes the pattern of timing of both revenue and of costs. It also has novel ways of looking at discounts and incentives, amongst others, and how, where, and when these are to be recognised.

The accounting sector in the past decade has also witnessed the way technologies could bring about disruptive changes to how they conduct business. According to Lai, one of the major challenges for their industry is how they can drive innovation and transformation, which will require them to explore new services to help clients cope with unprecedented business challenges.

“Digital transformation and

KT Tam

Paul Phenix

innovation across various industries have propelled continuous growth and diversification in demand for professional services from organisations such as Deloitte and other Big 4 firms, which have responded to market changes and sought to offer a wider range of advisory services,” Lai said. In fact, Deloitte recently announced a strategic investment program of US$200m, from which a significant portion will be earmarked for the purpose of scaling up advisory service capabilities and promoting the firm’s digital transformation.

Big data Phenix added that whilst big data and analytics are already top considerations for the Big Four accounting firms, Hong Kong businesses have yet to hop on the trend. Phenix said that the Big Four have already developed specialised units to service their clients involved in new technology and in fintech, more importantly, in blockchain.

“When blockchain can work well enough to satisfy regulators and the market, it will have phenomenal effect on how audits are done, indeed, whether audits need to be done,” Phenix said. Tam agreed that big data can help multinational companies and large corporations to have faster, more convenient, and timely analysis of accounting data. Despite this, Tam said that it would take some time for new technologies to be more common and popular in the accounting field.

Traditional accounting and legacy systems remain very common in the Hong Kong accounting sector and transitions have been slow to keep up with digital disruptions.

Salary range - Finance and Accounting

Source: Robert Half Hong Kong 2017 Salary Guide

HONG KONG BUSINESS ANNUAL 2018 13

RETAIL OUTLOOK

The changing face of Hong Kong’s retail Retailers should be ready to revamp their stores into unique lifestyle concepts to battle e-commerce.

A

n upgraded mall shopping experience will be crucial for retailers that want to combat the rise of online shopping.

Aggressive mainland Chinese firms such as JD.com and Alibaba Group are courting high-end shoppers with new online retail sites stocked with luxury goods, which they previously could only obtain by traveling to Hong Kong or other countries.

With Chinese consumers accounting for nearly a third of global luxury spending, a change in habit to high-ticket shopping at home will have an impact on Hong Kong luxury retailers. Joe Lin, executive director (advisory and transactions services) at CBRE Hong Kong forecasts that luxury items will be more focused on quantity sales than the price value in the coming year.

“Chinese tourist numbers rebounded in recent quarters, and shopping still ranks high in their agenda. However, they are shifting to more mid-range

14 HONG KONG BUSINESS ANNUAL 2018

“The idea is to add more value to the brick-andmortar store experience and make walking through store aisles a compelling alternative to increasingly convenient online shopping.”

products and buying less in quantity, as the gifting culture has been greatly diminished,” he said. “Although we are seeing the sales value of jewellery items rebound in the last couple of months because of the low-base effect year-on-year, but in longer term its momentum may not be as strong as the last decade.”

Cynthia Ng, director at Colliers Hong Kong expects tourism numbers to improve mildly but does not foresee a jump, owing to a slew of factors that has diminished retail demand and will require a complex solution. “The market slump in [the] past few years was not triggered by a single incident or a financial crisis but simply the policy of anti-corruption, political relationship with China, and a lack of confidence or clarity towards the government bodies in Hong Kong,” she said. “Such confidence could only be gradually picked up, [rather] than overnight.”

Alicia Garcia-Herrero, chief economist at Natixis forecasts tourism numbers to continue to increase, but at a more moderate level unlike previous years. She noted that visitors from other countries are also growing, such as Japan and Korea, representing a small but improving diversification of tourist sources that can benefit different parts of the retail industry—and a chance for HK to reinvent its retail growth paradigm.

“Retail sales have bottomed out but still quite far from the rapid expansion period previously. This points [to] a more fundamental problem of the narrow focus in shopping, which is against the global trend is switching to higher quality tourism,” she said.

“The world is competing for tourists through improvement in experience and Hong Kong may not be able to use its old growth model forever,” she said.

2018 promises to be a year

RETAIL OUTLOOK

Alicia Garcia Herrero

Cynthia Ng

of stabilisation and significant adjustments for retailers, with a particularly promising outlook for segments like jewellery and cosmetics. Aside from convincing shops to tweak their product lineups to cater more to domestic demand, the retail transformation will also push more stores to launch unique lifestyle concepts. The idea is to add more value to the brick-and-mortar store experience and make walking through store aisles a compelling alternative to increasingly convenient online shopping. The hunt for retail space is also expected to heat up as the retail rent correction likely bottoms out.

Stable market “In 2018, we think the market will be more stable,” CBRE Hong Kong’s Lin said. “Multi-brands cosmetic operators and jewellery are starting to look for good opportunities in the high street market; the tier-one high quality shops will be absorbed first if the rent is reduced to an attractive level which the retailers can survive with today’s retail market situation.”

He reckoned that more retailers are feeling relieved as the rental burden has eased in the past two years, with overall rent on major retail streets dropping significantly in the period. Instead of costs, the focus now is on how to generate a stronger, more diversified revenue stream—one that is more grounded on the local market to protect their businesses somewhat from the shock of low tourist numbers, as it has in

recent years.

“The main concern will be how to tap for new business sources when Chinese tourists are no longer their main support,” said Lin. “We tend to believe that it is a positive recovery, especially when we have seen so many retailers change their strategies quickly to focus more on the local market or the less expensive product range for tourists. With this observation, this recovery can last long.”

Winners and losers Given this shifting market focus amongst some retailers, Lin expects cosmetics to be one of the best performing segments in 2018.

“Mainland tourists are indeed the main customers for beauty and skincare retailers, but, at the same time, local people are also a strong segment for this business,” he said.

“Given their prices are mostly not expensive, especially the Korean brands, all ages of ladies—and men— can find what they want easily and affordably.” Lin also noted that Hong Kong hosts most of the renowned cosmetic brands in the world, with beauty and makeup stores still dominating the most prominent areas in the city’s shopping districts and department stores.

The medicines and cosmetics as well as jewellery segment will shine in 2018 on the back of an expected rebound in Chinese tourists, pushing total retail sales up slightly for the year, said Herrero. “The destiny of total retail sales value pretty much

Joe Lin

hinge on jewellery as the industry account for around one-fifth of total value. However, the improvement may be rather limited to the industry itself,” she added.

Aside from cosmetics and skincare, two other segments—food and beverage (F&B) and lifestyle apparel and premium accessories—have been doing well as of late and will continue to drag retail sales up in 2018, said Ng. She reckoned cosmetics and skincare have been the most sustainable in sales during the retail market slump, proving to be a virtual necessity as Hong Kongers strive to stay youthful and beautiful amidst societal expectations. Meanwhile, the biggest trend in F&B is fine dining at an approachable price, especially when paired with interesting and authentic food concepts.

Finally, she expects lifestyle apparel and premium accessories to remain strong and continue to post market gains from traditional luxury due to increased local consumption, particularly amongst affluent millennials,. “The positive recovery should not be short term as the market is steadily picking up confidence overall,” said Ng. Another supportive factor would be the adjusted rentals, where a cost of $1m or below are only half or even a third of its previous asking price, and will be attractive to premium international brands who can afford it. Overall, there is a twist of taste and preference by the consumers who are now looking for designer products that offer the experience and a brand identity,” she added.

“This is supported by multiple social marketing activities and digital platform to connect with the customers.”

Consumption vs retail sales

Source: DBS

HONG KONG BUSINESS ANNUAL 2018 15

legal OUTLOOK

2018 is looking bright for the legal sector The areas of New Law and Legal Tech have been fuelling the growth in Hong Kong’s legal sector.

H

ong Kong’s stature as a major financial hub remains a key reason why it is a very attractive landscape for legal firms and activities over the next 12 months, according to Rob Green, director for GRMSearch. “Hong Kong is a mature, well-run, enormous economy that will continue to be a major Asian hub for legal services,” he said.

This is echoed by Hayden Flinn, co-chief executive at King & Wood Mallesons, saying that part of Hong Kong’s charm for sector’s like the legal profession is its embedded global competitiveness towards an enabling business environment, large pool of world-class talent, and the territory’s proximity to mainland China— perhaps the biggest market in just about any economic, business, and legal activities.“As one of the world’s leading financial centres, Hong Kong is where many of our clients raise capital, and a regional hub for

16 HONG KONG BUSINESS ANNUAL 2018

An increased focus in cybersecurity and data privacy and protection will increase the demand and activities for legal services relating to these issues.

organisations operating in Asia,” he said, adding that Hong Kong also remains the gateway to China, given that much activity remains generated through Hong Kong’s close connection with the mainland.

“As well as being a centre for Asian fund raising, Hong Kong is also a key location for merger and acquisition activity, banking, litigation, and arbitration,” Flinn noted.

Green noted two areas fueling tremendous growth in Hong Kong and Singapore’s legal sector as of the moment: New Law, where companies effectively contract lawyers on short-term assignments, and LegalTech, with the advent of technology and across-the-board digital transformation of legal services.

The GRMSearch director noted that Hong Kong law firms are in the forefront and pioneering these technology-based solutions to give clients better services. “These areas

are showing a lot of growth … and there is a bright future in these spaces in the coming years. Firms that embrace the changes in the market will be the ones to flourish,” he said.

Areas to look forward to For the areas to look forward to, the three experts are in agreement that whilst the usual and staple legal areas of regulatory, finance, restructuring, corporate, mergers and acquisitions (M&A), and litigation—especially the China-related disputes—there are new frontiers to look forward to.

“The hot new spaces like technology, fintech, data protection, [and] competition—these areas are the exciting ones to watch in 2018,” Green said.

Psyche Tai, head of Norton Rose Fulbright’s Hong Kong office, shares the same sentiment, saying that aside from traditional banking and corporate experts who can do M&A work, strong hiring

legal OUTLOOK

Hayden Flinn

Psyche Tai

activity in regulatory compliance, investigations, fintech, data privacy, and cybersecurity reflects that industry activities are in line with market changes and demands.

“Regulatory compliance continues to be a hot topic, it has been for a few years now but that chatter hasn’t ceased,” she said. “Financial institutions continue to be very alert as new regulations impacting them continue to roll out and international investigation continue to be prevalent.”

In terms of data, the AsiaPacific region has perhaps become a catch basin for some of the biggest cyberattacks in recent years, including the WannaCry ransomware that crippled various industries, from the hospital and emergency segment in the United Kingdom to financial services institutions in the Philippines. Tai shared that an increased focus in cybersecurity and data privacy and protection, together with the impending rollout of the European Union’s General Data Protection Regulation, will increase the demand and activities for legal services relating to these issues.

“Asia has suffered an increase in cyberattacks in recent years so companies here have had to keep an eye on their breach protocols, therefore, reaching out to cybersecurity experts and sometimes insurers for risk and coverage advice,” the Norton Rose Fulbright official said.

New technologies—including

cashless transactions, fintech, e-payments, blockchain technology, and more—will continue to be an interesting area to watch out for in Hong Kong’s legal sector as adoption of these innovations are increasing exponentially. Tai shared that the emergence of new technologies has introduced a new stream of business for law firms with existing platform or newly developed fintech expertise.

Recruitment, competition Given the strong outlook for Hong Kong’s legal sector for next year, there will continue to be issues to note including recruitment and retention of professionals; competition between firms particularly on pricing; and competition for service provision across sectors and across borders.

Green noted that the Hong Kong government and other industry players and regulators should make sure that policies and programs to attract—and retain—top talent are in place to keep the territory’s competitiveness at the maximum.

“To fulfill the demand, we have to continue to attract the top international (and local) talent”, he said, elaborating on the fact that this has been an ongoing issue due to the increasing cost of living in Hong Kong—considered one of the most expensive cities in the world—and the increasing requirement to have a high level of language proficiency, particularly in English, Cantonese, and Mandarin Chinese, which reduces the potential recruitment pool significantly.

Rob Green

Tai shared that in addition to strong technical skills and legal knowledge, legal professionals should also have the appropriate cultural sensitivity, strong commercial sense, and business acumen. “Clients no longer see us as advisors on the law, but as partners in providing commercially sound solutions to their legal issues.

We need to be able to anticipate risks and issues that may impact our clients’ business objectives,” she said.

The importance of the language proficiency as well as cultural sensitivity and understanding particularly focuses on the rise of mainland Chinese clients in the market, according to Flinn. This is on top of lawyers’ ability to build strong relationships with clients and an understanding of how to do business around mainland China and across Asia.

The robustness of the legal sector in Hong Kong will also have an effect on the competition on fees and pricing for legal services.

This competition, however, is not only within the sector itself.

Tai shared that we will continue to see competitors and new entrants breaking into the market. For example, accounting firms are not the only ones setting up legal services in the territory, there is also a continuous influx of Chinese law firms expanding organically or via international mergers, into Hong Kong’s legal sector.

“The key is that law firms need to continue to grow and evolve according to client needs and demands,” she concluded. “Flexibility and innovation are important when it comes to delivering excellent services to your clients, and those who do not embrace change will be left behind.”

Salary Expectations - Legal & Compliance

Source: Robert Walters Salary Survey 2017

HONG KONG BUSINESS ANNUAL 2018 17

TOP NEWS IN 2017

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within three months of leaving school, and the majority of them (76%) are satisfied with their position, according to the latest jobsDB Survey on the Employment Status of Hong Kong’s Tertiary Students 2016.

RESIDENTIAL PROPERTY

Daily news: www.hongkongbusiness.hk HR & EDUCATION

MEDIA & MARKETING

Hong Kong Business High Flyers Awards 2016 recognises exceptional enterprises A total of 21 companies were awarded this year.

On its 13th year, Hong Kong Business High Flyers Awards honours outstanding firms and companies that have exemplified how an exceptional and commitment to innovation.

Nine jobs that are most in demand in Hong Kong in 2017 Chinese capital investment in asset management firms and private equity fund houses has created job growth in the non-banking financial services industry, according to recruiting experts Hays.

This is one key finding from the latest Hays Quarterly Report, for the January to March quarter, which is a guide to the current hotspots of recruitment activity and trends.

Cathay Pacific to announce job cuts and fewer flights According to Reuters, Cathay Pacific Airways is expected to announce job cuts, cost reductions and to shift flights to its short-haul arm when it unveils the results of a key review this week, as it grapples with growing competition from Chinese carriers.

18 HONG KONG BUSINESS ANNUAL 2018

RETAIL

Retail spending drops to 17year low South China Morning Post reported that with retail sales in Hong Kong plummetting to a 17-year-low, experts have called on the government to take action to better predict tourist spending habits. “The city’s retail sales totalled HK$436.6 billion at the end of 2016 down 8%.

Why Hong Kong’s crazy home buying can’t be stopped Bloomberg reported that demand for new homes soared 48 percent in January over December, compared with a 76 percent decline in the same period last year, according to data from the government and residential property agency Midland Realty. “A batch of 188 units at China Overseas Land & Investment Ltd.’s new complex.

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hard? Hang Seng Bank expects Hong Kong’s growth to pick up to 1.8% this year, with further economic recovery in advanced countries and the stabilisation of the mainland China economy.

“There are upside risks to our projection but we also take note of the economic uncertainties.

4 new trends to watch out for in Hong Kong’s retail sector According to JLL, overall visitor arrivals and visitors from mainland China have decreased by 5.4% and 7.8% year-on-year respectively through January-November last year. Retail sales were also down 8.6% y-o-y.

Hong Kong’s retail sales value down 2.9% The value of total retail sales in December, provisionally estimated at $42.4 billion, was down 2.9% on the same month last year, the Census & Statistics Department announced. After netting out the effect of price changes over the same period, the volume of total retail sales decreased 2.8% year-on-year.

HR & EDUCATION

Fresh grads’ salaries up 9.5% to $14,685 Nearly all of Hong Kong’s most recent batch of university graduates (89%) found a job

ECONOMY

Three economic risks Hong Kong could worry about Will retail sales’ consistent decline blow the economy

RETAIL

Uptrend in tourist arrivals boost luxury goods sales Value sales rose 2.3% in December According to a report from Citi Asia Economics, luxury goods sales and cosmetics benefited from recovering tourist trend, as value sales of jewellery, watches and clocks and valuable gifts rose by 2.3%yoy in December. “[T] his is a meaningful positive print after 26 months of negative. This is in line with the improvement in Mainland Chinese tourist arrivals – which also have returned to positive growth of 6.1%yoy after 18 consecutive months of decline,” Citi said.

Similarly, medicines and cosmetics are additional top shopping list items.

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Daily news: www.hongkongbusiness.hk The sales value of jewellery, watches and clocks, and valuable gifts fell 3.9%.

HOTELS & TOURISM

RETAIL

Retail profits may rise by at least 36% over the next 12 months Maybank Kim Eng notes that leases that were up for renewal have fallen as much as 41% over the past two years, based on Bloomberg data. CBRE and Colliers expect HK retail rent to fall further, in the low single digits this year, while Savills said the current adjustment cycle looks to have overshot.

Expect more empty hotel rooms in Hong Kong Visitor arrivals are forecast to drop 2% this year. Whilst Hong Kong’s visitor arrivals and hotel occupancy rates showed signs of recovery at the end of 2016, hoteliers can expect a turnaround this year.

According to CBRE, with the launch of new hotel rooms and an expected decline in visitor arrivals, occupancy in the coming years will suffer downward pressures.

Hong Kong’s retail sales value dropped 0.9% The value of total retail sales in January, provisionally estimated at $43.1 billion, was down 0.9% compared to a year ago, the Census & Statistics Department announced. After netting out the effect of price changes over the same period, sales value of jewellery fell 3.9%.decreased 1.4% year-on-year.

68% of Hong Kong employers plan to give bonuses to all workers According to recruiting experts Hays, in Hong Kong, 85 per cent of employers offer staff benefits in addition to salary/bonus. 12% expect paying bonuses worth 100% of staff salary.

Which jobs will be most in demand in Hong Kong in Q2?

Skilled professionals in Hong Kong’s economy is entering more positive territory with several sectors set to increase hiring over the April to June sector increasing competition for the best talent.

Hong Kong’s salary gap rises to 7.5 times For every US$100 that top management in the US earned in base salary, those in Hong Kong made US$128.

But for all the talk that bosses in Hong Kong are paid far more than workers, a new survey shows that local bosses are paid less than their counterparts.

HR & EDUCATION

6 factors that keep Hong Kong workplaces happy With the longest working hours in the world, few holidays compared to most countries and

fashion retailers Global loyalty marketing agency ICLP surveyed 750 consumers in Hong Kong and asked them which brand first comes to their mind amongst the retailers they regularly shop at. They said they like the brand, but they do not want to be engaged.

HR & EDUCATION

HR & EDUCATION

HR & EDUCATION

RETAIL

rising cost of living, it can be a challenge for employers in Hong Kong to make sure that their employees are happy.

A new report It’s time we all work happy: The secrets of the happiest companies and employees, commissioned by specialised recruitment company Robert Half, reveals the drivers behind employee happiness and how businesses can nurture positive culture.

RETAIL

Hong Kong consumers in a ‘casual’ relationship with fast-

RETAIL

Hong Kong consumers’ satisfaction levels hit threeyear low Tough-to-please Hong Kong consumers’ satisfaction with customer service has reached a three-year low, according to the American Express Customer Service Barometer.

In fact, only a third of consumers (32%) see businesses putting effort into providing excellent customer service, down significantly from two-thirds (58%) in the previous two years.

FINANCIAL SERVICES

82% of financial firms in Hong Kong eye partnering with fintech companies PwC’s 2nd Global FinTech Survey shows the vast majority (82%) of financial institutions in Hong Kong intend to form partnerships with FinTech companies in the next 3-5 years, rather than radically re-invent themselves.

Only 51% of Hong Kong institutions have adopted a ‘disruptive’ strategy.

HONG KONG BUSINESS ANNUAL 2018 19

TOP NEWS IN 2017

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and she doesn’t have enough money to feed her family of four crammed into her small, government-subsidized Hong Kong apartment. Her husband can’t work, and the kids don’t understand why their mother keeps buying stale food.

Daily news: www.hongkongbusiness.hk

MEDIA & MARKETING

sales value of jewellery, watches and clocks, and valuable gifts.

RETAIL

AVIATION

Cathay Pacific denies it will fire another 200 staff this year Cathay Pacific Airways has denied a report in the South China Morning Post that there will be an additional 200 staff cuts later this year.

“The number of redundancies resulting from the programme is around 600, as we announced to our people and the public yesterday.

Rumours of other figures are incorrect,” their spokesperson said.

Retail sales value up 0.1% to $35.2b in April The value of total retail sales in April, provisionally estimated at $35.2 billion, was up 0.1% on the same month last year, said the Census & Statistics Department. After netting out the effect of price changes over the same period, the volume of total retail sales dropped 0.1% year-on-year.

The sales value of jewellery, watches and clocks, and valuable gifts increased 0.5%.

Retail sales up 3.1% to $35.7b in March The value of total retail sales in March, provisionally estimated at $35.7 billion, rose 3.1% on the same month last year, the Census & Statistics Department announced. The volume of total retail sales increased 2.7% year on year. Meanwhile, the 20 HONG KONG BUSINESS ANNUAL 2018

ECONOMY

Hong Kong is Asia Pacific’s most expensive location for expats Hong Kong is the Asia Pacific region’s most expensive location for expatriates and the second-most expensive on a global scale. This was one of the findings of the latest Cost of Living survey published by ECA International. It is also the world’s second costliest city.

Hong Kong Business Awards 2017 honours 26 outstanding firms To recognise the companies that excelled despite challenges in the local and global markets, Hong Kong Business held this year’s International Business Awards, Listed Companies Awards, and Business Ranking Awards. Almost 100 executives attended the awarding ceremony on 25 July where 26 firms were honoured.

RESIDENTIAL PROPERTY

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dropping When will it start stabilising?

Passenger yields remain under pressure as back-end load factors remain soft leading to lower ticket prices according to Jefferies. In fact, management noted passenger yields continue to sequentially decline. Further, costs are also increasing, especially fuel.

4 new trends to watch out for in Hong Kong’s retail sector According to JLL, overall visitor arrivals and visitors from mainland China have decreased by 5.4% and 7.8% year-on-year respectively through January-November last year. Retail sales were also down 8.6% y-o-y.

Property sales drop 16.1% in May The Land Registry said the figures represent a 16.1% on April but up 24.3% compared to a year ago. The total consideration for sale and purchase agreements in May was $66.8 billion, down 24.1% on April but up 37.1% year-onyear. Amongst the sale and purchase agreements, 5,732 were for residential units.

ECONOMY

Hong Kong has the biggest wealth gap in Asia Mrs. Lau can’t help but glance nervously at the calendar. Her next paycheck isn’t for a week,

AVIATION

Cathay Pacific struggles as passenger yields continue

RETAIL

Over 3 in 5 retailers eye opening new stores in Hong Kong in 2018 A recent JLL survey found that 62% of international and local retailers have plans to open new stores in Hong Kong in 2018. It shows retailers are calling the bottom of the retail market and predicting an improvement since the retail rents in core shopping districts have dropped 41.2% from the market peak in 2014.

JLL surveyed 50 international and local retailers in June and found that half of the respondents think Hong Kong’s retail market will recover next year.

All retailers believe high-street rentals are still over-valued.

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Daily news: www.hongkongbusiness.hk RESIDENTIAL PROPERTY

Home prices predicted to surge 15% in the next 2 years: JLL Hong Kong residential housing prices continue to waft skywards, despite the government’s efforts to keep the property balloon closer to earth.

Centaline Property’s Centa-City Leading Index, broke previous records Friday to reach 160.3.

The index has climbed 11% this year and has surged more than 50% in the past five years.

HR & EDUCATION

Hong Kong gender pay gap widens to 22.2% It topped Singapore’s pay gap by 10ppt. Bloomberg Businessweek noted that Hong Kong’s pay gap widened to 22.2 % from 19.1% a decade ago. This is 10 percentage points higher than Singapore’s and the UK. Meanwhile, it is slightly higher than the gaps seen in Australia and the United States.

RETAIL

Is Hong Kong’s retail property market finally recovering?

Hong Kong’s retail sales continued to recover, rising 0.5% year on year in May, the third consecutive month of positive growth, according to Knight Frank.

The jewellery, watches and clocks, and valuable gifts” category also recorded retail sales growth for the third month in a row, gaining 1.4% year on year in May.

HR & EDUCATION

Employers struggle to secure preferred candidates as digital tech hiring booms Hong Kong’s digital technology sector is experiencing strong hiring activity across a range of areas with employers facing stiff competition to secure preferred candidates, according to recruitment specialist Hays.

HR & EDUCATION RETAIL

Hong Kong’s retail sales value up 0.1% to $33.7b The value of total retail sales in June, provisionally estimated at $33.7 billion, was up 0.1% on the same month last year, the Census & Statistics Department announced. Volume of total retail sales increased 0.4%.

sales value rising another 0.1% year on year in June 2017, according to Knight Frank. They fear having empty shops for extended periods.

8 hiring trends in Hong Kong’s banking and financial services sector Recruiting expert Hays recently reported that attracting and retaining young bankers is one of the challenges faced by financial services firms in Hong Kong.

Mandarin-speaking executives are in greater demand.

TELECOM & INTERNET

Price war looms over telcos amidst iPhoneX release South China Morning Post reported that China Mobile, one of the four major mobile operators in Hong Kong, cut its monthly package fee by 25 per cent on Tuesday – the last one to jump into the price war ahead of the latest iPhone launch. CSL fired the first shot last week by offering discounts, aiming to poach customers from SmarTone and Hong Kong Broadband network. One of the operators slashed monthly package fee by 25%.

RESIDENTIAL PROPERTY

RETAIL

Hong Kongers burdened by soaring home prices Bloomberg Markets reported that Hong Kong’s mortgagepayment-to-income ratio rose to 54.2% in June, the highest since 1998. Citing figures from Centaline Property Agency show, the report said the low affordability is a result of the steep rise in home prices, which have kept soaring despite efforts by the city’s leaders to impose restrictions to cool the market.

A gauge of existing home prices,

Why July retail sales performance may be a oneoff After weak June performance, July retail sales -- both by value and volume – surprisingly rebound to 4.0%yoy and 4.6%yoy, respectively.

Although July’s tourist arrival figures are not out yet, Citi analysts suspect the better performance likely to be associated with the rebound of tourists in summer.

COMMERCIAL PROPERTY

Retail landlords becoming more flexible in rental terms Hong Kong’s retail market continued to recover and recorded positive growth for 4 months in a row, with retail

HONG KONG BUSINESS ANNUAL 2018 21

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group CLSA. Next were Hong Kong, Japan, Taiwan, Thailand, Malaysia, India, Korea, China, the Philippines, and Indonesia.

The survey looked at five categories including corporate governance culture.

Daily news: www.hongkongbusiness.hk

RETAIL

Shoppers will splurge more on brands with loyalty programmes: survey

COMMERCIAL PROPERTY

Hong Kong office market pins its hope for growth on Shenzhen-HK Stock Connect

HOTELS & TOURISM

Mainland visitors to HK down by 10.6% to 20.4m

In the first half of 2016, it has been noted that Hong Kong welcomed 20.4m mainland visitors, down 10.6% year-on- year.

Research from Knight Frank noted that visitors also reduced their spending in Hong Kong whilst increasing it abroad. Factors driving away tourists from other areas could benefit HK.

In the luxury residential market, it has been noted that in the short term, curbing measures are expected to remain in the mainland’s first-tier cities.

Meanwhile, according to Knight Frank, the ShenzhenHong Kong Stock Connect is set to shore up the office letting market in Hong Kong. The territory’s retail market is expected to bottom out in early 2017.

Employers in Hong Kong may not be doing enough to motivate and retain the next generation of professionals.

Morgan McKinley says hiring managers should be more collaborative. Lack of feedback from hiring managers and complaints about job description mismatch were common.

22 HONG KONG BUSINESS ANNUAL 2018

HK to be home to world’s richest residents by 2020

Switzerland tops the current ranking of the world’s wealthiest territories measured by savings per capita, with the average Swiss citizen holding more than US$186,000 in liquid assets. However, Hong Kong will overtake Switzerland to have the world’s richest citizens by 2020, according to Verdict Financial.

Cathay Pacific braces itself for “loss-making” 2017

Here’s why Hong Kong can’t celebrate just yet despite recent stability

Why Hong Kong employers risk losing millennial talent

ECONOMY

A study by a global loyalty marketing agency reveals that the desire for innovative loyalty programmes is high on the agenda for consumers when considering their preferred retailers, with 41% saying that loyalty programmes encourage them to spend more with their favourite brands. According to a release from ICLP, 48% said that discounts on future purchases were most important to them, whilst 42% said free delivery may increase their spending.

AVIATION

ECONOMY

HR & EDUCATION

by technology that has made entrepreneurship easier than ever, a strong desire for autonomy, and startup role models such as Facebook’s Mark Zuckerberg, the two book-end generations of global workers – millennials and baby boomers – are driving a surge in the number of professionals looking to create their own business or be self-employed.

Analysts agree that Hong Kong has indeed stabilised but only due to the territory’s pacified headwinds. UBS says headwinds are not reversing and turning into boons.

Cathay Pacific has withdrawn its 2H16 profit guidance, implying a much worse 2H16.

According to HSBC Global Research, the company says overcapacity and strong competition are putting particular pressure on its passenger business, with continued shortfalls in revenue compared with forecasts and heavy pressure on yield. Results are not expected to be better.

MARKETS & INVESTING

Singapore knocks Hong Kong off top spot in corporate governance ranking

Out of 12 countries in the Asia-Pacific region, Singapore scored highest in corporate governance, according to brokerage and investment

HR & EDUCATION

Over 7 in 10 HK youth eye starting their own businesses

It has been noted that, fuelled

HOTEL & TOURISM

Hong Kong must expand tourism infrastructure: CLSA

To revitalise Hong Kong tourism, which has fallen 6% over the past two years along with Macau’s tourism, improved branding and attitude are apparently needed. According to a research note from CLSA, Hong Kong needs to convey a more welcoming image to mainlanders: some surveys say Hong Kong people are perceived to be hostile to Chinese tourists. History suggests that people will not travel to a city or country where they do not feel welcome.

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previous rates range from 1.5% to 8.5%, depending on the value of the property. The new measure is effective from November 5 and is applicable to individual and corporate purchasers. An immediate drop in transaction activities is expected.

HR & EDUCATION

Daily news: www.hongkongbusiness.hk expressed happiness with their current position.

RETAIL

September retail sales values beat market expectations

FINANCIAL SERVICES

HK ranks fifth amongst fintech hubs worldwide

It has been noted that the global top five fintech hubs in 2016 are London, Singapore, New York, Silicon Valley, and Hong Kong.

According to a release from Deloitte, Hong Kong ranks fifth and Singapore has moved up to second place, overtaking New York.

South Korea comes sixth right after Hong Kong, and Shanghai is in 11th place.

Hong Kong’s retail sales surprised the market on the upside in September, with both sales values and volumes registering significantly narrower declines. Sales volumes posted the smallest fall since February 2016.

Why Hong Kongers enjoy work-life balance less than Singaporeans

A Compass Index survey revealed that Singaporeans enjoy more of a work-life balance than Hong Kongers.

Singaporeans take work home less than employees in Hong Kong, and they also work shorter hours.

RETAIL

Sales of luxury goods plunged 19.7%

ECONOMY

HK as ‘parking lot’ can capture mainland investments

Notwithstanding the gloomy outlook in terms of tourism and retail sales, the expectation of further RMB depreciation should continue to provide incentive for Hong Kong to attract capital from the mainland.

Uninspiring leadership generating ‘culture of unhappiness’ in Hong Kong

A perceived lack of inspired leadership, shortfalls in career development opportunities, and poor training are creating a culture of unhappiness in Hong Kong. According to the Job Happiness Index, less than half of local employees

Average monthly residential sales rebounded 55% to 6,123 in 2H16

JLL reports that average monthly residential sales rebounded 55% year-on-year to 6,123 in the second half of 2016. A buoyant stock market, post-Brexit capital inflows seeking safe-haven investments, and strong pricing the public land sales market all contributed to the uplift. Capital values of mass residential properties rebounded by 9.5% (as of October) from their in-year lows (last trough in May.)

ECONOMY

Hong Kongers fear that competitiveness will dwindle in the region

Government jacks up residential Stamp Duty to 15%

The government has raised Stamp Duty to a new flat rate of 15% for residential property, except for first-time local buyers. According to a research note from Citi, this new 15% Stamp Duty will replace the Double Stamp Duty (DSD) rates that were introduced back in 2013. The

RESIDENTIAL PROPERTY

According to JLL, arrivals from mainland China are on track to drop for the second consecutive year after decreasing by 8.2% yoy in the first ten months of 2016 and 3% in 2015.

Mainland visitors utilising the Individual Visit Scheme (IVS) was down 15.6% yoy.

RESIDENTIAL PROPERTY HR & EDUCATION

market share increased to 63%. Hong Kong’s OOCL, with 2.7% of the world’s market share, seems to be one of the next targets.

SHIPPING & MARINE

Will Hong Kong’s OOCL be eaten up by the world’s biggest container lines?

With five of the top six global container lines increasing their market share through consolidation, the top six

CPA Australia encourages the SAR government to provide even greater support to spur businesses and entrepreneurs to undertake innovation in Hong Kong. The recommendation follows the release of economic sentiment survey data that reveals strong support for the government to take further action to ensure Hong Kong’s position worl’d best business hub.

HONG KONG BUSINESS ANNUAL 2018 23

company and industry - air transport and express industry

Air transport and express industry continues to fly

With one of the best connections to Asia’s urban centers, Hong Kong’s air transport and express industry has no way to go but up.

T

he air transport industry can be divided into the cargo and passenger sectors. There are scheduled and non-scheduled carriers operating in both the cargo and passenger sectors. More than over half of Hong Kong’s airfreight is carried in the holds of passenger aircraft rather than pure freighters. There are two major cargo types, namely, express cargo and heavy-lift cargo.

Typical express cargo services involve transport logistics of door-to-door deliveries with guaranteed time and traceable location. Thanks to Hong Kong’s superior air connectivity, industry players are able to deliver goods to major Asian cities within the same day, and to Europe and America within the next day.

Competition, together with information technology advancement, has encouraged the express cargo industry to integrate specialised and customised logistic solutions into its typical service model. Major industry players can now offer many value-added

24 HONG KONG BUSINESS ANNUAL 2018

services including: packaging, insurance, dangerous and bulky goods handling, customs clearance, and shipment-tracing.

Hong Kong International Airport Hong Kong International Airport (HKIA) at Chek Lap Kok, which allows 24-hour operation, was opened with a single runway and facilities in July 1998, followed by the second runway and associated facilities in May 1999. For long-term growth, Airport Authority Hong Kong (AAHK) has undertaken to construct the third runway system (3RS), which will allow HKIA to handle 102 million passengers, 8.9 million tonnes of cargo and 607,000 aircraft movements per year by 2030. Following the Executive Council approval of the HK$141 billion 3RS project in March 2015, construction started in August 2016 with the new runway expected to be commissioned in 2022 and the entire 3RS project completed in 2024. In addition, enhancement of the airport’s capacity through the Midfield Development

“38% and 43% of Hong Kong’s total exports and imports were done through air transport in 2016” project with a new concourse of 20 parking stands was completed in December 2015.

All air cargo terminals in the airport are privately-run. The largest one is known as the SuperTerminal 1 (ST1).

With more than 390,000 sq metres of gross floor area, ST1 is one of the most advanced and largest air cargo facilities in the world. It can handle over 3.5 million tonnes of cargo. In 2016, Hong Kong Air Cargo Terminals Limited (Hactl), which operates ST1, received the Air Cargo Handling Agent of the Year award by Air Cargo Week. Asia Airfreight Terminal (AAT), another cargo handling terminal at HKIA, was added in 2007. Cathay Pacific’s cargo terminal, the third at HKIA, has been put into full operation since 2013. It has an annual handling capacity of 2.6 million tonnes, increasing Hong Kong’s air cargo handling capacity to 7.4 million tonnes.

To supplement the cargo terminals, there is an airfreight forwarding centre at HKIA, providing space for warehousing, loading platforms, truck parking bays and offices.

Air transport has become more important to Hong Kong trade over the years. 38% and 43% of Hong Kong’s total exports and imports were done through air transport in 2016, compared with 26% and 19% in 1980 respectively. Hong Kong’s efficiency in customs clearance and its status as a free port are amongst the main contributors to this increase.

Simple customs clearance and 24-hour operation of HKIA makes it convenient for goods destined for the Chinese mainland to go through Hong Kong for the mainland.

In 2016, Hong Kong’s exports by air reached HK$ 1,364 billion, up 0.8% from 2015. For imports by air in the same year, they reached HK$ 1,715 billion, up 2.9% from 2015.

In terms of export by air, the Chinese mainland, the US and India were the largest markets in 2016, representing respectively 23.5%, 14.8% and 7.6% of Hong Kong’s total exports for that year. On the import side, the Chinese mainland, Taiwan and Singapore were the largest markets in 2016. They represented, respectively, 14.6%, 13.6% and 12.2% of Hong Kong’s total imports

air transport and express industry - company and industry Industry Data Hong Kong International Airport

Air Cargo throughput (million tonnes) YOY growth (%) No. of Passengers handled (million) YOY growth (%)

2014

2015

2016

4.38

4.38

4.52

+6.0

+0.1

+3.2

63.4

68.5

70.5

+5.8

+8.1

+2.9

SOURCE - Hong Kong International Airport

by air during the year.

Service Providers There are more than 100 international airlines providing about 1,100 scheduled passenger and allcargo flights each day between Hong Kong and about 190 destinations worldwide, including about 40 mainland cities. There are approximately 350 non-scheduled passenger and cargo flights each week on average.

Hong Kong’s express cargo industry is dominated by some multinational players with wide-ranging global air and ground networks with clear hub strategies to fill up their freighter planes.

To maximise freight loads, they tend to subcontract wholesale operators who have established routes and act as consolidators for other smaller operators. By contrast, smaller operators provide a faster and more flexible service focussed on niche markets and a stable customer base for regular income flows.

Service Exports Based on the latest available statistics, Hong Kong’s exports of air transport services increased by 1.4% to HK$ 93 billion in 2015, representing 40.3% of total transportation service exports for that year.

Besides air cargo handling

business, another area of potential for Hong Kong’s export of air transportrelated services is airport management services, especially in the operation of air cargo terminal. This can be done either by investing in air cargo terminals overseas, or by providing consultant services. Hong Kong is well positioned to tap into this market, as more and more airports around the world, particularly the Chinese mainland, are to be privatised or operated on a commercial basis.

A success story is the joint venture between AAHK and Hangzhou Xiaoshan International Airport (HXIA), under which HKIA has an equity share of 35% whilst the rest of ownership is retained by the Hangzhou government. Besides HXIA, AAHK has also entered into different cooperation pacts with various mainland airports, namely Zhuhai Airport, Shanghai Hongqiao International Airport and Beijing Capital International Airport.

As for the express cargo industry, its services tend to mirror trade routes.

Whilst North America and Europe remain the major markets, trading activity is also expanding within Asia.

The size of the mainland market provides good

“In 2016, Hong Kong’s exports by air reached HK$ 1,364 billion, up 0.8% from 2015.”

business opportunities for Hong Kong’s express cargo sector. Larger operators have already established a presence in major mainland cities via joint-venture arrangements.

Smaller players tend to grow their customer base through referrals and city visits to identify potential clients.

Hong Kong as an Air Transport Hub • In DHL’s Global Connectedness Index (GCI) released in 2016, Hong Kong’s ranking in terms of the depth of global connectedness in 2015 was second best in the world.

GCI measures cross-border flows of trade, capital, information and people, relative to the size of the domestic economy.

• As at October 2016, Hong Kong had signed air services agreements with 65 aviation partners.

• Besides extensive air connectivity, Hong Kong also has an excellent logistics infrastructure in place. In the World Bank’s 2016 Logistics Performance Index, Hong Kong ranked 9th amongst 160 regions and second in Asia. In 2016, HKIA was awarded the Air Cargo Award of Excellence

by Air Cargo World and was named the “Best Global Airport” by Asia Cargo News.

HONG KONG BUSINESS ANNUAL 2018 25

company and industry - arbitration and mediation industry

No dispute: Arbitration services is one of the best

Hong Kong’s legal system and talented pool of legal professionals has created a global demand for its dispute resolution services.

A

rbitration is a legal process through which awards are issued to the disputing parties by arbitrator(s) rather than the court. For an arbitration to take place, the concerned parties in dispute must both agree that the dispute will be handled by arbitration and not by court. This agreement is usually signed as a clause in the commercial agreement before the occurrence of any disputes.

Another option to resolve disputes is by mediation. It is a process of settling disputes through discussion sessions between involved parties under the presence of a neutral third party, i.e. a mediator. Unlike arbitrators, mediators are not given any power to impose a settlement for the disputes. Instead, they act as a shuttle diplomat by encouraging the disputing parties to discuss, and helping them filter out their emotional elements. In the event of the parties reaching an agreement, a legally binding contract consisting of all the agreed terms will be signed. In 2016, 460 cases were carried out under the auspices of

the Hong Kong International Arbitration Centre (HKIAC), including 262 arbitration cases, 183 domain name disputes and 15 mediation disputes. The total amount in dispute for the administered cases was approximately HK$19.4 billion. Top industry sectors of HKIAC administered arbitrations were corporate and finance (29.3% of total), maritime (21.6%) and construction (19.2%).

Services Suppliers Arbitrators are generally recognised senior experts from professions capable of understanding the technical issues involved in an arbitration case. Therefore, they can be lawyers, accountants, engineers, architects or quantity surveyors, with arbitration services suppliers scattered throughout professional services firms. In this context, prime arbitration hubs are often major commercial centres in their own right. As of June 2017, there were 421 persons on the Panel of Arbitrators and 157 persons on the List of Arbitrators.

Mediators are trained, neutral third parties with skills and knowledge to resolve

"HKIAC reached an important milestone by being the first international arbitration institution to set up a representative office in the Chinese mainland" disputes. They usually have expertise in such field as architecture, engineering, law, social work, teaching, etc. Their duties include organising and arranging a process to facilitate the parties in dispute to discuss their matters and try to end their arguments through mutual understanding. They should conduct the process in an impartial and confidential manner. The role of mediators is to assist both parties reaching a settlement, instead of adjudicating. As of June 2017, there were 831 mediators on the General Panel, 220 mediators on the Family Panel (including 52 family mediation supervisors).

The institutions related to arbitration and mediation services in Hong Kong include the following: HKIAC, the Hong Kong Institute of Arbitrators (HKIArb), the Chartered Institute of Arbitrators (CIArb), the International Chamber of Commerce (ICC), the Hong Kong Institute of Mediation (HKIMed), the Hong Kong Mediation Centre, the Hong Kong Mediation Council and the Conflicts Resolution Centre (CRC).

Exports According to the latest arbitration statistics with geographical breakdown, of the 262 non domain name arbitration cases handled by HKIAC in 2016, there were 228 international cases and 34 domestic cases. Parties from China, the British Virgin Islands, Singapore, the US, Korea, Marshall Islands, Taiwan, Macau, Cayman Islands and the UK represented the most frequent users of HKIAC services.

With increasing opportunities on the mainland after China’s WTO accession and continued market opening, more foreign investors or companies have transacted with their mainland counterparts. Hong Kong is a suitable “third” place for settling disputes involving Sino-foreign projects, as many foreign companies prefer to settle disputes in a “third” place, whilst mainland enterprises are also increasingly using Hong Kong as an arbitration centre.

Industry Development and Market Outlook In recent years, arbitration and mediation have gained in popularity as alternatives to resolving disputes without resorting to traditional litigation. Hong Kong has been

26 HONG KONG BUSINESS ANNUAL 2018

arbitration and mediation industry - company and industry Industry Data Number of dispute cases handled by HKIAC - Arbitration International Domestic

- Medication - Domain name disputes

2015 520 271 257 14 22 227

2016 460 262 228 34 15 183

Since Hong Kong International Arbitration Centre

a popular seat for international commercial arbitrations in the region.

• In June 2017, Hong Kong amended the Arbitration Ordinance to legalise third party funding of arbitration and mediation, adopting the 2016 proposal by the Hong Kong Law Reform Commission. This will reinforce Hong Kong’s lead as a leading centre for international dispute resolution, and enable claimants to spread their risk by not bearing the whole cost of bringing or defending a claim, particularly those in the construction industry.

• According to the sixth International Arbitration Survey released by Queen Mary University of London in 2015, HKIAC was hailed as the most preferred arbitral institution outside of Europe and ranked the third best arbitral institution worldwide.

• In November 2015, HKIAC reached an important milestone by being the first international arbitration institution to set up a representative office in the Chinese mainland, located within the China (Shanghai) Pilot Free Trade Zone.

• There has been a significant growth of arbitration in Asia in recent years. For example, the China International Economic and Trade Arbitration Commission (CIETAC) handled 1,968 cases in 2015 compared to a mere of 37 cases in 1985.

• Aiming to provide a platform for resolving cross-boundary commercial disputes between the Chinese mainland and

Hong Kong, the China Council for the Promotion of International Trade (CCPIT) and the Hong Kong Mediation Centre set up the CCPIT-HKMC Joint Mediation Centre in Hong Kong in December 2015.

• With increasing intellectual property (IP) transactions and thus growing demand for the use of dispute resolution, HKIAC launched a new panel of arbitrators for IP disputes in March 2016. The new panel, separated from HKIAC’s regular panel or list of arbitrators, is set to be the primary source for HKIAC’s appointment of arbitrators for IP cases.

• In January 2015, the Haguebased Permanent Court of Arbitration (PCA) and the Chinese government signed the Host Country Agreement and related Memorandum of Administrative Arrangements. Under the agreement, dispute resolution proceedings administered by the PCA can be conducted in Hong Kong on an ad hoc basis with the provision of facilities and support services required.

• The Mediation Ordinance came into operation in January 2013, which provides a regulatory framework for the conduct of mediation by seeking out certain standards expected of a mediator.

• In September 2012, CIETAC established an office in Hong Kong, which is known as the CIETAC Hong Kong Arbitration Centre, the first outside the Chinese mainland. The presence of CIETAC Hong Kong

"Hong Kong International Arbitration Centre (HKIAC) was hailed as the most preferred arbitral institution outside of Europe and ranked the third best arbitral institution worldwide."

further bolsters the city’s attractiveness as a venue for international arbitration.

• In August 2012, the Hong Kong Mediation Accreditation Association Limited (HKMAAL) was established in the form of a limited company to be a non-statutory, industry-led accreditation body responsible for accreditation and dealing with disciplinary matters.

• In November 2011, the Financial Dispute Resolution Centre (FDRC) was established under the government’s “Financial Dispute Resolution Scheme” (FDRS) to provide a one-stop, independent and affordable avenue for consumers to solve monetary disputes between financial service providers and consumers. All licensees or regulatees of the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), such as brokers or banks, are required to join the FDRS. • In the event of the financial disputes not being able to be settled directly between financial institutions and their customers, the financial institutions are obligated to follow individual consumers’ wish and enter into mediation and arbitration as per the scheme.

• FDRC to provide a costefficient and time-saving alternative to litigation for financial instrument investors, the usage of mediation and arbitration services is expected to be popularised in solving financial disputes in Hong Kong.

HONG KONG BUSINESS ANNUAL 2018 27

company and industry - banking industry

Banking on close economic ties for sustained growth

The close economic partnership arrangement with China (CEPA) sets lower barriers for HK banks entering the mainland market.

T

he banking system in Hong Kong is characterised by its 3-tier system, which is formed by 3 types of banking institutions, namely licensed banks, restricted licence banks and deposit-taking companies, which are authorised to take deposits from the general public.The 3 tiers of deposit-taking institutions operate under different restrictions. Only licensed banks and restricted licensed banks can be called banks. As of end-December 2016, there were 156 licensed banks, 22 restricted licence banks and 17 deposit-taking companies.

There were also 54 representative offices of overseas banks.

Range of Services Banks are amongst the most important channels for fund-raising in the region.

28 HONG KONG BUSINESS ANNUAL 2018

The significance of Hong Kong’s banking sector can be reflected by its prominence in the region. The quality of Hong Kong’s banking system enables it to play a major role in serving well beyond its boundary.

Many Hong Kong-based banks have set up operations in other parts of Asia, typically the Chinese mainland.

Hong Kong is at the forefront of being a Fintech hub in Asia amid a pro-entrepreneur and transparent regulatory environment with a focus on collaboration as well as access to incubators and accelerators.

Electronic cheque (e-Cheque), a new online payment instrument, was launched in Hong Kong in December 2015. At the initial stage, nine banks offer the e-Cheque issuance services. According to the Global Financial Centres Index (GFCI) released by the Z/ Yen Group in September 2016, Hong Kong

"The quality of Hong Kong’s banking system enables it to play a major role in serving well beyond its boundary." ranked fourth in the financial centre league after New York, London and Singapore.

Since releasing the first semi-annual results in March 2007, GFCI has consistently ranked Hong Kong as one of the top international financial centres in Asia.

Renminbi (RMB) businesses RMB business in Hong Kong was first launched in 2004, which first allowed Hong Kong banks to provide personal RMB business, and has since been continually expanded. With the introduction of the pilot scheme for RMB trade settlement in July 2009 and its expansion in July 2010, banks participating in RMB business in Hong Kong can now offer a wide range of RMB services to their corporate customers, including trade finance, RMB certificate of deposits, RMB bonds and other related products and services.

The RMB trade settlement scheme and related facilitation arrangements have brought about many benefits, allowing traders to gain access to a range of new RMB services (including L/C issuance, packing loan, import invoice financing, export invoice discounting, and factoring), reducing the transaction cost of buying/ selling in RMB, as well as allowing them to exchange, receive and keep RMB trade receipts offshore.

Over the past years, RMB trade settlement has become an increasingly popular option amongst foreign traders doing business with China. In 2015, around 26% of Chinese external trade was settled in RMB, up from 22% in 2014, marking a growing importance of RMB as the trade settlement currency.

Hong Kong has been playing an important role in RMB cross-border trade settlement.

According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), RMB was the world’s sixth mostused payment currency as of December 2016 (trailing the US dollar, Euro, British pound, Japanese yen and Canadian dollar), with Hong Kong being the leading offshore RMB hub that handles about 70% of global payment in RMB. From the debut of RMB trade in July 2009, banks in Hong Kong had handled RMB trade settlement totalling about RMB15 trillion as of end-2014. In the first ten months of 2015, RMB trade settlement handled by banks in Hong Kong amounted to RMB5.7 trillion, a year-on-year (YOY) growth of more than 10%.

banking industry - company and industry Industry Data Number of authorised institutions - December 2016 Licensed Banks

156

Restricted licensed banks

22

Deposit-taking companies

17

Representative offices of foreign banks

57

TOTAL Employment - end September 2016

101,813

SOURCES Monthly stsastistical bulletin, Hong Kong Monetary Authority; Quarterly report of employment and vacancies statistics, Census and Statistics department

Besides, Hong Kong hosts the largest pool of RMB liquidity outside the Chinese mainland.

RMB deposits excluding RMB certificates of deposits totalled RMB854 billion as of end-October 2015, more than tenfold the level seen when the pilot RMB cross border trade settlement scheme was implemented in July 2009.

As of end-March 2015, there are 224 banks in Hong Kong participating in the RMB clearing platform, whilst a wide range of RMB products and services is available in Hong Kong’s offshore RMB market, including trade finance, certificate of deposits (CDs), bonds, stocks and ETFs. Liberalisation of China’s Banking Sector China became a WTO member in December 2001 and all commitments for the banking and financial services had been completely phased in by 2006.

In line with China’s WTO commitments, the Chinese government has promulgated the “Regulations of the People’s Republic of China on Administration of Foreignfunded Banks” with effect from December 2006. The major provisions, amongst others, are as follows: • A foreign bank on its own or jointly with any other foreign financial institution can apply to establish a wholly foreignfunded bank in China.

• A foreign financial institution partnering with a Chinese company or enterprise can apply to establish a Chineseforeign joint venture bank in China.

• The minimum registered

capital for a wholly foreignfunded bank or a Chineseforeign joint venture bank shall be RMB1 billion or an equivalent amount in convertible currencies.

• A foreign bank that applies for establishing a branch shall satisfy the requirement, amongst others, that it have the total assets of not less than US$20 billion at the end of the year prior to the submission of the application.

• A wholly foreign-funded bank or a Chinese-foreign joint venture bank may engage in foreign exchange and RMB businesses, including the retail banking businesses like receiving deposits from the general public and conducting bank card businesses.

• As a result, Chinese and foreign banks are now subject to a unified regulatory regime, competing directly with one another under the same market environment and the same supervision regulations.

• Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA) • Hong Kong’s banking sector is one of the liberalised sectors benefiting greatly under CEPA, with lower barriers set for Hong Kong banks entering the mainland market. Currently, banking services are covered by the Agreement of Trade in Services (ATIS) signed in November 2015 between the Hong Kong government and the Ministry of Commerce of China. This agreement further liberalise the services market and extend the

"Hong Kong has been playing an important role in RMB cross-border trade settlement."

geographical coverage to the whole Chinese mainland.

Under the ATIS, the following banking and other financial services (excluding insurance) are opened to Hong Kong’s banking institutions on the Chinese mainland: 1. Acceptance of deposits and other repayable funds from the public; 2. Lending of all types, including, inter alia, consumer credit, mortgage credit, factoring and financing of commercial transaction; 3. Financial leasing; 4. All payment and money transmission services; 5. Guarantees and commitments; 6. Trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, in money market instruments, foreign exchange, derivative products (including but not limited to futures and options), exchange rate and interest rate instruments, transferable securities and other negotiable instruments and financial assets, including (bullion); 7. Participation in issues of all kinds of securities; 8. Money broking; 9. Asset management; 10. Settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments; 11. Advisory and other auxiliary financial services; 12. Provision and transfer of financial information, and financial data processing and related software by providers of other financial services.

HONG KONG BUSINESS ANNUAL 2018 29

company and industry - cosmetics and toiletries industry

Making up Hong Kong’s cosmetics sector

International brands still dominate the cosmetics scene but local manufacturers are in prime position to enter the local market.

T

he cosmetics and toiletries manufacturing sector in Hong Kong is small, with most manufacturers concentrating on producing mid-priced toiletries and perfumes, particularly for the Chinese mainland, Southeast Asia and the US. These are usually produced under their own brands.

Most of the companies in the industry are traders acting as agents to sell to the Chinese mainland, the US, Macau, Japan, Southeast Asia and the EU. Several Hong Kong spa and beauty salons also act as agents for cosmetics and skincare products looking to sell into Asia.

A number of traders have good connections on the mainland, useful links for selling professional product lines to beauty salons on the mainland. Hong Kong traders make good partners for foreign brands, given their market knowledge, skills, connections and integrity.

They are also useful when it comes to handling the entry procedures for goods being imported, with these tending to

30 HONG KONG BUSINESS ANNUAL 2018

require the disclosure of confidential information, such as product formula.

Sales Channels Most of the companies in the industry are traders who act as agents for international cosmetics brands looking to sell to the Chinese mainland, Macau and Southeast Asian markets. Hong Kong has a number of experienced distributors, many of whom are well versed in regional markets and regulations. They are capable of acting as distributors for popular brands, targeting the general public and devising comprehensive marketing initiatives.

Most of Hong Kong’s cosmetics and toiletries manufacturers concentrate on producing mid-end toiletries and perfumes.

Choi Fung Hong’s own cosmetics brands, such as Joseristine, and other skincare brands, such as The Happiest Thingsand iSUM, for example, emphasise that their products are “made in Hong Kong”.

In addition, Choi Fung Hong and other Hong Kong manufacturers, such as Cogi, have succeeded in building their own brands

"Hong Kong traders make good partners for foreign brands, given their market knowledge, skills, connections.” on the Chinese mainland market.

A number of mid- and high-end foreign brands have established sales counters in local department stores and opened their own outlets in shopping malls, whilst the more professional products are sold through beauty salons. Specialty cosmetics chains are well developed in Hong Kong, with Sasa, Bonjour, Aster, Angel and Colourmix taking the lead.

These companies mainly sell international brands with deep discounts, as well as private label products. Meanwhile, many “made in Hong Kong” brands are targeting the local niche market and they mainly sell online.

Yet, some local brands also consign their products to salons or lifestyle shops. Health and personal care chains, such as Watsons and Mannings, have shifted their focus more towards cosmetics in recent years, selling mainly international brands. Meanwhile, many international brands have tapped into online sales in order to extend their reach in different markets.

Industry Trends Owing to high production costs in Hong Kong, many manufacturers have set up offshore production facilities on the mainland and in a number of Southeast Asian countries, notably Thailand, Indonesia and the Philippines.

The world cosmetics market, especially the upper-end segment, has long been dominated by a number of substantial global companies, including P&G, Unilever, Shiseido, L’Oreal and Estee Lauder.

Their domination of the top-tier of the market segment has made it difficult for new brands to enter.

OEM production in the sector, however, is not widespread. This is largely due to the strict official requirements on quality control and secrecy with regard to product formula. Most manufacturers directly export their finished products to their overseas distributors.

Recently, several international suppliers have reached licensing agreements with supermodels and fashion brands with regards to developing fragrances and cosmetics products. An increasing number of famous fashion brands have also diversified into developing cosmetics products under their own labels, notably Anna Sui, Chanel and Christian Dior.

There is a rising trend amongst Hong Kong

cosmetics and toiletries industry - company and industry Export Performance

Domestic Exports Re-exports of Chinese Mainland Origin Total Exports Total exports by Major Market Chinese mainland Macau Japan

2015 HK$Mn. Growth %

2016 HK$Mn. Growth %

Jan-Jul 2017 HK$Mn. Growth %

186

+91

106

-43

91

+98

13,500

+9

14,832

+10

9,812

+22

3,728

*

3,564

-4

2,268

+23

13,686

+9

14,938

+9

9,903

+22

2015 Share % Growth %

2016 Share % Growth %

Jan-Jun 2017 Share % Growth %

29

+51

35.1

+32

42.9

+61

22.8

+3

20.9

*

20.0

+16 -8

9.4

+38

10.7

+24

9

US

12.1

+9

10.7

-4

8.5

*

ASEAN

10.4

+13

9.3

-2

8.4

*

EU (28)

4.4

-35

3.5

-14

3.8

+35

Taiwan

2.9

-20

3.1

+19

2.3

-19

Republic of Korea

3.0

-15

2.9

+8

2.1

-6

* Insignificant ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.

companies in this sector to look to explore the mainland market.

With the increased affluence and appearance awareness of Chinese consumers, the potential of the cosmetics and toiletries market on the mainland is huge, especially for branded mid- to high-end cosmetics and toiletries products. The mainland’s cosmetics market is also notably highly brand-oriented.

CEPA Provisions Following the implementation of the third phase of the Chinese mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in January 2006, all products of Hong Kong origin can be imported into the mainland at a zero tariff. According to the stipulated procedures, products that have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers if they comply with the CEPA rules of origins.

General Trade Measures Affecting the Exports of Cosmetics and Toiletries The tariff rate of the Chinese mainland is higher than in most other markets.

Product standards and quality control requirements are also barriers to the importation of

foreign cosmetics products.

Under China’s World Trade Organization (WTO) commitments, import tariffs on cosmetics and toiletries were reduced to 5%-10%. In order to meet the needs of administrative licensing for cosmetics, China’s State Food and Drug Administration issued a notice regarding the application and assessment guide for new raw materials of cosmetics. This took effect on 1 July 2011.

Safety and environmental issues are major trade concerns in many overseas markets. In the US, the Centre for Food Safety and Applied Nutrition of the US Food and Drug Administration (FDA) is the official body monitoring the safety of all imported cosmetics.

Cosmetics exported to the US must comply with the provisions of the Federal Food, Drug and Cosmetic (FD&C) Act, the Fair Packaging and Labelling (FP&L) Act, and the regulations published under the authority of these laws.

The new EU Regulation 1223/2009 (Cosmetics Regulation) came into force on 11 July 2013. This strengthens the safety of cosmetics products and streamlines the framework for all operators in the sector.

A number of significant changes were introduced under

"Most of Hong Kong’s cosmetics and toiletries manufacturers concentrate on producing mid-end toiletries and perfumes."

the Cosmetics Regulation.

These include the need for manufacturers to follow specific requirements in the preparation of a product safety report prior to placing a product on the market, as well as stipulation that only cosmetics products for which a legal or natural person has been designated within the EU as the “responsible person” can be placed on the market. The new Cosmetics Regulation allows for the precise identification of the responsible entity and clearly outlines their obligations.

In Japan, the revised Pharmaceutical Affairs Act, applicable to all cosmetics, quasi-drugs, drugs and medical devices entering the Japanese market, went into effect in June 2009. Under the terms of the Act, cosmetics importers assume all quality assurance and product liability for their products. The importer must also obtain a primary distributor’s licence for cosmetics.

The primary distribution business refers to the sale, rental or lending of manufactured or imported cosmetics. Any primary distributor that engages in the final packaging, labelling in the Japanese language, or storage of imported products, is required to obtain a cosmetics manufacturer’s licence.

HONG KONG BUSINESS ANNUAL 2018 31

company and industry - environmental protection industry

HK cleans up to pave way for sustainable future

Developing green tech is aimed at solving Hong Kong’s growing waste problem to improve the quality of environment in the region .

T

he EcoPark, one of the waste management facilities set up by the government, is located in Tuen Mun with a site area of 20 hectares providing long term land at affordable costs for the recycling industry since 2007. A number of enterprises engaging in recycling of waste cooking oil, waste computer equipment, waste metals, waste plastics, waste wood, waste batteries, etc. have a presence in the EcoPark.

Hong Kong households and business establishments dispose of more than 70 thousand tonnes of computers and electrical and electronic equipment every year. To reduce the quantity of waste computers and waste electrical and electronic equipment disposed of at landfills, the Government introduced the Waste Electrical and Electronic Equipment (WEEE) Recycling Programme, which aims to channel WEEE for reuse and recycling instead of disposal.

The EcoPark WEEE Recycling Centre was opened in 2011 in order to help proper disposal of used electrical appliances and reduce the pressure on the landfills. The

32 HONG KONG BUSINESS ANNUAL 2018

WEEE collection is focused on major designated items like TV sets, refrigerators, washing machines, video or audio equipment, microwave ovens, fans, water heaters, rice cookers, air-conditioners, heaters, electronic games and mobile phones.

Development of Green Technology The HKSTP accommodates a number of environmental enterprises which are devoted to developing technologies related to environmental protection and clean energy. They comprise Hong Kong companies as well as environmental companies from other countries and territories. Companies currently operating out of the HKSTP include Beghelli Asia Pacific Ltdfrom Italy, Liricco Technologies Ltd and Waste & Environmental Technologies Ltd. Phase 3 of the HKSTP completed construction in April 2016. This project was one of the Government’s initiatives to boost the development of green technology in Hong Kong and to attract high-tech

"As a global sourcing hub, Hong Kong attracts a number of international trading houses and major retailers." investment by private companies. It can accommodate about 150 green technology companies and create 4,000 research and development positions of green technology in the territory.

Another case in point is the Dunwell Enviro-Tech (Holdings) Ltd at the Yuen Long Industrial Estate which provides used oil and waste water treatment, recycling and reuse services. Dunwell turns waste lubricating oil into cost-effective finished oil using its patented vibrating membrane advanced treatment (VMAT) technology.

The ASB Biodiesel plant established in Tseung Kwan O Industrial Estate is a foreign investment project essentially funded by Bahrain and other Middle Eastern investors.

It adopts Austrian technology to process waste oil, such as waste cooking oil and grease trap oil, with the capacity to produce 100,000 tons of low-carbon transport fuel per year.

Phase 1 of the OWTF project at Siu Ho Wan in North Lantau commenced in December 2014 and is slated for completion in 2017. Using biological treatment technologies, this facility is expected to convert 200 tons of organic waste into biogas and 20 tons of compost and other useful resources daily.

Hong Kong-Guangdong Cross-boundary Cooperation In April 2008, the Government launched a Cleaner Production Partnership Programme to encourage Hong Konginvested enterprises in Guangdong to actively participate in improving the quality of the environment in the region. In light of the environmental benefits and positive feedback from industry, the Programme (as endorsed by the 20th Working Meeting of the Hong Kong/Guangdong Co-operation Joint Conference held in March 2015) has been extended until 31 March 2020. Under the Programme, assistance is given to Hong Kong factories in the PRD to use cleaner production technologies and operation mode so that concerted efforts are made to create a cleaner environment.

Through cleaner production, Hong Konginvested manufacturers can meet national and Guangdong province’s environmental protection standards, enhance their environmental performance, lower cost, increase competitiveness and improve their corporate image. This programme

environmental protection industry - company and industry Industry Data Business Area (1) Water conservation and pollution control

Related Services Related services rendered by the industry may involve biological treatment, chemical treatment, physical treatmendt, sludge treatment, etc., as well as supply and installation of equipment like monitoring/measurement/analytical apparatus and pumping systems.

(2) Air and odor pollution control

This includes services in relation to gas emmission controls, odor/organic gases controls, particulate controls etc., for which chemicals such as activated carbons, catalysts and scrubbing solution, as well as equipment for purposes of monitoring and analysis, enhancement of ventilation, filtration, germs killing, dehumidification/humidification, air ionisation, deodorisation and aromatisation may be involved.

(3) Energy Conservation

This involves rendering of energy conservation services in relation to areas like recovery of residual heat and pressures, lowenergy production processes and adoption of alternative and/or renewable energy.

(4) Waste treatment, disposal and recycling (5) Noise Control and mitigation (6) Environmental consulting services

This involves design and supply of waste handling, storage, disposal and control systems/equipment, as well as provision of waste reclamation, transportation and recycling services.

This involves design of noise mitigation systems and solutions, and supply of noise control equipment like noise barriers and vibration isolators.

With knowledge of latest environmental technology and experience of technology integration, some Hong Kong companies are providing consulting services to enterprises in Hong Kong and the Chinese mainland to help them contain pollution.

* Insignificant ^ Source: Hong Kong Trade Statistics, Census and Satistics Department

targets eight industries, namely chemical products, food and beverage, furniture, metal and metal products, non-metallic mineral products, paper making and paper products, printing and publishing, and textiles.

Currently, more than 180 environmental technology service providers have registered with this programme, including service companies in Hong Kong and the PRD. In April 2010, Hong Kong and Guangdong signed a “Framework Agreement on Hong Kong/Guangdong Co-operation”, and agreed to, amongst others, cooperate on environmental protection like: • Reducing pollutants: jointly exploring the reduction targets and options for total air pollutants emission in the PRD region in 2011-2020.

• Cleaner production: help implement the “Cleaner Production Partnership Programme” to support Hong Kong-invested enterprises in Guangdong to conduct assessment, develop demonstration projects, provide certification services, etc. in order to improve energy efficiency and to reduce air pollution.

• Electric cars: introducing

electric cars to major greater PRD cities such as Hong Kong, Guangzhou and Shenzhen, and jointly fostering research and development, manufacturing, general application and development of the relevant auto-parts industry for electric cars in the greater PRD region.

In June 2012, the Government jointly published the Regional Co-operation Plan on Building a Quality Living Area with Guangdong and Macau.

The Plan covers long-term co-operation initiatives in five major areas, namely (1) environment and ecology, (2) low-carbon development, (3) culture and social living, (4) spatial planning and (5) green transportation systems, which aim to build a green and quality living area in the greater PRD region.

At the 21st Working Meeting of the Hong Kong/Guangdong Co-operation Joint Conference held in March 2016, Hong Kong and Guangdong agreed to continue to take forward the air pollutant emission reduction work, conduct mid-term review on the emission reduction targets for 2015 and 2020 and implement various emission

"The HKSTP accommodates a number of environmental enterprises which are devoted to developing technologies related to environmental protection and clean energy."

reduction measures for the sake of continuously enhancing the living environment in the region.

CEPA Provisions Since the implementation of the second supplement to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) in January 2006, all products of Hong Kong origin, including those related to environmental protection can be imported into the mainland at zero tariffs. Detailed information, as well as the origin rules for Hong Kong products, is available here.

On the other hand, Hong Kong service providers can set up wholly-owned enterprises on the mainland under CEPA to provide architectural design and engineering services etc., including those in relation to environmental system engineering services.

When Hong Kong service providers set up construction engineering design enterprises in China, their track record in Hong Kong and on the mainland can be used by the authorities as the basis for assessing their application for enterprise qualification on the mainland.

HONG KONG BUSINESS ANNUAL 2018 33

company and industry - film and entertainment industry

Hong Kong’s future is bright on the big screen

Hong Kong’s quality films and talent pool have made a name for themselves amongst a global audience.

A

s of January 2017, there were 55 cinemas in Hong Kong. Films are mainly released through channels such as United Artists, Broadway Circuit, the MCL Circuit, the AMC Circuit, Golden Harvest and Newport Circuit. Other movie distribution channels include selling of film DVDs and CDs, broadcasting by local free televisions, pay televisions, subscription satellite services and online platforms such as Amazon, iTunes and Google Play.

Hong Kong is amongst the world’s largest film exporters. In 2016, 61 locally produced films were released. In 2014, Hong Kong’s audio-visual production-related services exports amounted to HK$675 million. Hong Kong’s film industry as a whole is reliant on overseas revenues, given the limited size of the domestic market. Asia accounts for the majority of the foreign sales income.

The box office on the Chinese mainland has become a vital market for Hong Kong movies. In 2016 China’s box office had surpassed North America for the first time.

2016 Box office income reached RMB45.5 billion in the same year, though growth

34 HONG KONG BUSINESS ANNUAL 2018

remarkably slowed down to 3.3%.

Nowadays, an increasing number of movies have been co-produced by Hong Kong and mainland film production companies. A record total of 89 films obtained co-production permits in 2016, up 11% from 2015 – with 54 of the coproductions involving mainland and Hong Kong producers. Co-productions have fared well in the Chinese film market in recent years. Chinese mainland-Hong Kong Co-productions always occupy spots amongst the top 10 box office films in the Chinese mainland.

Thanks to such co-operation, many goodquality films with critical acclaims have been produced. For example, The Grandmaster won the Best Costume Designer in the 8th Asian Film Awards (AFA) and the Best Cinematography of the 56th Asian Pacific Film Festival (APFF). Also, The Journey to the West: The Demons Strike Back, directed

by Tsui Hark and produced by Stephen Chow, achieved a new box office record of RMB355 million on its premier day in January 2017.

"Hong Kong is amongst the world’s largest film exporters."

Hong Kong’s films have gained increasing recognition from the international film industry over the years, with young talents on the rise. In 2016, Wong Chun won the Best New Director Award at the 53th Golden Horse Awards with his debut feature Mad World. Crime thriller Trivisa, directed by new talents Frank Hui, Jevons Au and Vicky Wong and produced by Johnny To, won the Best Original Screenplay (by Loong Man Hong, Thomas Ng, Mak Tin-shu. The movie also won Best Film Editing (by Allen Leung Chin-lun and David Richardson) in the same year.

In 2015, Port of Call received the best film award at the 19th Bucheon International Fantastic Film Festival, and Aaron Kwok also won the Star Asia award at the 13th New York Asian Film Festival for his performance in the film. In 2014, Ann Hui won the Best Director award at the Taipei Golden Horse Film Festival with her film The Golden Era. Apart from buying rights for theatrical distribution, Hollywood is also interested in acquiring rights to remake Hong Kong movies. For example, The Eye released by Hollywood in 2008 was a remake based on a 2002 film Gin Gwai directed by Hong Kong’s Pang Brothers. Infernal Affairs was remade

by Martin Scorsese to the Oscar-winning movie The Departed, which was released in 2006. Further, Korean film Mujeogja was a remake of Hong Kong gangster film A Better Tomorrowin 2010.

Hong Kong has a unique advantage in bridging the Chinese mainland with the Western audiences and opening a window on the world for Chinese audience. In 2015, Warner Bros. Entertainment and China Media Capital (CMC) formed a joint venture of US$1 billion, headquartered in Hong Kong, to develop and produce films for global distribution.

Hong Kong film talents and professionals have managed to make their names known in both Eastern and Western movie market. For example, Ann Hui also won the Lifetime Achievement Award of the 6th AFA. In Hollywood, Yuen Woo Ping is one of the best known and Chinese martial arts movie choreographers because of his involvement in Matrix. John Woo, Chow Yun-fat, Michelle Yeoh, Cory Yuen, Sammo Hung and Ronny Yu are just some of the Hong Kong names that have managed to successfully straddle both Eastern and Western markets. For instance, Ip Man 3

film and entertainment industry - company and industry Motion Pictures and other Entertainment Services Sep 2016 Number of Establishments

2,438

Employment (excluding those in civil service)

16,376

SOURCE: Quarterly Report of Employment and VAcancies Statis

2015

2016

Number of Local Films released

59

61

Number of Foreign Films released

273

287

1,986

1,947

Total box office receipts (including foreign film - HK$ million) SOURCE: Hong Kong Box Office LTD.

Exports Audio-visual production and related services (HK$ million)

2014 675

SOURCE: Report on Hong Kong Trade in Services Statistics 2014, Census and Statistics Department

fetched a box office of US$1.6 million during the first ten days of its premiere in the North America market.

Whilst major film companies have their own distribution departments, smaller independent filmmakers usually rely on distribution companies to sell their films in overseas markets. Key channels for international distribution are the three main film markets in Los Angeles, Cannes and Berlin, where producers, distributors and buyers meet to initiate deals for the distribution of films. In 2016, the HKTDC organised the Hong Kong Pavilion showcasing the latest Hong Kong film productions at the Marché du Film in Cannes. Hong Kong has hosted an annual film market since 1997 to promote Hong Kong as a film distribution centre in the region. In 2016, FILMART attracted 800 exhibitors from 30 countries and regions, and 7,300 visitors from 60 countries and regions.

FILMART (Hong Kong), Marché Du Film (Cannes) and American Film Market (the US) have been chosen by film industry players as the top three most important global film events. FILMART is now the largest film and TV market event in Asia.

Hong Kong acts as the hub of buying and selling Chinese mainland films and TV dramas through FILMART

and it is increasingly seen as a remarkable platform to explore co-production in Asia. In 2016, there were over 200 Chinese exhibitors at FILMART. Hong Kong is also a popular place for overseas crews shooting commercial films, TV programmes and advertisements. In recent years, feature films from various countries that have made Hong Kong their filming locations included Transformer: Age of Extinction (US) and The Suspect (Korea). For TV programmes, Cesar to the Rescue (US) and Asia’s Got Talent (Singapore) were filmed in Hong Kong as well.

Television programmes Hong Kong TV companies derive a substantial portion of their revenue from overseas markets, targeting primarily Chinese-speaking populations.

In addition, some programmes are dubbed into other languages to target the non-Chinesespeaking audience. Hong Kong’s television broadcasters sell their products using the following methods: programme licensing, pre-packaged programme content and subscription fees, with satellite distribution and landing rights now becoming an increasingly important source of revenue. Recently, over-the-top (OTT) services through digital TV and mobile platforms have emerged to be an

"Hong Kong film talents and professionals have managed to make their names known in both Eastern and Western movie market."

important distribution channel of TV programmes in Hong Kong. For example, most of the latest programmes produced

by Television Broadcasts Limited (TVB) are available on their mobile application platform “myTV SUPER”. In November 2014, Hong Kong Television Network Limited (HKTV) started distributing their programmes through the internet, which can be accessed by various devices including mobile phones and tablets. ViuTV, the channel run

by HKTVE and launched in April 2016, offers both free-toair broadcast and media-ondemand streaming services on mobile devices. In January 2016, global streaming giant Netflix rolled out its OTT service in Hong Kong. Netflix users can enjoy unlimited movies and TV programmes on TV, laptops and mobile devices on a paid subscription basis. . With a surge in TV and cable channels, the mainland’s demand for quality programme content is huge. Landing rights have been granted to Hong Kong’s TV broadcasters to provide TV entertainment to millions of homes in China, and much wider access of mainlandHong Kong co-produced television programmes are provided under CEPA. Hong Kong’s TV industry is expected to greatly benefit from more opportunities from China.

HONG KONG BUSINESS ANNUAL 2018 35

company and industry - freight forwarding industry

Freight forwarding industry continues to soar

Despite setbacks in total freight handled this year, Hong Kong cargo transport companies offer competitive services for its customers.

I

n general, smaller freight forwarders in Hong Kong tend to provide more basic and economical services. Services related to import/export trade, including the preparation of shipping documents, customs clearance and logistics, may be undertaken by the import and export companies or their agents. Smaller operators generally provide more flexibility and more personalised services. In addition, they have lower overheads as they “piggyback” on the fixed capacities of the larger companies, and therefore can often provide lower rates.

Total freights handled in Hong Kong dropped by 0.2% to 283.1 million tonnes in 2016, with the decline easing from 13% in 2015 as the overall external environment remained unconstructive. Nonetheless, the US economy was gaining momentum despite the slow EU recovery and sluggish sputtering growth of China due to economic rebalancing.

Service Providers The Hong Kong Association of Freight Forwarding Agents (HAFFA) was formed in

36 HONG KONG BUSINESS ANNUAL 2018

1966 to represent the interests of the freight forwarding industry. It has been renamed as Hong Kong Association of Freight Forwarding and Logistics Ltd to reflect the sophisticated nature of the business. HAFFA, with some 300 members, aims to promote standardisation and professional conduct amongst industry players. It coordinates with the Hong Kong government and related associations, including Hong Kong Air Cargo Terminals Ltd. (HACTL) and the Hong Kong Shippers’ Council (HKSC), in enhancing the business environment for its members. Similarly, the Chartered Institute of Logistics and Transport in Hong Kong (CILTHK), set up in 1968, is a professional body for people engaged in the sectors of shipping, logistics, airline, railway, road, public transport, government, educational institutes and consultancy, with around 1,900 members.

In Hong Kong, larger sea freight forwarders tend to target big companies for exclusive deals. They provide valueadded services and invest in information technology to ensure that they meet the

"Total freights handled in Hong Kong dropped by 0.2% to 283.1 million tonnes in 2016, with the decline easing from 13% in 2015" changing needs of their customers. Some of them set up logistics subsidiaries to provide tailor-made and specialised services to become the service partners for their customers. Generally, larger companies’ wellestablished brands and far-reaching logistics networks have enhanced their significant market shares in the global export market.

The smaller regional players, however, have better understanding of the business culture, better knowledge of their markets and have established networks in the region.

As reliable and speedy delivery is the key to successful freight forwarding services, Hong Kong’s forwarders offer competitive services and secure the confidence of international customers through their understanding of international practices, reliability and networks that are time-proven effective.

In 2016, Kerry Logistics was crowned the “Global Logistics Provider of the Year” at the Payload Asia Awards, after being awarded the “Global Logistics Provider of the Year” and the “X Factor Award” in 2015. The judging panel of the Payload Asia Awards comprised Asia’s leading supply chain academics, business leaders and over 20,000 customers.

Exports More than 70% of Hong Kong’s merchandise exports are sent to other Asian markets, with Western Europe and North America each accounting for about 10%. With Asia becoming an increasingly integrated production base, lots of parts and components are included in exports within Asia. In contrast, Western Europe and North America tend to account for a bigger proportion of the total services exports. Based on the latest services trade report (released in February 2017), Hong Kong’s exports of cargo forwarding services contracted by 10.5% to US$1.9 billion in 2015.The larger freight forwarders often follow their big international customers to new markets. In some instances, transport service providers set up business in the new markets before recommending their smaller customers to follow suit. They expand overseas usually by setting up subsidiaries, joint ventures or appointing agents to render global services.

A number of global trends are affecting the freight forwarding industry, including globalisation of the supply chain, mass

freight forwarding industry - company and industry Total (Inward + Outward) Freight Movements (million tonnes) Seaborne

River

Road

Air

2012

188.9

80.4

26.2

4.0

Total 299.5

2013

184.2

91.8

25.6

4.1

305.7

2014

197.3

100.4

24.2

4.4

326.3

2015

168.6

88.0

22.8

4.4

283.8

2016

164.1

92.6

21.9

4.5

283.1

SOURCE: Summary Statistics on Port Traffic of Hong Kong Port Development Council

Selected Key Indicators As at December 2016 1,314

Number of Air Cargo indicators Emplyment

17,287

Emplyment

17,893

Number of Sea Cargo Forwarders

2,272

SOURCE: Quarterly report of Employment and Vacancies Statistics, Hong Kong Census and Statistics Department

customisation, shortening of product cycles, endeavour for achieving low to zero inventory, and quick response requirements. In the face of these trends, an increasing number of businesses are compelled to optimise their supply chains via external experts, i.e. third-party logistics (3PL) and fourth-party logistics (4PL), which are more sophisticated in their service offers and able to provide supply chain management services.

3PL refers to an outsourced provider that manages all or a significant part of a business’ logistics requirements and performs transportation, locating and sometimes product consolidation activities. In contrast, 4PL refers to an outsourced provider which completely integrates its client’s supply chain – managing the resources, capability and technology of all parties, including the 3PLs, to deliver a comprehensive supply chain solution.

Technology Trends New technologies play an increasingly important role for the freight forwarding industry to improve operation efficiency.

The adoption of automatic identification and data capture (AIDC) technology, which enables users to gain automatic access to information, as well as identify, collect and store data

directly to a computer system, is expected to become more prevalent as radio frequency identification (RFID) sensors and Bluetooth technology are implemented throughout the logistics industry. Besides streamlining the process of manually transferring data between systems, the adoption of AIDC technology also enable freight forwarders to develop real time systems to give customers up-to-date information about their shipment delivery.

The Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA) Hong Kong and the Chinese mainland entered into a subsidiary agreement under CEPA in 2014 to achieve basic liberalisation of trade in services in Guangdong (Guangdong Agreement), followed by the Agreement on Trade in Services (ATIS) which consolidated prior commitments under the Guangdong Agreement as well as the 10 Supplements introduced between 2004 and 2013. ATIS extends the trade liberalisation coverage from Guangdong to the rest of the mainland, effective from June 2016.

Unlike the previous Supplements which adopted a positive-list approach to introducing liberalisation measures, ATISadopts a hybrid approach to granting preferential

"Hong Kong’s forwarders offer competitive services and secure the confidence of international customers through their understanding of international practices, reliability and networks that are time-proven effective."

access to Hong Kong using both positive and negative lists. With basic liberalisation of trade in service between the mainland and Hong Kong achieved, the city’s status as a logistics hub as well as gateway to the mainland is set to strengthen. The following sections cover the major liberalisation measures under ATIS: Freight Forwarding Agency Services Under CEPA, Hong Kong service suppliers (HKSS) are allowed to set up wholly owned freight forwarding agencies on the mainland to provide services such as shipping undertaking, issuance of bills of lading, settlement of freight rates, signing of service contracts, customs declaration and inspection, and use of common commercial bills for lading or multimodal transport documents for conducting multimodal transport services, etc. Maritime Transport Services Under CEPA, HKSS can form wholly owned units in providing maritime services such as international transport (freight and passengers excluding cabotage transport), container station and depot services, non-vessel operating common carrying services, port cargo loading and unloading services, tug services between Hong Kong and mainland ports, ship maintenance and repair services.

HONG KONG BUSINESS ANNUAL 2018 37

company and industry - fund management industry

Steady cash flows for the fund management industry Hong Kong’s accumulated expertise in investing in Asian markets particularly in mainland China contributes to high turnovers.

S

ecurities and Futures Commission (SFC) in July 2016, the combined fund management business in Hong Kong hit a record high of US$2,230 billion as of end-2015, down 1.6% year-on-year (YoY). The combined fund management business comprised asset management business (71% share), private banking business of registered institutions (21%), fund advisory business of licensed corporations (7%) and REITs (1%).

Service Providers Hong Kong is a major regional fund management centre with a large concentration of international fund managers in Asia. According to the SFC survey, around 68.5% of the investment funds (excluding REITs) were sourced from outside Hong Kong in 2015.

Hong Kong’s fund management industry has developed a strong expertise of investing in Asia, in particular the Chinese mainland. Such expertise is vital to Hong Kong’s appeal for attracting funds for management. According to the SFCsurvey,

38 HONG KONG BUSINESS ANNUAL 2018

in 2015, 71.5% of the assets managed in Hong Kong were invested in the AsiaPacific, amounting to HK$4,881 billion, with HK$3,427 billion in Hong Kong and the Chinese mainland, HK$420 billion in Japan and HK$1,034 billion in the rest of the Asia-Pacific respectively. There is an increasing trend of mainland-related financial institutions establishing operations in Hong Kong. As of 2015, mainland-related groups of companies had established a total of 270 licensed corporations or registered institutions in Hong Kong, according to the SFC. The number of funds managed by these companies had risen from 253 in 2014 to 283 in 2015.

As of end-2016, there were 2,779 SFCauthorised collective investment schemes, including 2,196 unit trusts and mutual funds, 300 investment-linked assurance schemes, 257 pension/MPF-related funds and 26 other investment schemes.

• ETFs listed in Hong Kong cover a wide range of geographical locations, including Hong Kong, the Chinese mainland, Japan, South Korea, Russia, India and

"Hong Kong is a major regional fund management centre with a large concentration of international fund managers in Asia." other emerging markets. Types of assets include equity, Asian bonds, gold and commodity futures index, etc. The depth and breadth of investment funds managed in Hong Kong has increased notably in recent years. A broad range of investment products, ranging from low-risk bonds or money market funds to more sophisticated REITs and hedge funds products, are available in Hong Kong.

• As of end-2016, there were 157 listed unit trusts/mutual funds on the Main Board of the Hong Kong Exchange (HKEx), up from 147 a year ago. A mongst them, there were 133 ETFs, 12 leveraged and inverse products (L&I) and 11 REITs. • The turnover of ETFs in Hong Kong in 2016 amounted to HK$1 trillion, accounting for 6% of the HKEx’s main board total. As of end-December 2016, Hong Kong’s ETF market capitalisation amounted to HK$306 billion.

• In December 2015, the first batch of cross-border funds under the Mainland and Hong Kong Mutual Recognition of Funds (MRF) scheme was approved, consisting of three Hong Kong funds and four mainland funds. The introduction of MRF products allows mainland investors to broaden their offshore investment spectrum via investment fund products from Hong Kong. MRF implementation gives funds managers a greater incentive to set up more Hong Kong-domiciled funds targeting mainland investors.

This has come on top of the continued expansion of RMB investment products in Hong Kong. In January 2017, 54 crossborder funds were approved under the Mutual Recognition of Funds (MRF) scheme, comprising 6 Hong Kong funds and 48 Chinese mainland funds.

• In December 2016, the SFC and the Swiss Financial Market Supervisory Authority signed an MoU on Switzerland-Hong Kong Mutual Recognition of Funds and Asset Managers. Under the MoU, allow eligible Swiss and Hong Kong public funds can be distributed in each other’s market through a streamlined vetting process.

• In keeping with industry development, the SFC continues to work with the Hong Kong Government in developing a legal and regulatory framework for openended fund companies, so as to provide

fund management industry - company and industry Industry Data 2015 Fund Management Business (Asset under management, US$ billion)

2230

Asset management business

1,572

Advisory business

163

Private Banking Business

470

Real estate invetments trusts (REITs)

26

SOURCE: Fund Management Activities Survey 2015, Securities and Futures Commission

an additional choice for the market and attract more funds to domicile in HK. Qualified Domestic Institutional Investor (QDII) In April 2006, the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) jointly issued rules to allow qualified commercial banks to raise RMB funds from individuals and institutions to invest in overseas financial instruments. Hong Kong was the first market which mainland residents were allowed to invest via qualified mainland financial institutions. The QDII scheme is conducive to an orderly outflow of mainland capital.

Six lenders on the mainland were then allowed to provide such service to their customers, including Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), Bank of China (BOC), Bank of Communications and the mainland branches of Hong Kong and Shanghai Banking Corporation (HSBC) and Bank of East Asia. QDII has since then been extended from banks to insurance companies, fund companies, and securities companies.

As of end-January 2017, SAFE had granted QDII quota amounting to US$90 billion, with US$13.8 billion assigned to 30 banks, US$37.6 billion to 48 fund management companies and securities firms, US$30.9 billion to 40 insurance companies, and US$7.8 billion to 14 trustees.

The amount of mainland assets managed in Hong Kong sourced from QDII grew by 16%

year-on-year to HK$145 billion in 2015, of which 54% were invested in the Asia-Pacific.

RMB Qualified Foreign Institutional Investor (RQFII) The Central government introduced the RMB Qualified Foreign Institutional Investor (RQFII) scheme in the second half of 2011, under which RQFIIs are allowed to raise funds in Hong Kong and invest in the securities market on the Chinese mainland. The scheme has been expanding in terms of quota and participation from overseas countries. As of endJanuary 2017, the accumulated RQFII quota was RMB530 billion, with Hong Kong accounting for some 51% of the total or RMB270 billion.

China’s World Trade Organisation (WTO) Accession The full potential of Hong Kong’s fund management industry cannot be realised without the Chinese mainland market. China has a growing demand for fund management expertise to manage its massive savings pool and rapidly expanding retirement funds.

Given its proximity to the mainland, Hong Kong has played a key role in sharing management skills and talents in the development of the mainland’s fund management industry.

With China having phased in all WTOcommitments, overseas fund houses can now hold up to 49% of equity stakes in a fund management company on the mainland.Under China’s 12th Five-year Plan, it is stated that the mainland will support Hong Kong as an offshore RMB centre and fund management centre.

"The turnover of ETFs in Hong Kong in 2016 amounted to HK$1 trillion, accounting for 6% of the HKEx’s main board total.

As of end-December 2016, Hong Kong’s ETF market capitalisation amounted to HK$306 billion."

Hong Kong’s financial services offer will be reinforced by an expected rise in dual-listing of stocks and ETF. Riding on the expanded RMB trade settlement scheme, Hong Kong has succeeded in expanding its offer of RMB-denominated financial products and services, including trade finance, RMB stocks, RMB bonds and other related products and services.

Stock Market Connection with the Chinese Mainland To improve the opening and healthy development of capital markets on the mainland and in Hong Kong, Premier Li Keqiang unveiled in April 2014 the Central government’s plan to deepen China’s capital markets through linking the stock exchanges in Shanghai and Hong Kong (that is, SSE and HKEx).

This cross trading of eligible stocks between the two stock exchanges, was officially launched on 17 November 2014, with initial daily quotas of RMB 13 billion for northbound trading of SSE listed securities and RMB 10.5 billion for southbound trade of HKEx-listed securities.

Hong Kong fund management companies are eligible to participate in the Stock Connect, thereby providing an alternative route for them to invest in the mainland equity market apart from the scheme of RMB RQFII. Similarly, the “Shenzhen-Hong Kong Stock Connect” was launched on 5 December 2016, with daily quotas of RMB 13 billion for northbound trade covering 881 stocks, and of RMB10.5 billion for southbound trade covering 417 stocks versus 318 stocks.

HONG KONG BUSINESS ANNUAL 2018 39

company and industry - giftware industry

Hong Kong’s giftware industry keeps on giving

Hong Kong’s giftware industry is world-renowned for supplying light consumer products that cater to global demand.

A

fter dropping by 8% in 2015, Hong Kong’s giftware and premiums exports extended the decline by 12% in 2016. Sales to all major markets were uninspiring. The US and the EU, the two largest markets making up 48.1% of the total, fell by 11% and 14% respectively in 2016. Exports to the next major markets, Chinese mainland, Japan and ASEAN, which in total accounting for 22.5%, dropped 6%, 13% and 2% respectively in 2016. Fine jewellery and wristwatches were the dominating categories of Hong Kong’s giftware exports, taking up more than half of the total.

Structurally, there has been a rising trend of offshore trade. This tendency is phenomenal in the case of toys and some lower-priced gift items, particularly for those bounded for the US and increasingly the EU market. On the other hand, high-valued items like timepieces and precious jewellery remain largely exported through Hong Kong, mainly by air.

In general, Hong Kong companies rely heavily on OEM and ODM orders. Whilst

40 HONG KONG BUSINESS ANNUAL 2018

premium and give-away items are embossed with the buyers’ company logos and names, most gift products are exported as open items. Hong Kong manufacturers also offer expertise in design, engineering, tooling, quality control and other technical knowhow to its customers.

To expand business networks and explore market opportunities abroad, Hong Kong manufacturers may participate in some influential international trade fairs. Since gifts and premiums comprise a wide range of products, manufacturers may also participate in other related fairs; say for toys, stationery, jewellery, and timepieces. Some leading trade fairs are listed as follows: Industry Trends There is a trend towards consolidation of buyers and retail channels. In particular, large-scale retail chains and mass merchants are minimising inventory and shortening delivery lead time in an effort to lower costs and business risks. Such a development will continue to pose a threat to smaller manufacturers, as giant retailers, doing

"Hong Kong exporters are capable of delivering a large number of pricecompetitive products for the premium and give-away markets" direct sourcing on their own, may tend to favour large suppliers. On the other hand, the rise of giant retailers has provided new opportunities for private labelled items.

With the rapid development of internet technology, online shopping becomes more popular, particularly for gift items because consumers are increasingly look for personalised gifts and unique gift ideas which online shops are usually able to deliver. The intensifying price war and increasing environmental awareness are prompting giftware manufacturers to explore more affordable and non-polluting substitutes to traditional materials. Also, due to the intense competition, giftware firms need to turn out an increasing number of new models and designs in an effort to stay competitive.

Licensing is entering the home accessories market. According to industry sources in the US, there is good market potential in the licensing of decorative accessories. Licensed products based on familiar characters from movies or TV series will likely remain popular. Hong Kong companies are in a good position to capitalise on this trend, as they are known for protecting clients interests with due respect for intellectual property rights.

CEPA Provisions Under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), the mainland has given all products of Hong Kong origin, including giftware, tariff-free treatment starting from 1 January 2006.

According to the stipulated procedures, products which have no existing CEPA rules of origin can enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. Non-Hong Kong made giftware products are subject to tariff rates up to 35% when entering the mainland.

The promulgated rules of origin for giftware products to benefit from CEPA’s tariff preference are basically similar to the existing rules governing Hong Kong’s exports of these products. Generally speaking, for the manufacturing of imitation jewellery, moulding and assembling, identified as the principal processes for the purpose of delineating their origin, must be done in Hong Kong. For giftware articles

giftware industry - company and industry Performance of Hong Kong’s Exports of Giftware and Premiums 2014 HK$Mn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

by Market

2015 HK$Mn. Growth %

HK$Mn.

2016 Growth %

8,194

-9

7,203

-12

6,409

184,413

+2

169,595

-8

148,914

-12

114,890

-3

107,816

-6

92,971

-14

192,607

+2

176,797

-8

155,324

-12

2014 Share % Growth %

2015 Share % Growth %

Share %

-11

2016 Growth %

US

24.3

-1

26.6

*

26.8

-11

EU

21.3

-2

21.6

-7

21.3

-14

UK

5.1

-4

5.9

+6

5.9

-11

Germany

4.2

-3

4.2

-9

4.2

-12

France Chinese Mailand

3.2

-7

2.9

-18

3.0

-9

7.3

-2

7.5

-7

8.0

-6

Japan

7.6

-2

7.8

-5

7.8

-13

ASEAN

5.9

+12

6.0

-7

6.7

-2

by category

2014 Share % Growth %

2015 Share % Growth %

Share %

2016 Growth %

Fine jewellery

30.9

+8

29.5

-12

30.2

-10

Battery powered, Non-precious metal Wristwatches

19.8

+1

20.1

-7

20.2

-12

Whelled toys and Dolls

16.2

-3

17.2

-3

16.2

-17

* Insignificant

manufactured from paper, cutting, die-pressing, wrapping and glueing, must be done in Hong Kong. If rolling and/or forming is/are required after die-pressing, such process/ processes must be also done in Hong Kong.

General Trade Measures Affecting Giftware Exports Some trade measures such as anti-dumping charges affect giftware products exported by Hong Kong companies. For example, certain paper-made products, folding gift boxes and wax candles are subject to anti-dumping duties by the US, whilst some ring binder mechanisms are charged against by the EU. These measures can affect Hong Kong companies as many of them are manufacturing on the mainland. On the other hand, the EU has removed its import quotas on China-made kitchenware of porcelain or china since 2005.

Product requirements have become more stringent in overseas markets, mainly in areas of product safety and

environmental protection. For example, the EU’s revised Toys Directive has been adopted.

All member states have been required to implement its provisions from July 2011. In the US, the enactment of the Consumer Product Safety Improvement Act (CPSIA) poses a great challenge to Hong Kong’s toy exporters. Tightened lead limits, prohibition on the use of certain phthalates and third-party testing requirements are amongst the strengthened provisions contained in the CPSIA. Safe and ethical working conditions have also increasingly been a concern amongst overseas buyers. A number of leading buyers such as Hasbro, Mattel, LEGO, and Wal-mart are all requiring the supplier to meet the standards.

The International Council of Toy Industries (ICTI), with active involvement of Hong Kong toy makers, has introduced the ICTI Code of Business Practice and an associated auditing process known as the CARE Process to manufacturers, distributors and

"Hong Kong’s giftware industry is supported by a strong network of competent ancillary industries."

retailers of toys.

Product Trends Personalised items: Customers have become more savvy and sophisticated. Especially when choosing gift items they look for something special and unique.

That makes personalization a stronger trend today. Whilst gift items can be custom ordered to personal specifications, there are simpler solutions such as monogramming or assortment of different themed or coloured accessories.

These allow customers to “mix and match” to create gift items with their own style. Distribution of higher-valued, functional corporate giveaways to boost sales: Corporate giveaways will continue to be an effective sales and marketing tool.

Companies will however tend to distribute highervalued, functional yet creative premiums in the future, as target recipients appear to feel drained of low-valued items.

For example, IT peripherals such as USB flash memory and power banks are increasingly considered as corporate gift items.

HONG KONG BUSINESS ANNUAL 2018 41

company and industry - houseware industry

Houseware industry faces competition from peers

"Hong Kong’s total exports of houseware products remained sluggish in recent years, dropping by 17% in 2016, after a decline of 12% in 2015."

H

Kong manufacturers are shifting from OEM to ODM. A few also create and market their own brands (OBM). Some manufacturers apply more advanced technologies in the production process, such as gas-assisted and injection compression moulding in plastic houseware production. More resources are used in product design and maintaining product quality to increase the competitiveness of Hong Kong products.

Local houseware manufacturers turn to ODM to move ahead of the competition against traditional Chinese firms.

ong Kong is a well-known international sourcing centre for houseware products. The industry itself covers a wide range of products including tableware, kitchenware, non-electric domestic cooking/ heating appliances and sanitary ware.

Companies in the field of metal cookware and kitchenware provide a comprehensive selection of products, including saucepans, casseroles, frying pans, Dutch ovens, steamers, egg poachers, double boilers and frying baskets. Stainless steel is the most commonly used material due to its durability. Aluminium-made cookware is also available, with porcelain-enamelled exterior and the interior coated with nonstick material.

Others focus on plastic-ware, including tableware, kitchen utensils, water pots, trash bins and bathroom accessories. The majority of them are small to mediumsized companies since production of plastic houseware, especially the smaller items, requires comparatively less labour input and capital investment. Sophisticated moulding

techniques are generally not required for lower-end products. As such, some toy makers also engage in plastic houseware as their sideline business. On the other hand, the production of larger plastic houseware, such as buckets, basins and baskets, is dominated by a few large manufacturers since heavy capital investment is required for installing large machinery.

Hong Kong companies are also noted for producing convincing replicas of artefacts dating from the Tang Dynasty. These imitations are accurate reproductions in every detail, ranging from small ceramic horses to large pieces of Tang Dynasty tomb servants. Owing to the high production cost in Hong Kong, most Hong Kong manufacturers have relocated their production to the Chinese mainland.

Other high value adding functions, such as sourcing, logistics, product development and marketing are maintained by offices.

Most Hong Kong houseware production is on an OEM basis. Facing intensified competition from indigenous Chinese companies and other Asian suppliers, Hong

Performance of Hong Kong Exports of Houseware Products [1] Hong Kong’s total exports of houseware products remained sluggish in recent years, dropping by 17% in 2016, after a decline of 12% in 2015. The EU and the US were our largest markets, which together accounted for 51.5% of the total. In 2016, exports to the US dropped by 17% whilst sales to EU saw a decrease of 20%. Other major markets included Chinese mainland, Japan, ASEAN and Macau, which in sum made up another 32.8% of the total exports of houseware products. Product-wise, plastic houseware, and metal cookware and kitchenware, were the two largest export categories of the industry, which together accounted for 76.8% of the total in 2016.

Household goods, covering not only most houseware products, but also electrical appliances and electronic products such as radios, shavers, dish cleaning machines, refrigerators, etc, saw a marginal increase of 1% in 2016, after a small decline of 2% in 2015.

Sales Channels Department stores, retail chains and mass merchants remain the dominant retail channels for houseware products in mature markets like the US, EU and Japan but increasingly, consumers also look for niche products online. Hong Kong manufacturers usually deal directly with overseas retailers or through their buying offices or agents in Hong Kong. Hong Kong companies also enter into licensing agreements for production with some overseas brand holders. This is especially common for kitchenware and cookware. For markets with smaller order sizes, trading firms are often involved as an intermediary. A few well-established manufacturers have their

42 HONG KONG BUSINESS ANNUAL 2018

houseware industry - company and industry Performance of Hong Kong’s Exports of Leather Consumer Goods^ 2014 HK$Mn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

Total exports by Major Market

2015 HK$Bn. Growth %

HK$Bn.

2016 Growth %

42

+14

44

+5

48

7,377

-10

6,520

-12

5,376

-18

6,803

-11

5,905

-13

4,778

-19

7,418

-9

6,563

-12

5,425

-17

2014 Share % Growth %

2015 Share % Growth %

Share %

+11

2016 Growth %

US

29.0

-14

29.2

-11

29.3

-17

EU

26.3

-10

23.0

-23

22.2

-20

Germany

8.5

-4

7.6

-21

6.8

-26

UK

5.3

-14

5.4

-10

5.3

-18 -16

3.4

-8

2.5

-35

2.5

Chinese Mainland

France

10.5

-6

11.3

-5

14.7

+8

Japan

6.3

-4

7.4

+4

9.2

+3

ASEAN

5.2

-7

5.8

-2

6.0

-14

Macau

2.2

+47

4.9

+100

2.9

-51

own overseas offices responsible for marketing and other liaison activities.Many manufacturers attend international trade fairs in order to increase their exposure in overseas markets. Below is the schedule of some major trade fairs: Industry Trends In most of the mature markets, the retail industry for houseware is dominated by a few large chain stores or discount giants.

These overseas buyers have strong bargaining power as they usually place large-volume and repeated orders from a few suppliers. Over the years, Hong Kong manufacturers have proved themselves reliable and maintained a good market position by providing good-quality products at a competitive price. Yet they are facing fierce competition from other suppliers in the region. To stay competitive, Hong Kong manufacturers are undertaking more ODM and licensing arrangement. Licensing is especially common in the kitchenware sector for US and European brands as consumers in general favour brand-named products as well as other private label items owned by department stores and chain stores.

On the distribution side,

internet sales of houseware have continued to grow as consumers increasingly enjoy the ease, convenience and board assortments of online shopping. Besides buying from pure-play online retailers, it is also common to buy online and pick up at the local stores. An efficient logistics system and inventory management hence become more important for both e-tailers and brick-andmortars. Furthermore, the use of big data analytics enables retailers to be more responsive to consumer preference.

Product Trends Bright colours: The use of bright colours has become a key trend in home designs.

Green, for instance, from light and pale to rich and neon retro green hues, is often used to create a natural feel of a home.

Other bright and modern colours such as pink, purple and orange are also popular for brightening up kitchens and rooms. Responding to the trend, suppliers are keen on creating unique and modern designs of kitchen decor accessories, tableware and decorative fabrics, utensils, lamp shades and kitchenware in vibrant colour palettes for easy mix-and-match.

Smart and innovative designs: Recent years have seen more

"Over the years, Hong Kong manufacturers have proved themselves reliable and maintained a good market position by providing good-quality products at a competitive price."

new products with smart designs, multi-functional and innovative features. Examples of these products include a set of knife blocks with concealed, hygiene-boosting air vents in their base and water jugs with in-built filters that provide a good solution for the provision of quality drinking water. Besides, tech gadgets have started to enter the kitchen space. For example, some kitchen baking scales can now be connected to an iPad app which would provide instructions to make a perfect cake.

Simple and healthy lifestyle: People are getting more healthconscious and prefer eating healthier and simpler. Kitchen tools that help cook healthy meals and craft a simple lifestyle will continue to be popular.

For example, consumers prefer cookware and kitchenware with non-stick surface that are easy to clean up. Steamers and pans which require less oil for cooking are appealing.

Handy gadgets such as salad choppers and juicers are much sought-after. Houseware gift sets: Fewer people purchase premium ceramic and porcelain products for their own use.

Instead, they would purchase them as gifts.

HONG KONG BUSINESS ANNUAL 2018 43

company and industry - insurance industry

Insurance industry reports premium gains in 2017

Total gross premiums represent 18.5% of the city’s Gross Domestic Product (GDP) in the first half of the year.

A

ccording to the Office of the Commissioner of Insurance’s (OCI) provisional statistics for the first half of 2016, Hong Kong’s total gross premiums increased 14.0% YOY to HK$207.5 billion (US$26.6 billion), representing 18.5% of the city’s GDP in the first half of this year. General business grew 0.6% to HK$24 billion (US$3.1billion).

During the same period, long-term in-force insurance business increased by 14% YOY to HK$183.5 billion (US$26.6 billion), whilst new long-term insurance business expanded faster at 18.9% YOY to HK$81.7 billion (US$10.5 billion). Analysed by gross premiums, long-term insurance business represented about 88% of the market, whilst general business accounted for the remaining 12%.

Service Providers Authorised insurers Hong Kong had 161 authorised insurers as of end-June 2016, about half of which were incorporated overseas. Amongst the overseas-incorporated insurers, Bermuda,

44 HONG KONG BUSINESS ANNUAL 2018

the US and the UK took the lead.

According to the Hong Kong’s Office of the Commissioner of Insurance (OCI) 2015 Annual Report, the top 10 insurers by overall gross premiums in 2014 were AXA General Insurance Hong Kong, Zurich Insurance Company Ltd, Bupa (Asia) Limited, China Taiping Insurance (HK) Company Limited, Bank of China Group Insurance Company Limited, QBE-HKSI Limited, AIG Insurance Hong Kong Limited, CNOOC Insurance Limited, Asia Insurance Company Limited, and AXA China Region Insurance Company Limited. The total amount of the gross premiums written by these insurers was HK$ 19.73 billion (US$ 2.53 billion) in 2014, accounting for 45.3% of the total market share.

Major mainland insurers which have been listed in Hong Kong include China Life Insurance (largest commercial insurance group in mainland China), Ping An Insurance of China, China Taiping Insurance and China Pacific Insurance. The People’s Insurance Company (Group) of China (PICC) was listed in Hong Kong in

“For the first half of 2016, Hong Kong’s total gross premiums increased 14.0% YOY to HK$207.5 billion (US$26.6 billion)” December 2012.

Insurance agents and brokers Insurance agents and brokers serve as an intermediary between policyholders and the authorised insurers. Whilst insurance agents are contracted with a certain insurance company, insurance brokers are not affiliated with any insurance company.

As at end-June 2016, there were 2,482 insurance agencies and 56,809 individual agents registered with the Insurance Agents Registration Board, and 744 authorised insurance brokers who are the members of the approved bodies of insurance brokers, namely The Hong Kong Confederation of Insurance Brokers and Professional Insurance Brokers Association.

Industry Development and Market Outlook • Against the backdrop of a highly matured market, an ageing population and rising general affluence, many insurers are already venturing into retirement planning and wealth management to meet consumer demands.

• The Insurance Companies (Amendment) Ordinance 2015 was enacted by the Legislative Council in July 2015, paving the way for establishing the Independent Insurance Authority, as well as a statutory licensing regime to replace the existing self-regulatory system for insurance intermediaries. This changeover will help regulate the insurance business, protecting potential and existing policy holders and promoting the development of the industry.

• To better protect policyholders and strengthen market stability in the event of insurer insolvency, the Hong Kong government has been working with the insurance industry to establish a Policyholders’ Protection Fund to cover both Individual and SME policyholders.

• In line with the regional trend, multichannel distribution for insurance products is growing in popularity.

Whilst insurance products are primarily distributed by insurance agents, bancassurance penetration (the distribution of insurance products by banks) has been growing rapidly. Asia, in particular China, continues to be

insurance industry - company and industry Industry Data Insurance and Services Auxiliary to Insurance and Pension Funding

June 2016

Employement

84,715

Number of Establishments

16,199

SOURCES: Quarterly Report of Employment, and Vacancies Statistics, Census & Statistics Department

Number of Barristers Insurance Market

First Half of 2016

Total gross premiums (US$ billion)

26.6

Long-term business

23.5

Gerneral Business

3.1

Insurance penetration (premium income as % of GDP) #

18.5

Insurance Density (per capita premium, US$) SOURCES: Office of the Commissioner of Insurance, Census & Statistics Department

viewed by global insurers and reinsurers as the region of opportunities. In addition to the Chinese mainland’s WTO liberalisation, Hong Kong’s insurance sector and professionals can benefit from the CEPA agreement signed with the mainland. (see the CEPA section below) China’s Insurance Market • The Chinese mainland recorded a year-on-year growth of 32.18% in premiums income to RMB 2.52 trillion (about US$32.3 billion) in the first three quarters of 2016, with longterm insurance business and general insurance business growing by 37.0% and 7.8 % over the year respectively.

• In the first three quarters of 2016, foreign-invested insurance companies on the mainland accounted for 6.0% of the life insurance market and 2% in property and casualty insurance market respectively. For foreign insurers, they have entered the Chinese market mainly through the formation of joint ventures with local companies.

• It is estimated that 40% of the total population will be aged 60 or above by 2050, accentuating the need for more extensive health insurance protection on the mainland.

• In April 2014, China Insurance Regulatory

1,621.0* # Based on mid 2016 GDP (*population) Figures and 2016 first 6 months total gross premiums

Commission (CIRC) announced to allow domestic or foreign insurance companies in acquiring one more mainland insurance company in the same business segment from June 2014, be it life insurance or property-and-casualty insurance, and any purchase of more than one-third of the equity stake of an insurer will be subject to regulatory approval. Currently, insurance companies on the mainland are only allowed to own one insurance company in each segment. The maximum limit of capital participation by a Hong Kong insurance company in a Mainland insurance company is 24.9%.

The new arrangement is seen as conducive to industry consolidation, raising the operational efficiency of insurance companies on the mainland.

Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA) Under the CEPA framework, the Agreement between the Mainland and Hong Kong on Achieving Basic Liberalisation of Trade in Services in Guangdong (“Guangdong Agreement”) came into effect from March 2015. Measures related to the insurance sector included the following: • Encouraging Guangdong insurance companies to cede their business to Hong Kong insurance or reinsurance

“Hong Kong had 161 authorised insurers as of end-June 2016, about half of which were incorporated overseas.”

companies with RMB as the settlement currency.

• Encouraging Hong Kong insurance companies to expand their reinsurance business to mainland reinsurance companies.

Allowing Guangdong insurance companies that fulfil regulatory requirements to appoint Hong Kong insurance companies to provide RMB insurance policies selling services in Hong Kong.

On the heels of the Guangdong Agreement, the Hong Kong government and the Ministry of Commerce (MoC) signed the Agreement on Trade in Services in November 2015 for implementation in June 2016. The subsidiary agreement extends the liberalisation of service from Guangdong to the whole of the Chinese mainland, hence promoting more opportunities for the insurance industry in both Hong Kong and the mainland. There were 21 approved applications for Hong Kong service supplier (HKSS) as of end November 2016.

HONG KONG BUSINESS ANNUAL 2018 45

company and industry - maritime services industry

Maritime services industry navigates to success

More than 2,500 vessels were on HKSR as of April 2017, boasting a total of 109 million gross tonnes (GT).

H

ong Kong was the world’s 7th largest trading economy in 2016 as well as an international maritime centre characterised by a strong presence of ship owners, cargo owners and traders in Hong Kong on the one hand, and a vibrant maritime services cluster on the other.

Hong Kong Shipping Register (HKSR) is a ship registration system separate from that of the Chinese mainland. More than 2,500 vessels were on HKSR as of April 2017, boasting a total of 109 million gross tonnes (GT). Besides, Hong Kong is the world’s fourth largest ship register following Panama, Liberia and Marshall Island -- registered vessels totalled 171 million deadweight tonnes (DWT) or 9.3% of the world’s total as of October 2016, according to Danish Shipping Statistics.

Income derived from the international trade of ships registered in Hong Kong is exempt from profits tax. Besides, Hong Kong has also entered into double taxation agreements (DTAs) which cover shipping income with many places, including the

Chinese mainland, US, UK, Netherlands, Korea, New Zealand, Singapore, Belgium, Denmark, Norway and Germany. With a low tax regime and strong institutional environment, along with a maritime services cluster, Hong Kong flag is seen as a preferred choice for foreign vessel owners.

With a mission of creating an exchange platform for ship-owners in Hong Kong, the Hong Kong Shipowners Association (HKSOA) was established in 1957.

Representing the interests of its members in international shipping committees, HKSOA is a member of the Asian Shipowners Association (ASA), the International Chamber of Shipping (ICS) and International Association of Independent Tanker Owners (INTERTANKO). As of 1 December 2016, HKSOA members owned, managed and operated a fleet with a combined carrying capacity of more than 178 million DWT. Range of Services and Services Providers Ship brokers in Hong Kong provide services in ship chartering and transactions. When

"Hong Kong was the world’s 7th largest trading economy in 2016 as well as an international maritime centre " working for the ship owners, chartering brokers seeks employment for the ships and negotiate the favourable shipping rates and routes for their clients. On the other hand, ship brokers also help cargo owners to find the best ship for a voyage and complete a charter. Apart from the negotiation, ship brokers are also responsible for monitoring the implementation of voyage instructions, payments, preparation of contracts and related documents.

Many of the world’s leading ship brokers have established offices in Hong Kong, such as Clarksons and Simpson Spence & Young. With in-depth knowledge of the Asian markets, local and foreign ship brokerage experts in Hong Kong provide consultancy services and up-todate market intelligence of the shipping industry trends. Headquartered in London with 25 branches including Hong Kong, the Institute of Chartered Shipbrokers (ICS) is an international organisation representing the professional network of ship brokers, ship managers and agents.

ICS provides education and training for both new entrants to the industry and experienced professionals. ICS membership is internationally recognised in the shipping industry; presently ICS membership comprises 4,000 individuals and 120 corporate members. The majority of ICS members obtained membership through the ICS’ Professional Qualifying Examinations (PQE), which assesses candidates’ knowledge of the commercial shipping industry.

Ship Management Hong Kong is home to numerous wellestablished professional ship management services providers. Many of the ship owners outsource regular operational functions to professional third-party ship managers to achieve better cost control.

Ship management functions include organising crew and supplies, dry-docking, maintenance and regulation compliance.

Ship management companies often have specialised departments focusing on specific functions. For crewing services, ship managers are involved in staff recruitment, insurance, visa and work permits, as well as training. In addition, some ship management companies offer consultancy services in ship engineering, construction

46 HONG KONG BUSINESS ANNUAL 2018

maritime services industry - company and industry Ownership of Merchant Fleets with Hong Kong Flag (as of 1 January 2016) Country/Territory of Ownership

DWT (‘000)

% Share of Total

Hong Kong

67,522

42%

Chinese Mainland

47,618

29%

Bermuda

6,967

4%

Singapore

6,565

4%

US

4,662

3%

France

4,161

3%

161,720

100%

Total Source: United Nations Conference on Trade and Development (UNCTAD)

and shipyard selection.

To complete a voyage, ships and cargo have to be insured.

Therefore, the marine insurance sector is vital to the shipping industry.

Insurance brokers help ship buyers identify the risks and tailor the suitable insurance coverage. Hong Kong has a cluster of international marine insurance service providers, with a wide range of marine insurance products offered. As of March 2017, there were 88 authorised ship insurers in Hong Kong, of which 35 of them were foreign insurers.

Marine Insurance Marine insurance is generally classified into two types - hull & machinery insurance and cargo insurance, which insure, respectively, loss or damage to the hull and machinery of the ships, and cargo on board.

In addition, Hong Kong is a hub for Protection and Indemnity (P&I) insurance, which is a form of insurance that involves third-party liabilities and expenses arising from ownership or operation of ships.

Specifically, members of the P&I Clubs (co-operative insurance associations), including ship owners, ship operators and charterers, mutually insure each other’s liability for risks or expenses such as collision, cargo damages and towage.

At present, there are 13 principal member clubs under the International Group of P&I Clubs worldwide, providing P&I liability cover for about 90% of the world’s ocean-going tonnage.

12 of these principal P&I Clubs have established offices in

Hong Kong. In October 2016, the International Union of Marine Insurance (IUMI), a key professional organisation representing the global marine insurance industry, announced to set up its Asian hub in Hong Kong.

Shipping Finance Apart from ship mortgages, shipping finance includes sales and leaseback transactions, initial public offerings and related financial products. Ship finance service providers engage in the loan documentation for credit applications, which require shipping risk analysis and industry intelligence.

Besides, shipping banks provide ship owners with other financial services, such as currency and payment system management.

As an international financial centre, Hong Kong has a high concentration of banks providing professional ship financing services to the local shipping industry, as well as foreign ship owners and shipyards who arrange their financing and transactions in the region.

Some the world’s leading maritime finance banks, such as HSH Nordbank and Credit Agricole, have established a presence in Hong Kong.

According to statistics from the Hong Kong Monetary Authority (HKMA), shipping equipment loans booked in Hong Kong amounted to about US$ 12.7 billion in March 2017, accounting for 2% of Hong Kong’s total bank loans. Since a typical ship loan may well be a significant investment of over US$100 million, detailed

"Hong Kong is the world’s fourth largest ship register following Panama, Liberia and Marshall Island"

considerations on administrative arrangements and taxation of different regimes would be taken into account.

Therefore, a bank’s lending to ship owners may be recorded in the bank’s accounts on the headquarters or other branches, and in this regard, HKMA figures may not fully reflect the size of shipping finance related to ship owners and other stakeholders in Hong Kong.

Maritime Legal Services Legal services for the maritime sector cover maritime casualty and commercial shipping activities. The latter involves legal processes for ship finance, contracts for ship building and transactions. International law firms in Hong Kong offer maritime legal advice on shipping matters including chartering, piracy, cargo claims and dispute resolution.

Maritime lawyers specialised in Admiralty Law work for ship owners, charterers and cargo owners, whilst maritime insurers in deal with the legal issues of maritime casualties, such as ship fires, collisions, sinking and groundings, as well as the subsequent pollution, towage and wreck removal Hong Kong jurisdiction originated from the British common law system, with a well-established legal system and judicial independence.

The UK’s Maritime Law is also widely adopted in the world.

The High Court of Hong Kong has specialist lists to deal with admiralty disputes with its own Admiralty Court Judge. In some cases, shipping disputes are resolved through arbitration.

HONG KONG BUSINESS ANNUAL 2018 47

company and industry - medical and healthcare equipment industry

Ageing population challenges HK healthcare

Technological innovation in developing household medical products is key to cater to the needs of an ageing population.

T

he medical and healthcare equipment industry has two distinct markets: the household consumer and professional or institutional (hospitals and clinics).

Most medical and healthcare equipment companies in Hong Kong are engaged in OEM business, such as producing massagers and blood pressure monitors for household consumer use; and rubber moulding, plastics/resins for institutional use. With increased competitiveness in price and product development, the Chinese mainland is increasingly putting pressure on Hong Kong local companies, inducing them to strive for product and company re-positioning. Many Hong Kong-based companies also provide engineering design services in order to enhance their competitive edge.

To lower production costs, many Hong Kong manufacturers have relocated their production facilities to the Chinese mainland, and most of them are engaged in the manufacturing of mechano-therapy appliances/massage apparatus. However,

48 HONG KONG BUSINESS ANNUAL 2018

quality control, marketing, research and development, design, as well as material and equipment procurement continue to be conducted in Hong Kong.

Products with better growth prospects for Hong Kong manufacturers include homebased equipment, hygiene sterilised supplies, equipment for less-invasive procedures, orthopaedic tools and devices, devices and supplies for high health-risk diseases and injuries and telemedicine etc.

Performance of Hong Kong’s Exports of Medical and Healthcare Equipment[1] In 2016, Hong Kong’s total exports of medical and healthcare equipment increased by 8%. Exports to the Chinese mainland, the largest market for Hong Kong’s medical and healthcare equipment increased by 4%.

Meanwhile, exports to the US and the EU, respectively, increased by 30% and 5%.

Amongst different product categories, Hong Kong’s exports of miscellaneous electro-diagnostic apparatus (including apparatus for functional exploratory examination or for checking physiological parameters) slightly increased by 3%.

"In 2016, Hong Kong’s total exports of medical and healthcare equipment increased by 8%."

Meanwhile, exports of syringes/needles for medical/surgical increased by 18%.

Outsourcing has been growing in popularity amongst overseas manufacturers of medical and healthcare equipment in recent years. Hong Kong companies are in good position to act as contract manufacturers or sourcing partners given their edge in quality assurance and intellectual property (IP) protection. Though the cost of regulatory compliance is relatively higher in Hong Kong than the mainland, this helps to differentiate Hong Kong companies from other low-cost competitors.

Sales Channels Medical equipment is mainly sold directly to hospitals and clinics, whilst healthcare equipment is mostly distributed to department stores, chain stores and supermarkets via local or overseas trading companies. Well-established suppliers, such as Osim and OTO, have set up their own specialty shops.

Many of Hong Kong’s medical and healthcare goods are exported under OEM arrangements with supplied product specifications and designs. Hong Kong manufacturers are highly regarded for their handling of customers’ intellectual property (IP) and sensitive technology. In recent years, Hong Kong manufacturers have become increasingly involved in product design and development, engineering, modelling, tooling and quality control. In order to differentiate themselves from low-end products, many Hong Kong manufacturers apply for different international certifications for their products.

Apart from producing for OEM customers, some Hong Kong manufacturers also have in-house R&D departments to develop models produced under their own brand names. For these original brand products, Hong Kong manufacturers would sell to overseas importers and distributors, who would also act as agents to provide an after-sales services. It is advised that manufacturers/distributors take out insurance or make other arrangements to minimise the risk of product liability claims.

To further explore overseas market opportunities, medical and healthcare equipment manufacturers and exporters are encouraged to join the trade fair missions and exhibitions organised by the Hong Kong Trade Development Council

medical and healthcare equipment industry - company and industry Performance of Hong Kong’s Exports of Lighting Products ^ 2014 HK$Mn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

by Market

2015 HK$Mn. Growth %

HK$Mn.

2016 Growth %

16

-57

11

-32

25

12,257

+2

11,787

-4

12,728

+8

6,619

+9

6,886

+4

7,661

+1

12,272

+1

11,798

-4

12,753

+8

2014 Share % Growth %

2015 Share % Growth %

Share %

+123

2016 Growth %

Chinese Mainland

43.5

-7

38.5

-15

37.2

+4

US

17.1

+15

20.8

+18

25.0

+30

EU (28)

11.8

+8

13.1

+7

12.7

+5

UK

1.6

+35

1.6

-2

1.8

+22

Japan

4.8

+27

4.8

-4

4.8

+6

ASEAN

3.6

+5

3.9

+4

4.5

+23

India

1.9

-8

2.6

+34

2.5

+3

SOURCES: Census and Statistics Department. HKSARG

(HKTDC). HKTDC also organises from time to time study or matchmaking missions for Hong Kong manufacturers to visit specific markets for establishing new business connections.

Industry Trends Demographic trends have an important impact on the medical and healthcare equipment industry. According to the United Nations, the older population is, and will remain, predominately female. Globally, women outlive men by 5 years on average in 2010-2015. Life expectancy at birth was 73 years for females compared to 68 years for males. Globally, life expectancy is projected to 77 years in 2045-2050. These trends have resulted in an increasing demand for medical and healthcare products designed for the ageing population.

The total global expenditure for health is now more than US$6.5 trillion a year, according to the World Health Organization, and health expenditure as a percentage of GDP has been increasing amongst all major economies, including the Chinese mainland.

The increasing share of medical services or healthcare in household expenditures in some developing countries can be translated into more opportunities for Hong Kong

exporters of medical and healthcare products.

CEPA Provisions Since the implementation of the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariffs.

According to the stipulated procedures, products that have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rules of origins being agreed and met. For more information about country of origin, please refer to the Trade and Industry Department’s CEPA web page.

Equipment for medical purposes faces stringent regulations in overseas markets.

In the US, the Food and Drug Administration (FDA) is responsible for ensuring that medical devices comply with the safety and effectiveness requirements stipulated in the Federal Food, Drug and Cosmetic Act. The US regulations cover various aspects of design, clinical evaluation, manufacturing, packaging, labelling and post-market surveillance of medical devices.

Product Trends

"Hong Kong manufacturers are highly regarded for their handling of customers’ intellectual property (IP) and sensitive technology."

As a result of the aging population, treatments for cardiopulmonary disease, diabetes and neurological disorders will see rapid growth, such as orthopaedic devices and pharmaceuticals that can help aging baby boomers stay active. In addition, increased consciousness in personal health and fitness in developed countries is boosting demand for home-based or self-care equipment such as pill alarm boxes, positioning aids, shower chairs, electric wheelchairs, canes, crutches and patient lifts. This equipment facilitates the prevention, detection and management of illness.

Modern technology plays major role in the medical and healthcare equipment industry. Innovations such as microminiature and remote surgery techniques, DNA-based diagnostics, tissue-engineered organs, 3D printing for cranial implants and advanced information technologies provide solutions to some of the most persistent and debilitating healthcare problems, and create demand for medical equipment utilising these new technologies.

In addition, Bluetooth technology has also given rise to new devices like a patient-worn pulse oximetry and a portable patient monitor. Technology has also led to telemedical services and less-invasive procedures.

HONG KONG BUSINESS ANNUAL 2018 49

company and industry - sea transport industry

Sea transport industry is riding on wave of success

Due to its strategic location and advanced port facilities and services, Hong Kong remains one of Asia’s best sea transport hubs.

T

he sea transport sector is of vital importance in supporting Hong Kong’s status as the world’s seventh largest trading entity.

In 2016, Hong Kong handled 257 million tonnes of seaborne and river cargo. About 65% of seaborne cargo was transported by ocean-going vessels. Of the seaborne cargo handled in the aforesaid year, 93.4 million tonnes (57%) were transhipment cargo.

The Chinese mainland was the biggest source and destination of Hong Kong’s transhipment cargo.

Hong Kong handled 19.8 million TEUs of containers in 2016, down 1.3% from 2015.

Of the total, 77% were handled by container terminals at Kwai Tsing Terminals, with the rest handled mid-stream by Hong Kong’s mooring buoys and by river trade facilities.

The moorings also handle most of Hong Kong’s break bulk cargo. Bulk shipping takes care of bulky, unpacked goods such as oil, gas, grain, minerals and timber.

Sea cargo to and from Hong Kong is carried both by liners and bulk vessels. Liner shipping is operated under a scheduled

timetable with pre-announced rates and destinations. Many key routes are under liner conferences (agreements by the main shipping lines on tariffs and sailings).

Hong Kong is a major hub with about 340 container liner services per week connecting to about 470 destinations worldwide.

The larger container lines have invested in advanced systems to provide cargo tracking information and improve efficiency. They often form alliances or merge with other transport providers to develop door-to-door multi-modal services. Many liners are also forming alliances amongst themselves to increase efficiency and reduce cost in a very competitive environment. Vessel sharing has enabled the liners to offer a more flexible service in terms of global coverage, higher frequency of departures and a greater choice of routes.

Container Terminals Hong Kong has nine existing container terminals with a total of 24 berths at Kwai Chung and Tsing Yi Island, operated by several private consortia. Through various

"In 2016, Hong Kong handled 257 million tonnes of seaborne and river cargo." productivity enhancement measures, their combined throughput capacity is some 20 million TEUs per year.

In December 2014, the Hong Kong government released findings of the Study on the Strategic Development Plan for Hong Kong Port 2030 (HKP2030) and the Preliminary Feasibility Study for Container Terminal 10 (CT10) at Southwest Tsing Yi. Although the preliminary PFS findings show that CT10 development is technically feasible, the project is not viable financially or economically due to slow throughput growth. Further, with appropriate measures expected to enhance the handling capacity of existing terminals to cope with future growth, planning for CT10 before 2030 is therefore not recommended.

To meet the development needs of the port and logistics industries, the Hong Kong government has been implementing a number of enhancement measures, including provision of additional terminal yard space and barge berths in phases to increase the handling capacity of the Kwai Tsing Container Terminals and better use of back-up land. In addition, dredging work to deepen the Kwai Tsing Container Basin and its Approach Channel from 15m to 17.5m was completed in 2016 to allow ultra-large container ships to access the container terminals at all tides.

Service Providers Shipowners own ships to obtain an income.

In the liner shipping market, ship owners rent ships to a shipping line. In the bulk shipping market, ships are rented on a time or voyage basis to a ship charterer or ship operator.According to the Hong Kong Shipowners Association (HKSOA), as at December 2016, the total tonnages of ships owned or managed by its members exceed 178 million deadweight tonnes (DWT), or about 9% of the world’s total.

As at May 2017, 2,540 vessels were on the Hong Kong Shipping Register (HKSR), boasting a total of more than 110 million gross registered tonnes, making HKSAR the fourth largest shipping register in the world following Panama, Liberia and Marshall Islands.

Shipping lines tend to own and/or lease a group of ships which they deploy on predetermined liner routes. Ship operators rent ships from owners and use them to carry bulk cargoes from port to port.

50 HONG KONG BUSINESS ANNUAL 2018

sea transport industry - company and industry Total Port Cargo Throughput (million tonnes) 2015

% of total

2016

% of total

Total

256.6

100%

256.7

100%

Seaborne cargo

168.6

65.7%

164.1

63.9%

Exports and Imports

73.7

43.7%

70.7

43.1%

Transhipments

94.9

56.3%

93.4

56.9%

88.0

34.3%

92.6

36.1%

Exports and imports

49.9

56.7%

54.6

59.0%

Transhipments

38.1

43.3%

38.1

41.1%

River Cargo

SOURCE: Hong Kong Shipping Statistics, Census and Statistics Department

Total Container Traffic (million TEUs) 2014

2015

2016

Total

22.2

20.1

19.8

2016/15 Change -1.3%

Kwai Tsing Terminals

17.6

15.6

15.2

-2.4%

Ocean Vessel

14.5

12.8

12.2

-4.2%

River Cargo Vessel;

3.1

2.8

3.0

5.9%

Mid Stream operation and other berths

4.6

4.5

4.6

2.4%

Ocean Vessel

1.1

1.1

1.3

21.1%

River cargo Vessel

3.5

3.4

3.3

-3.6%

SOURCE: Summary Statistics on Port Traffic in Hong Kong, Hong Kong Port Development Council

Shipping lines use shipping agents to sell their freight space in a particular port. The shipping broker acts to match the supply of bulk vessels from operators/owners with the demand for bulk cargo shipments by the charterers.

According to the latest available statistics, Hong Kong earned HK$115.3 billion from exporting sea transport services in 2015 (accounting for 14.3% of total service exports in 2015), down 12.3% from 2014. Unlike air transport, passenger revenues constituted an insignificant part of the export of sea transport services.

Exports More countries are seeking to privatise their port operation and/or develop new ports to be run on a commercial basis. An exportable sea transport service from Hong Kong is thus the development and management of ports on the Chinese mainland and the wider region.

Hong Kong port operators are already active in this field.

Modern Terminals, a Hong Kong terminal operator, invest and operate several container

terminals in Shenzhen, and has expanded its business to the Yangtze River Delta (YRD) since 2004. Hutchison Port Holdings (HPH) Group, another Hong Kong terminal operator, has a network of operations that comprises 48 ports in 25 countries, handling 81.4 million TEUs worldwide in 2016.

The Hong Kong Maritime and Port Board (HKMPB) was established in April 2016 as a platform for closer collaboration amongst the government, the industry and relevant stakeholders. HKMPB is charged with steering the long-term development of Hong Kong ports and respective maritime services.

Ports on the Chinese mainland have been developing quickly over the past years.

Shanghai was the world’s busiest seaport in 2016, handling 37.1 million TEUs, whilst Shenzhen was the world’s third busiest port with a throughput of 24.0 million TEUs, followed by fourth-ranking NingboZhoushan (which has surpassed Hong Kong since 2015) with throughput growing by 4.5% annually to 21.6 million TEUs.

"Hong Kong is a major hub with about 340 container liner services per week connecting to about 470 destinations worldwide."

The shareholding of Hong Kong service suppliers should not exceed 51%. This lowers the barrier of the third-party international shipping agency services for Hong Kong service suppliers, as compared to other foreign joint-ventures outside CEPA. Business scope has been further expanded for HKSS since January 2009, as they are allowed to set up wholly owned enterprises and branches in Guangdong on a pilot basis to provide shipping agency services to vessel operators for routes between Guangdong Province and Hong Kong and Macau.

After ten annual Supplements to keep widening and broadening the liberalisation measures in favour of HKSS, Hong Kong and the mainland entered into a subsidiary agreement under CEPA in 2014 to achieve basic liberalisation of trade in service trade in Guangdong (“Guangdong Agreement”). This was then followed in December 2015 by the Agreement on Trade in Services (“ATIS”) to extend the coverage of the 2014 agreement from Guangdong to the rest of the mainland.

HONG KONG BUSINESS ANNUAL 2018 51

company and industry - securities industry

Hong Kong securities scene is as lively as ever Hong Kong’s local securities scene shows no sign of stopping as it continues on an upward trajectory.

T

rading services of the securities industry are provided by investment banks, commercial banks, finance companies and securities brokerage companies.

Investment banks are the principal underwriters for initial public offerings (IPO). Hong Kong’s highly liberal and liquid securities market has attracted many international investment banks and securities houses to build their presence here, eyeing the IPO and securities businesses.

In the secondary market, local retail customers are served mainly by local brokers and banks, whereas institutional buyers are principally served by the international brokers and investment banks.

Being the most liquid overseas market for mainland enterprises, Hong Kong is an important centre for raising capital for companies on the Chinese mainland. The majority of mainland companies seeking overseas listings have their listing in Hong Kong. As of end 2015, 943 mainland

companies were listed in Hong Kong, with a market capitalisation of US$1,901 billion, or about 62% of the total.

Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA) Generally, CEPA allows easier access for Hong Kong’s securities and futures companies and professionals to the mainland market. In addition, CEPA also encourages, through financial services cooperation between the mainland and Hong Kong, more mainland enterprises to get a listing in Hong Kong.

In January 2014, The CEPA Supplement X took effect, allowing Hong Kong professionals (Hong Kong permanent residents who possess a licence issued by the Securities and Futures Commission of Hong Kong) applying for securities and futures industry qualifications of the mainland are only required to undertake training and pass examination related to mainland laws and regulations. Examination on professional

"Hong Kong’s stock market capitalisation amounted to more than US$3.3 trillion as of September 2016." knowledge is not required.

Currently, securities and futures services are covered by the Agreement of Trade in Services (ATIS). The agreement was signed in November 2015 between the Hong Kong government and the Ministry of Commerce.

This agreement extends liberalisation of trade in services from the Guangdong Agreement (signed in 2014) to the whole of Chinese mainland.

On liberalisation measures specific to the securities market, the “participation in one and holding of one” principle is applicable to the mainland-Hong Kong joint venture securities, securities investment advisory and futures companies that are allowed to be invested in through shareholding acquisition

by Hong Kong-funded financial institutions.

The ATISalso explore ways to promote qualified Hong Kong companies to issue RMB bonds in the Chinese mainland stock exchanges. The ATIS operates a positive list and a negative list. Further details of the lists can be found here.

These CEPA provisions help contribute to a greater use of Hong Kong as a financial platform for mainland securities and futures companies, with the expectations of generating more cross-border business opportunities for Hong Kong and the mainland.

Qualified Domestic Institutional Investor (QDII) In April 2006, the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) jointly issued rules to allow qualified commercial banks to raise RMB funds from individuals and institutions to invest in overseas financial instruments. Hong Kong was the first market which mainland residents were allowed to invest via qualified mainland financial institutions. The first QDII stockoriented fund was launched in September 2007. As of 27 October 2016, SAFE had granted respective QDII quota of US$13.8 billion to 30 banks, US$37.6 billion to 48 fund management and securities companies, US$30.9 billion to 40 insurance companies, and US$7.8 billion to 14 trust companies, totalling US$89.9 billion.

RMB Qualified Foreign Institutional Investor (RQFII) The mainland government introduced the RMB Qualified Foreign Institutional

52 HONG KONG BUSINESS ANNUAL 2018

securities industry - company and industry Industry Data End of 2015

3rd Quarter 2016

Number of listed companies

1,644

1,687

Total Market Capitalisation (US$ billion)

3,131

3,245

222

243

33

36

2015

2nd Quarter 2016

Equity Market Main Board

Growth Enterprise Market Number of listed companies Total Market Capitalisation (US$ billion) SOURCES: Hong Kong Exchanges and Clearing

Securities & commodity contracts (Administration of Marketplace & dealing service) Number of Establishments Employment

971

955

22,809

22,594

SOURCES: Hong Kong Exchanges and Clearing

Investor (RQFII) scheme in the second half of 2011, with an initial quota of RMB 20 billion. In March 2013, new RQFII regulations were rolled out to expand the scope of RQFII applicants, relax the source of RMB funds, simplify the application documents, and expand the permissible RQFII investments. With RQFII scheme expansion, the total quota had stood at RMB 270 billion as of end 2013. As of 27 October 2016, SAFE had approved RQFII quota of RMB515 billion.

A spate of RMB A-share ETFs was rolled out via the RQFII scheme after the second expansion of RQFII to aid the development of ETF products in Hong Kong, which quickly became one of the most popular RMB products for investors. As of September 2016 there were 39 RMB ETFs listed on the HKEx. Shanghai-Hong Kong Stock Connect The Shanghai-Hong Kong Stock Connect was launched in November 2014, allowing investors to access eligible Shanghai-listed shares through the HKEx (i.e. northbound trading) and eligible Hong Kong-listed shares through the Shanghai Stock Exchange (i.e. southbound trading). Currently, the respective daily quota for northbound and southbound trading are set at RMB13 billion

and RMB10.5 billion. As of September 2016, the respective northbound and southbound trades were RMB61 billion and RMB127 billion.

Shenzhen-Hong Kong Stock Connect In August 2016, China Securities Regulatory Commission (CSRC) and Hong Kong’s Securities and Futures Commission (SFC) approved in principle the establishment of the “Shenzhen-Hong Kong Stock Connect”. The SZ-HK Stock Connect was launched in December 2016 with daily quotas of RMB 13 billion for northbound trading covering 880 stocks, and RMB10.5 billion for southbound trading covering 417 stocks.

Mainland-Hong Kong Mutual Recognition of Funds In May 2015, the CSRC and SFC jointly introduced the Mainland-Hong Kong Mutual Recognition of Funds (MRF) for implementation in July 2015, with rules on eligibility requirements, applications procedures, operational requirements and regulatory arrangements of the MRF also released. Under the scheme, funds from the mainland and Hong Kong are allowed to operate in each other’s market, which will help deepen financial cooperation between the two places, laying the foundation for

"Hong Kong’s highly liberal and liquid securities market has attracted many international investment banks and securities houses to build their presence here, eyeing the IPO and securities businesses."

a fund regulatory standard and promoting the integration and development of the Asian asset management industry.

Industry Development Hong Kong’s stock market capitalisation amounted to more than US$3.3 trillion as of September 2016. Besides, IPO fund raised topped the world for the first 3 quarters of 2016 amounting to US$17.2 billion from 75 new listings.

Large IPOs in this period included Postal Savings Bank, China Resources Pharma and China Merchants Securities Co. This came on the heels of raising IPO fund of US$33 billion in 2015.

Hong Kong had 186 authorised ETFs as of endSeptember 2016, with a turnover of US$35 billion in the same period. ETF products provide Hong Kong investors with a wide variety of geographical and product exposures, including Hong Kong, the Chinese mainland, Japan, Korea, Russia, India and emerging markets. They are in the form of different asset classes, namely equities, Asian bonds, gold, and commodities futures index.

Investors in Hong Kong securities market are welldiversified. As per a survey conducted by the HKEx during 2014/15, overseas investors accounted for 28% of total market turnover value whilst local investor contributed 21%.

HONG KONG BUSINESS ANNUAL 2018 53

company and industry - technology industry

Hong Kong could just start the next tech revolution With its vast technological infrastructure and partnership with Shenzen, there’s no telling when tech industry can boom.

C

ompanies in Hong Kong’s technology sector specialise in the commercialisation and application of innovative products and systems, as well as in industrial engineering, with both local and overseas companies active in this sector. Amongst the high-profile overseas technology companies active in Hong Kong are Nvidia (US), Texas Instruments (US), IBM (US), Sierra Wireless (Canada), Samsung (South Korea), Hitachi (Japan), Siemens (Germany), Philips (the Netherlands), Huawei (Chinese mainland), and Macronix (Taiwan).

Electronics-related players, including those in the semiconductor sector and those involved with the manufacture of a wide array of parts and components, are amongst the most prominent technology-related businesses in Hong Kong.

Hong Kong’s status as a major IT and telecommunications hub has also led to the emergence of a number of companies in related hardware and software design and development sectors.

Overall, Hong Kong companies in the

54 HONG KONG BUSINESS ANNUAL 2018

technology sector are notably proactive when it comes to undertaking R&D and innovation-led activities. According to the latest figures from the Census and Statistics Department, there were 3,885 Hong Kong companies undertaking R&D activities in 2015. Overall, total R&D expenditure in the business sector amounted to US$1 billion, a 7% rise on the preceding year.

Innovation-led activities were even better supported, with 7,344 companies engaging in such activities in 2015. The total innovation-related expenditure of the business sector amounted to US$2.2 billion for the same period, up 3% year-on-year.

In 2015, 425 Hong Kong companies had in place co-operative arrangements with external partners with regard to R&D, whilst 1,093 had such an arrangement with regard to innovation-oriented activities.

A substantial proportion of these external partners were technology companies or research institutes either in Hong Kong or on the Chinese mainland.

The Hong Kong Science Park is home to more than 600 technology companies and

"Hong Kong’s technology sector also benefits from the R&D activities of various public bodies." approximately 13,000 technology talents.

The park houses five distinct clusters: (1) biomedical technology; (2) electronics; (3) green technology; (4) information and communications technology (ICT); and (5) material and precision engineering. Its current development focus is on three overarching cross-disciplinary platforms – smart cities, healthy ageing and robotics.

Technological Infrastructure Cyberport, a wholly-owned Hong Kong government facility, is a creative digital workspace with more than 800 community members. With an avowed mission to establish itself as a leading global innovation and technology hub, Cyberport is committed to boosting the local economy by nurturing digital industry start-ups and entrepreneurs, driving collaboration in terms of resources and the creation of business opportunities, whilst accelerating digital adoption through strategic initiatives and partnerships.

Hong Kong’s technology sector also benefits from the R&D activities of various public bodies. The Hong Kong Productivity Council (HKPC) is a multi-disciplinary organisation established by statute in 1967 to enhance the productivity and international competitiveness of Hong Kong enterprises through the provision of market led applied R&D in smart products, smart manufacturing, automation, new materials, surface treatment, smart mobility, green transportation and environmental technology. HKPC also provides consultancy, technology transfer, training and other support services in the areas of product innovation, intellectual property management, intelligent automation, testing and certification, environmental management, information technology applications as well as business process management.

In 2006, under the government’s Hong Kong R&D Centre Programme, five centres were established to drive and co-ordinate applied R&D in selected focus areas, as well as to promote the commercialisation of these R&D results and any subsequent technology transfer. The five R&D centres were: • The Automotive Parts and Accessory Systems R&D Centre (hosted by the Hong Kong Productivity Council) • Hong Kong Research and Development Centre for Information

technology industry - company and industry Hong Kong’s Total Exports of High Technology Products 2016 US$ million

% share of the total

% growth

Telecommunications and sound recording and reproducing apparatus and equipment

206,434

78.1

Office machines and automatic data processing machines

36,389

13.8

+7.4 -7.8

Scientific instruments

9,265

3.5

+1.3

Electrical machinery

7,190

2.7

-3.7

Aerospace

4,169

1.6

+20.9 +1.4

Non-electrical machinery

369

0.1

Chemical materials and products

355

0.1

-3.9

Medicinal and pharmaceutical products

278

0.1

-13.4

264,450

100.0

+4.6w

Total

Remark: The definition of high technology products is based on the statistical framework developed by the OECD in collaboration with the Statistical Office of the European Communities (Eurostat).

SOURCE: Census and Statistics Department, Hong Kong SAR Government

and Communications Technologies (under the Hong Kong Applied Science and Technology Research Institute) • The Hong Kong Research Institute of Textiles and Apparel (hosted by the Hong Kong Polytechnic University) • The Hong Kong R&D Centre for Logistics and Supply Chain Management Enabling Technologies (hosted by the University of Hong Kong, the Chinese University of Hong Kong, and the Hong Kong University of Science and Technology) • The Nano and Advanced Materials Institute Limited Technology Trading Hong Kong’s technology sector is also engaged in trading in a wide range of high-tech products. In 2016, Hong Kong’s exports of high-tech products amounted to US$264 billion, accounting for 57% of total merchandise exports for that 12-month period.

Technological Co-operation with the Chinese Mainland In order to foster technological co-operation across the border, Hong Kong’s technology sector has longestablished connections with its mainland counterpart. This is of particular significance as the mainland government has resolved to use technological advancement and innovation as its key means of fostering economic development.

The mainland’s 13th Five-Year Plan (20162020) places considerable emphasis on advancing mass entrepreneurship, encouraging technological innovation and promoting the development of new industries in a bid to inject new vigour into the country’s economy. Under the terms of the plan, there will be a distinct focus on developing high technology and high value-added industries, whilst strengthening supporting infrastructure, revamping related financial systems, and improving the business environment in order to promote the further growth of related industries. The target industries and development sectors include the following: • Corporate Innovation Every effort will be made to encourage R&D, strengthen technology integration capabilities and to import technology from abroad.

In particular, advanced technologies will be targetted, including next-generation information communication, new energy, new materials, aviation and space, biomedicine, and smart manufacturing.

Action will also be taken to improve the tax concession policies related to corporate R&D expenses, whilst preferential treatment will be expanded for the accelerated depreciation of fixed assets in order to encourage enterprises to update their equipment and

“Hong Kong’s status as a major IT and telecommunications hub has also led to the emergence of a number of companies in related hardware and software design and development sectors.”

introduce new technology.

• Made in China 2025 Steps will be taken to encourage industries across the mainland to graduate from “Made in China” to “Created in China” and to complete the industrial upgrade process. In order to deliver this, the level of product technology, technical equipment, energy efficiency and environmental protection will all need to be raised.

It will also be important to liberalise market access to cutting-edge services as part of any moves to promote the development of a specialised high-value producer service industry and to assist the manufacturing industry in increasing its added value.

Tax and fiscal measures As many Chinese companies lack the necessary front-end technologies to achieve such objectives – whilst continuing to foster domestic R&D activities – the mainland has implemented a number of tax and fiscal measures designed to boost the import of key technologies and related equipment.

With its conducive business environment, robust protection of intellectual property rights and its comprehensive range of professional service providers, Hong Kong is ideally configured to allow its technology sector to undertake technology transfers from the international markets to Mainland China which serves as its major partner.

HONG KONG BUSINESS ANNUAL 2018 55

numbers | indicators Labour force, unemployment, and underemployment Period

2014

Labour Force No. (‘000)

Percentage change over the same period in preceding year (%)

3 871.1

0.4

Unemployed (‘000)

Unemployment rate(Seasonally adjusted) %

Unemployment rate (Not Seasonally adjusted) %

Underemployed (‘000)

Underemployment rate %

127.6

-

3.3

56.8

1.5

2015

3 903.2

0.8

129.4

-

3.3

53.3

1.4

2016

3 920.1

0.4

133.0

-

3.4

54.7

1.4

6/2016 - 8/2016

3 933.0

0.3

141.7

3.4

3.6

56.1

1.4

7/2016 - 9/2016

3 925.7

0.4

140.0

3.4

3.6

55.8

1.4

8/2016 - 10/2016

3 918.9

0.5

136.3

3.4

3.5

55.8

1.4

9/2016 - 11/2016

3 907.3

0.2

131.0

3.4

3.4

55.1

1.4

10/2016 - 12/2016

3 909.5

0.1

122.4

3.3

3.1

54.6

1.4

11/2016 - 1/2017

3 930.5

0.5

121.1

3.3

3.1

50.1

1.3

12/2016 - 2/2017

3 943.8

0.9

119.4

3.3

3.0

48.8

1.2

1/2017 - 3/2017

3 947.4

0.9

125.0

3.2

3.2

49.0

1.2

2/2017 - 4/2017

3 943.9

0.9

127.2

3.2

3.2

48.8

1.2

3/2017 - 5/2017

3 944.2

1.1

126.3

3.2

3.2

47.6

1.2

4/2017 - 6/2017

3 947.2

0.9

125.2

3.1

3.2

45.5

1.2

5/2017 - 7/2017

3 961.7

1.0

128.2

3.1

3.2

44.3

1.1

6/2017 - 8/2017

3 971.2

1.0

130.0

3.1

3.3

45.2

1.1

7/2017 - 9/2017

3 965.6

1.0

128.2

3.1

3.2

43.7

1.1

8/2017 - 10/2017

3 960.7

1.1

123.6

3.0

3.1

44.2

1.1

Notes: # Provisional figures

- Not applicable

Starting from 2001, annual figures are compiled based on data collected in the General Household Survey from January to December of the year concerned as well as the mid-year population estimates by District Council district compiled jointly by the Census and Statistics Department and an inter-departmental Working Group on Population Distribution Projections.

The labour force refers to the land-based non-institutional population aged 15 and over who satisfy the criteria for being classified as employed population or unemployed population.

The employed population comprises those persons aged 15 and over who have been at work for pay or profit during the 7 days before enumeration or have had formal job attachment.

The unemployed population comprises all unemployed persons. For a person aged 15 or over to be classified as unemployed, that person should : (a) not have had a job and should not have performed any work for pay or profit during the 7 days before enumeration; and (b) have been available for work during the 7 days before enumeration; and (c) have sought work during the 30 days before enumeration.

However, if a person aged 15 or over fulfils the conditions (a) and (b) above but has not sought work during the 30 days before enumeration because he/she believes that work is not available, he/she is still classified as unemployed, being regarded as a so-called “discouraged worker”.

Notwithstanding the above, the following types of persons are also

56 HONG KONG BUSINESS ANNUAL 2018

classified as unemployed: (a) persons without a job, have sought work but have not been available for work because of temporary sickness; and (b) persons without a job, have been available for work but have not sought work because they: (i) have made arrangements to take up a new job or to start business on a subsequent date; or (ii) were expecting to return to their original jobs.

Unemployment rate refers to the proportion of unemployed persons in the labour force. “Unemployment rate (seasonally adjusted)” refers to the unemployment rate adjusted for seasonal variations.

Starting from May 2008, the seasonally adjusted unemployment rate is compiled by the X-12 ARIMA method to replace the previous X-11 ARIMA method. The seasonally adjusted unemployment rates since November 2006 - January 2007 have also been revised using the new method. Figures prior to November 2006 – January 2007 refer to the seasonally adjusted unemployment rates based on the X-11 ARIMA method. Seasonal adjustment is not applicable to annual average unemployment rates.

The underemployed population comprises those employed persons who have involuntarily worked less than 35 hours during the 7 days before enumeration and have sought additional work during the 30 days before enumeration, or have not sought additional work but have been available for additional work during the 7 days before enumeration.

GDP and its main expenditure components at current market prices

Year

Qtr HK$ million

Yearonyear % change

2014

2,260,005

2015 2016 2016

2017

Gross domestic fixed capital formation

Changes in inventories

HK$ million

Yearonyear % change

HK$ million

Year-onyear % change

HK$ million

Year-onyear % change

HK$ million

5.7

1,502,768

6.3

214,216

7.9

530,916

3.0

7,473

2,398,437

6.1

1,593,227

6.0

231,261

8.0

537,228

1.2

-20,580

2,491,001

3.9

1,648,082

3.4

248,085

7.3

536,155

-0.2

5,635

Q3

636,210

3.6

400,391

3.7

62,118

7.3

135,706

6.7

1,549

Q4

678,587

5.0

435,447

5.4

62,931

7.2

152,813

6.9

4,341

Q1

628,459

6.5

421,462

5.9

67,457

6.5

131,942

10.6

5,549

Q2

629,051

7.4

447,266

7.9

63,033

5.5

145,107

13.1

1,323

Q3

679,831

6.9

439,716

9.8

65,676

5.7

139,886

3.1

-410

Exports of goods (f.o.b.)

Year

Government consumption expenditure

Private consumption expenditure

GDP

Qtr HK$ million

Year-onyear % change

Exports of services HK$ million

Imports of goods (f.o.b.)

Year-onyear % change

HK$ million

Year-onyear % change

Imports of services HK$ million

Year-onyear % change

2014

3,986,769

1.5

829,085

2.0

4,237,700

2.3

573,522

-1.7

2015 r

3,889,225

-2.4

808,948

-2.4

4,066,527

-4.0

574,345

0.1

2016 r

3,900,462

0.3

767,035

-5.2

4,036,909

-0.7

577,544

0.6

Q3 r

1,025,058

1.1

196,380

-3.7

1,036,803

1.7

148,149

0.9

2016

2016

Q4 r

1,097,702

5.3

200,017

0.7

1,121,390

5.9

153,274

1.2

Q1 r

942,108

11.0

201,261

3.9

1,000,454

12.1

140,866

1.8

Q2 r

993,413

6.9

184,385

4.2

1,061,967

7.6

143,509

4.3

Q3 r

1,098,905

7.2

208,492

6.2

1,117,819

7.8

154,615

4.3

Notes : Figures in this table are the latest data released on 10 November 2017.

Figures on exports and imports of goods and services are compiled based on the change of ownership principle in recording goods sent abroad for processing and merchanting under the standards stipulated in the System of National Accounts 2008. Users should note that the figures of exports and imports of goods in this table are different from those published in external merchandise trade statistics which are not compiled based on the change of ownership principle.

r “Revised figures”.

p “Preliminary figures”.

‘0.0’

denotes increase or decrease of less than 0.05%.

The GDP for 2017 is forecast to increase by 3.7% in real terms.

Source : National Income Section (1)1, Census and Statistics Department (Enquiry telephone no. : 2582 5077 Enquiry e-mail : gdp-e@censtatd.gov.hk)

In Hong Kong, the first released GDP statistics in respect of a period are called “preliminary figures”. When more data become available, the preliminary figures will be revised. This routine revision is in accordance with the international practice to compile and release GDP figures at the earliest possible time by using only partial data. All those figures published subsequently, on revision, are called “revised figures”. In general, the figures are finalised when data from all regular sources are incorporated.

HONG KONG BUSINESS ANNUAL 2018 57

numbers | indicators Nominal Wage Indices for employees up to supervisory level (excluding managerial and professional employees) by selected industry section (September 1992 = 100) Import/export, wholesale and retail trades

Manufacturing Year

Month

Year-onyear % change

Index

2016

2017

2017

Year-onyear % change

Index

203.6

+3.6

215.5

+2.8

192.5

+3.6

193.1

+4.9

206.6

+3.8

215.9

+2.7

195.6

+3.3

194.5

+5.0

Dec

206.8

+3.9

216.3

+2.8

195.3

+3.3

195.1

+4.8

Mar

207.2

+3.6

216.7

+2.9

195.3

+3.1

197.2

+4.5

Jun

211.5

+3.9

221.7

+2.9

198.3

+3.0

202.5

+4.9

Month

Year-onyear % change

Real estate leasing and maintenance management Index

Professional and business services

Yearon-year % change

Index

Year-onyear % change

Personal services

Index

All selected industry sections#

Yearon-year Index % change

Yearon-year % change

Jun

225.5

+3.2

238.6

+3.4

242.6

+4.7

293.7

+5.8

217.3

+3.8

Sep

228.9

+3.0

239.9

+3.7

245.3

+4.4

297.9

+5.3

219.0

+3.7

Dec

230.0

+3.2

239.9

+3.5

247.5

+4.5

301.9

+4.9

219.6

+3.6

Mar

231.8

+3.3

242.6

+3.4

246.1

+4.9

304.2

+4.4

220.5

+3.6

Jun

233.7

+3.6

248.2

+4.0

255.0

+5.1

307.2

+4.6

225.6

+3.8

Notes : The above statistics are compiled based on the Hong Kong Standard Industrial Classification (HSIC) Version 2.0 and the series has been backcasted to March 2004 whereas the statistics prior to March 2004 are based on HSIC Version 1.1. Users may also download “HSIC Version 1.1-based statistics” for reference. For more details on the revision of HSIC, please refer to the feature article “Revision of Hong Kong Standard Industrial Classification” published in the November 2008 issue of the Hong Kong Monthly Digest of Statistics. ^

Year-onyear % change

Jun

Index

2016

Index

Accommodation and food service activities ^

Sep

Financial and insurance activities Year

Year-onyear % change

Index

Transportation

boarding houses and other establishments providing short term accommodation. # Refers to all industries covered by the wage enquiry, including the electricity and gas supply industry, sewerage and waste management activities industry and publishing activities industry, the statistics of which are not separately shown.

‘0.0’

Accommodation services cover hotels, guesthouses,

Denotes increase or decrease of less than 0.05%.

Number of Establishments, Persons Engaged and Vacancies (other than those in the civil service) Analysed by Industry Section Industry Section B : Mining and quarrying Establishments Year

Month

Jun 2016

2017

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

2

0.0

61

-19.7

***

***

Sep

2

0.0

63

-16.0

***

***

Dec

2

0.0

61

-15.3

***

***

Mar

2

0.0

58

-6.5

***

***

Jun

2

0.0

57

-6.6

***

***

58 HONG KONG BUSINESS ANNUAL 2018

numbers | indicators Number of Establishments, Persons Engaged and Vacancies (other than those in the civil service) Analysed by Industry Section Industry Section C : Manufacturing Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

10 425

-4.1

96 094

-3.5

2 284

-16.2

Sep

10 268

-4.9

95 266

-4.4

2 099

-22.1

Dec

10 032

-6.3

94 856

-4.1

2 067

-16.4

Mar

9 876

-6.5

94 548

-3.4

2 567

-11.0

Jun

9 730

-6.7

93 413

-2.8

2 288

0.2

Industry Sections D & E : Electricity and gas supply, and waste management Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

403

-0.5

10 902

1.0

***

***

Sep

399

-0.3

11 125

1.5

***

***

Dec

390

-2.0

11 190

2.1

***

***

Mar

392

-5.1

11 161

3.4

***

***

Jun

393

-2.5

11 317

3.8

***

***

Industry Section F : Construction sites (manual workers only) Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

1 399

6.8

106 193

14.4

546

-41.6

Sep

1 403

2.6

107 819

15.0

592

-16.6

Dec

1 391

0.0

112 370

10.2

848

29.7

Mar

1 377

-4.4

117 642

12.2

568

-40.8

Jun

1 433

2.4

112 825

6.2

1 508

176.2

Part of Industry Section G : Import/export trade and wholesale Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

114 733

-1.2

543 048

-0.5

6 938

-15.4

Sep

114 261

-1.4

541 961

-0.6

7 031

-7.5

Dec

114 166

-1.0

541 610

-0.7

7 073

9.7

Mar

114 306

-0.4

540 927

-0.4

7 532

8.8

Jun

114 380

-0.3

540 981

-0.4

7 322

5.5

HONG KONG BUSINESS ANNUAL 2018 59

numbers | indicators Number of Establishments, Persons Engaged and Vacancies (other than those in the civil service) Analysed by Industry Section Part of Industry Section G : Retail Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

63 589

-2.8

266 151

-1.4

7 097

-15.9

Sep

63 808

-2.7

266 521

-0.9

8 279

-0.9

Dec

63 726

-2.2

267 534

-0.2

7 373

-7.2

Mar

63 375

-1.7

267 324

0.4

7 536

-1.6

Jun

63 466

-0.2

267 796

0.6

7 082

-0.2

Industry Section H : Transportation, storage, postal and courier services Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

9 656

-1.2

177 864

0.8

3 285

-19.1

Sep

9 704

0.2

178 184

ยง

3 206

-6.8

Dec

9 713

0.7

178 802

0.2

3 040

-2.0

Mar

9 705

1.3

178 112

-0.3

3 602

4.9

Jun

9 720

0.7

177 615

-0.1

3 560

8.4

Industry Section I : Accommodation and food services Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

17 672

-0.8

280 826

-0.7

13 037

-13.9

Sep

17 818

0.1

282 079

-0.1

13 225

-9.4

Dec

17 896

0.2

282 879

-0.1

13 360

1.2

Mar

17 933

1.1

280 905

0.1

13 665

5.7

Jun

17 844

1.0

281 534

0.3

13 216

1.4

Industry Section J : Information and communications Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

12 754

-0.1

105 104

0.2

2 473

-0.3

Sep

12 981

1.9

105 671

0.2

2 830

7.9

Dec

13 155

3.3

107 342

0.8

2 708

-14.4

Mar

13 323

5.4

107 270

1.5

2 719

6.6

Jun

13 591

6.6

106 581

1.4

2 710

9.6

60 HONG KONG BUSINESS ANNUAL 2018

numbers | indicators Number of Establishments, Persons Engaged and Vacancies (other than those in the civil service) Analysed by Industry Section Industry Section K : Financing and insurance Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

23 769

3.0

220 565

0.4

5 231

-1.5

Sep

23 871

3.4

220 810

0.5

5 418

10.0

Dec

24 379

4.8

222 720

1.0

4 969

-19.0

Mar

24 697

5.2

223 221

0.9

5 380

3.9

Jun

24 959

5.0

223 680

1.4

5 744

9.8

Industry Section L : Real estate Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

15 754

1.4

128 878

-0.5

3 998

-6.5

Sep

15 874

2.3

129 682

ยง

4 053

-12.2

Dec

15 991

2.2

130 033

1.1

3 950

-1.5

Mar

16 148

2.8

130 159

1.3

4 260

0.7

Jun

16 181

2.7

130 455

1.2

4 210

5.3

Industry Sections M & N : Professional and business services Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

45 981

1.0

368 556

1.5

8 789

-4.5

Sep

46 274

1.5

370 096

1.9

8 202

-9.3

Dec

46 632

2.1

372 421

2.5

8 155

-12.2

Mar

46 940

2.8

374 871

2.9

8 981

-0.1

Jun

47 044

2.3

374 423

1.6

8 589

-2.3

Industry Sections P - S : Social and personal services Establishments Year

2016

2017

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

49 513

1.9

503 396

1.7

14 264

-17.5

Sep

49 785

1.3

505 220

1.6

14 210

-9.9

Dec

49 885

1.3

507 952

1.2

13 414

-7.8

Mar

50 343

1.5

510 321

1.0

13 464

-5.7

Jun

50 434

1.9

510 767

1.5

13 132

-7.9

HONG KONG BUSINESS ANNUAL 2018 61

numbers | indicators Number of Establishments, Persons Engaged and Vacancies (other than those in the civil service) Analysed by Industry Section All industry sections covered in the survey Establishments Year

Month

Jun 2016

2017

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

365 650

-0.4

2 807 638

0.6

68 199

-13.0

Sep

366 448

-0.3

2 814 497

0.7

69 341

-7.1

Dec

367 358

0.1

2 829 770

0.8

67 141

-5.8

Mar

368 417

0.6

2 836 519

1.0

70 463

0.2

Jun

369 177

1.0

2 831 444

0.8

69 592

2.0

services.

(8) Starting from March 2009 round of the SEV, the survey coverage has been expanded to include more economic activities in some of the industries due to the change in industrial classification.

The industries concerned are in Industry Section H Transportation, storage, postal and courier services, Industry Section N Administrative and support services and Industry Sections P - S Social and personal services.

(9) Figures relate only to those industries covered. Figures relating to the civil service are excluded.

(10) The above statistics are compiled based on the Hong Kong Standard Industrial Classification (HSIC) Version 2.0 and the series has been backcasted to March 2000 whereas the statistics prior to March 2000 are based on HSIC Version 1.1. For more details on the revision of HSIC, please refer to the feature article entitled “Revision of the Hong Kong Standard Industrial Classification” published in the November 2008 issue of the Hong Kong Monthly Digest of Statistics.

Notes : (1) Establishments in construction sites refer to number of sites, whilst persons engaged and vacancies refer to manual workers only.

Please refer to “Limitations of the Survey” in Part V of the Quarterly Report of Employment and Vacancies at Construction Sites.

(2) Industrial coverage of retail trade is slightly incomplete in the present context. Main omissions are hawkers and retail pitches (other than market stalls).

(3) Industrial coverage of the transportation, storage, postal and courier services is rather incomplete in the present context. Main omissions are taxis, public light buses, and part of goods vehicles and inland freight water transport.

(4) Accommodation services cover hotels, guesthouses, boarding houses and other establishments providing short term accommodation.

(5) Industrial coverage of the financing and insurance is slightly incomplete in the present context. Main omissions are monetary authorities and self-employed insurance agents with no business registration.

(6) Industrial coverage of professional and business services is slightly incomplete in the present context. Main omissions are renting and leasing of recreational and sports goods.

(7) Industrial coverage of social and personal services is rather incomplete in the present context. Main omissions are industry sections T & U (“Work activities within domestic households” & “Activities of extraterritorial organisations and bodies”); and religious organisations, authors and other independent artists, and some social and personal

*** Data are not released in order to safeguard confidentiality of information provided by individual establishments. §

Increase or decrease within 0.05%.

Source : Employment Statistics and Central Register of Establishments Section, Census and Statistics Department

Number of Regional Headquarters in Hong Kong by Country/Territory where the Parent Company was Located

Year

Number of regional headquarters in Hong Kong

Country/Territory where the parent company was located United States of America

Japan

The mainland of China

United Kingdom

Germany

France

Switzerland

2013

1 379

316

245

114

126

81

66

43

2014

1 389

310

240

119

120

91

68

45

2015

1 401

307

238

133

126

87

67

43

2016

1 379

286

239

137

124

85

73

51

2017

1 413

283

233

154

122

87

81

55

62 HONG KONG BUSINESS ANNUAL 2018

numbers | indicators Number of Regional offices in Hong Kong by Country/Territory where the Parent Company was Located

Country/Territory where the parent company was located

Year Singapore

Italy

Australia

Sweden

Netherlands

Belgium

Taiwan

Canada

2013

41

44

32

29

46

15

33

19

2014

43

43

37

28

43

14

31

16

2015

42

40

40

28

36

18

26

18

2016

40

36

37

30

29

20

25

17

2017

45

39

35

27

27

21

19

19

Notes : (1) Figures refer to the first working day of June of the year.

(2) A regional headquarters is an office that has managerial control over offices and/or operations in the region (i.e. Hong Kong plus one or more other places) on behalf of its parent company located outside Hong Kong.

(3) The definition of regional headquarters was revised in 2006 to enhance the clarity of description. It should be noted that figures

for regional headquarters for 2006 and onwards may not be strictly comparable with those before 2006.

(4) In the case of a joint-venture regional headquarters in Hong Kong, there may be more than one country/territory where its parent companies are located.

(5) Prior to 2005, figures refer to the countries/territories where parent companies were incorporated. As from 2005, figures refer to the countries/territories where parent companies were located.

Seasonally adjusted Consumer Price Indices Average monthly rate of change (%) during the latest 3 months

Year

2016

2017

Month

Composite Consumer Price Index

Consumer Price Index (A)

Consumer Price Index (B)

Consumer Price Index (C)

Aug

+0.1

+0.1

+0.1

+0.1

Sep

+0.3

+0.4

+0.2

+0.2

Oct

+0.3

+0.4

+0.2

+0.2

Nov

+0.3

+0.5

+0.3

+0.2

Dec

+0.2

+0.2

+0.2

+0.2

Jan

+0.1

+0.1

+0.1

+0.1

Feb

-0.1

-0.1

-0.1

0.0

Mar

+0.1

0.0

0.0

+0.1

Apr

+0.2

+0.2

+0.2

+0.2

May

+0.3

+0.3

+0.3

+0.3

Jun

+0.2

+0.2

+0.2

+0.1

Jul

+0.1

+0.1

+0.1

0.0

Aug

+0.1

+0.1

+0.1

+0.1

Sep

+0.1

+0.1

+0.1

+0.1

Oct

+0.1

+0.1

+0.1

+0.2

HONG KONG BUSINESS ANNUAL 2018 63

numbers | indicators Population by Age Group and Sex Mid-2013

End-2013

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

134.2

125.5

259.7

3.6

133.9

124.6

258.5

3.6

5-9

127.9

120.2

248.1

3.5

133.9

125.4

259.3

3.6

10 - 14

149.2

139.5

288.7

4.0

142.9

134.7

277.6

3.9

15 - 19

208.7

197.0

405.7

5.7

205.3

193.9

399.2

5.5

20 - 24

226.3

231.2

457.5

6.4

224.1

228.3

452.4

6.3

25 - 29

221.8

294.7

516.5

7.2

223.5

292.6

516.1

7.2

30 - 34

231.9

341.4

573.3

8.0

232.9

344.4

577.3

8.0

35 - 39

229.5

328.8

558.3

7.8

228.4

329.1

557.5

7.7

40 - 44

239.8

337.7

577.5

8.0

239.2

337.4

576.6

8.0

45 - 49

270.8

337.0

607.8

8.5

264.5

332.9

597.4

8.3

50 - 54

313.8

340.4

654.2

9.1

311.2

344.2

655.4

9.1

55 - 59

281.1

288.0

569.1

7.9

288.7

296.6

585.3

8.1

60 - 64

219.9

222.7

442.6

6.2

224.1

227.9

452.0

6.3

65 - 69

148.7

146.4

295.1

4.1

156.5

155.5

312.0

4.3

70 - 74

109.5

103.6

213.1

3.0

108.5

101.4

209.9

2.9

75 - 79

100.4

109.8

210.2

2.9

100.2

110.2

210.4

2.9

80 - 84

69.3

88.3

157.6

2.2

73.0

90.4

163.4

2.3

>= 85

47.1

96.8

143.9

2.0

49.7

100.9

150.6

2.1

All age groups

3 329.9

3 849.0

7 178.9

100.0

3 340.5

3 870.4

7 210.9

100.0

Mid-2014

End-2014

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

137.4

128.1

265.5

3.7

140.3

130.9

271.2

3.7

5-9

136.0

126.7

262.7

3.6

139.3

129.1

268.4

3.7

10 - 14

141.5

133.8

275.3

3.8

138.6

131.6

270.2

3.7

15 - 19

198.5

188.0

386.5

5.3

192.2

181.3

373.5

5.1

20 - 24

223.8

227.0

450.8

6.2

223.4

226.3

449.7

6.2

25 - 29

224.2

290.8

515.0

7.1

224.5

288.0

512.5

7.1

30 - 34

233.0

346.0

579.0

8.0

232.8

344.3

577.1

8.0

35 - 39

226.8

329.5

556.3

7.7

225.1

330.2

555.3

7.7

40 - 44

239.7

338.4

578.1

8.0

239.6

339.6

579.2

8.0

64 HONG KONG BUSINESS ANNUAL 2018

numbers | indicators

Mid-2014

End-2014

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

45 - 49

258.0

329.1

587.1

8.1

250.5

324.9

575.4

7.9

50 - 54

310.6

347.9

658.5

9.1

308.4

351.2

659.6

9.1

55 - 59

291.6

299.2

590.8

8.2

295.6

303.3

598.9

8.3

60 - 64

227.5

232.6

460.1

6.4

230.1

236.1

466.2

6.4

65 - 69

163.0

163.3

326.3

4.5

172.7

174.2

346.9

4.8

70 - 74

109.6

101.9

211.5

2.9

110.6

103.0

213.6

2.9

75 - 79

99.9

109.4

209.3

2.9

100.9

109.0

209.9

2.9

80 - 84

73.3

91.4

164.7

2.3

74.9

92.8

167.7

2.3

>= 85

50.1

101.9

152.0

2.1

52.5

105.1

157.6

2.2

All age groups

3 344.5

3 885.0

7 229.5

100.0

3 352.0

3 900.9

7 252.9

100.0

Mid-2015

End-2015

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

146.2

135.6

281.8

3.9

144.8

134.3

279.1

3.8

5-9

145.0

134.2

279.2

3.8

149.9

139.3

289.2

4.0

10 - 14

136.0

129.4

265.4

3.6

131.5

125.4

256.9

3.5

15 - 19

186.6

175.8

362.4

5.0

180.2

169.1

349.3

4.8

20 - 24

222.6

226.1

448.7

6.2

220.6

224.2

444.8

6.1

25 - 29

226.0

287.6

513.6

7.0

227.8

285.3

513.1

7.0

30 - 34

233.8

345.0

578.8

7.9

232.1

343.5

575.6

7.9

35 - 39

225.3

334.0

559.3

7.7

227.0

338.7

565.7

7.7

40 - 44

239.2

339.1

578.3

7.9

235.8

334.9

570.7

7.8

45 - 49

246.1

323.8

569.9

7.8

243.1

325.9

569.0

7.8

50 - 54

303.8

351.3

655.1

9.0

296.0

349.8

645.8

8.8

55 - 59

300.9

309.4

610.3

8.4

306.2

315.3

621.5

8.5

60 - 64

234.1

239.8

473.9

6.5

238.1

244.6

482.7

6.6

65 - 69

180.3

182.8

363.1

5.0

190.4

192.8

383.2

5.2

70 - 74

110.3

103.4

213.7

2.9

110.3

105.2

215.5

2.9

75 - 79

101.2

108.3

209.5

2.9

102.6

107.8

210.4

2.9

80 - 84

73.8

92.4

166.2

2.3

73.6

92.0

165.6

2.3

>= 85

54.4

107.7

162.1

2.2

58.6

113.0

171.6

2.3

All age groups

3 365.6

3 925.7

7 291.3

100.0

3 368.6

3 941.1

7 309.7

100.0

HONG KONG BUSINESS ANNUAL 2018 65

numbers | indicators Population by Age Group and Sex Mid-2016

End-2016

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

144.8

134.7

279.5

3.8

145.2

135.0

280.2

3.8

5-9

151.2

140.6

291.8

4.0

154.9

143.3

298.2

4.0

10 - 14

132.3

126.9

259.2

3.5

136.5

130.7

267.2

3.6

15 - 19

176.5

164.4

340.9

4.6

167.0

155.5

322.5

4.4

20 - 24

220.3

224.8

445.1

6.1

219.8

224.8

444.6

6.0

25 - 29

227.7

282.5

510.2

7.0

229.0

279.5

508.5

6.9

30 - 34

233.0

344.2

577.2

7.9

231.0

344.0

575.0

7.8

35 - 39

228.0

343.3

571.3

7.8

229.2

347.0

576.2

7.8

40 - 44

234.6

335.2

569.8

7.8

234.9

338.1

573.0

7.8

45 - 49

240.2

326.8

567.0

7.7

239.5

328.2

567.7

7.7

50 - 54

292.9

350.2

643.1

8.8

288.3

349.7

638.0

8.6

55 - 59

306.8

316.2

623.0

8.5

305.5

316.4

621.9

8.4

60 - 64

244.1

251.2

495.3

6.8

251.9

259.5

511.4

6.9

65 - 69

196.5

199.2

395.7

5.4

200.6

203.8

404.4

5.5

70 - 74

112.2

108.6

220.8

3.0

118.9

117.1

236.0

3.2

75 - 79

101.2

105.2

206.4

2.8

99.6

102.2

201.8

2.7

80 - 84

74.1

92.9

167.0

2.3

75.4

94.6

170.0

2.3

>= 85

59.0

114.3

173.3

2.4

62.6

117.9

180.5

2.4

3 375.4

3 961.2

7 336.6

100.0

3 389.8

3 987.3

7 377.1

100.0

All age groups

Mid-2017 Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

143.0

133.6

276.6

3.7

5-9

157.8

145.8

303.6

4.1

10 - 14

132.7

127.2

259.9

3.5

15 - 19

160.5

149.7

310.2

4.2

20 - 24

209.6

216.3

425.9

5.8

25 - 29

229.9

275.2

505.1

6.8

30 - 34

230.3

342.2

572.5

7.7

35 - 39

232.0

352.9

584.9

7.9

40 - 44

234.9

338.9

573.8

7.8

45 - 49

240.1

332.1

572.2

7.7

66 HONG KONG BUSINESS ANNUAL 2018

numbers | indicators

Mid-2017 Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

50 - 54

283.4

345.7

629.1

8.5

55 - 59

308.1

322.0

630.1

8.5

60 - 64

258.9

265.4

524.3

7.1

65 - 69

204.6

208.3

412.9

5.6

70 - 74

124.9

124.4

249.3

3.4

75 - 79

98.4

100.4

198.8

2.7

80 - 84

77.3

95.3

172.6

2.3

>= 85

65.7

122.0

187.7

2.5

All age groups

3 392.1

3 997.4

7 389.5

100.0

Notes :

#

Provisional figures.

The 2016 Population By-census conducted from June to August 2016 provides a benchmark for revising the population figures compiled since the 2011 Population Census. Population figures from end-2011 to mid-2016 have been revised accordingly.

Source : Demographic Statistics Section (1), Census and Statistics Department (Enquiry telephone no. : 3903 6943 Enquiry e-mail : population@censtatd.gov.hk)

Real Salary Indices (A) for Middle-level Managerial and Professional Employees Analysed by Selected Industry Section (June 1995 = 100)

Year

Manufacturing, Electricity and Gas Supply

Building and Construction and Related Trades

Transportation, Storage, Communications and Travel Agencies

Import/Export, Wholesale and Retail Trades

Financing and Insurance

All Selected Industry Sections

Index

YoY % change

Index

YoY % change

Index

YoY % change

Index

YoY % change

Index

YoY % change

Index

YoY % change

2013

100.7

-1.4

110.2

+1.9

118.8

+0.5

108.5

-0.8

128.7

-1.2

117.7

0.0

2014

101.1

+0.4

113.0

+2.6

119.5

+0.6

110.3

+1.6

129.0

+0.3

118.8

+0.9

2015

103.1

+2.0

117.4

+3.9

122.5

+2.5

113.4

+2.8

132.8

+2.9

122.2

+2.8

2016

105.2

+2.0

121.1

+3.1

124.1

+1.4

116.1

+2.5

134.2

+1.1

124.2

+1.7

2017

107.8

+2.5

125.2

+3.4

126.2

+1.7

118.7

+2.2

137.1

+2.1

126.9

+2.2

Notes : Figures refer to June of the year.

The above statistics are compiled based on the Hong Kong Standard Industrial Classification (HSIC) Version 2.0 and the series has been backcasted to 2004 whereas the statistics prior to 2004 are based on HSIC Version 1.1. Users may also download “HSIC Version 1.1-based statistics” for reference. For more details on the revision of HSIC, please refer to the feature article “Revision of Hong Kong Standard Industrial Classification” published in the November 2008 issue of the Hong Kong

Monthly Digest of Statistics.

‘0.0’ denotes increase or decrease of less than 0.05%.

(1) Salary Index (A) measures the overall changes in average salary rates.

(2) The Real Salary Indices are derived by deflating the Nominal Salary Indices by the 2014/15-based CPI(C).

Source : Wages & Labour Costs Statistics Section (2), Census and Statistics Department (Enquiry telephone no. : 3105 2369)

HONG KONG BUSINESS ANNUAL 2018 67

7

High-Flyers 2017 Profiles of Hong Kong’s Outstanding Enterprises and Business Leaders

​HSBC Insurance (Asia) Limited 70 | Able Communications Group 74 | Athena Best Financial Group 76 | British Airways 78 | Dorsett 80 | Elite Concepts 82 | ​FTLife Insurance Company Limited 84| GODIVA Chocolatier (Asia) Ltd. 86 | Hang Seng Bank 88 | Hang Seng Insurance Company Limited 90 | LadyCode 94 | Lan Kwai Fong Hotel @ Kau U Fong 96 | Lifestyle Insurance 98 | MassMutual Asia Ltd. 100 | Mayfare Group 102 | Mercedes-Benz Hong Kong Limited 104 | PrimeCredit 106 | Shama Serviced Apartments 108 | Standard Chartered Bank (Hong Kong) Limited 110 | Towngas Telecommunications Co. Ltd. 110 | TMA 114 | Wharf T&T 116 | Zchron Design 118

CONTRIBUTING WRITERS: Andrew Ng, Samuel Riding, Jennifer Hiu Wai Chan, Jonathan Di Rollo

Edward Moncreiffe Chief Executive Officer HSBC Insurance, Hong Kong 70 HONG KONG BUSINESS ANNUAL 2018

​HSBC Insurance (Asia) Limited

H

ong Kong is increasingly positioning itself as a fintech (financial technology) hub, and HSBC Insurance – backed by the financial firepower of the world’s fifth largest bank – intends to give full play to its resource advantages as it leads the insurance industry into this new era. Understanding client needs through big data analysis is at the cutting edge of HSBC Insurance’s commitment to fintech, and it’s resulted in several recent product innovations – HSBC Term Protector, which was introduced in 2016, and HSBC Cancer Term Protector, launched in late 2017. The insurer dedicated staff and financial resources to investigating customers’ behaviour and preferences in preparing for the launch of the first of these innovations.

“To better meet our customers’ needs in the digital era, we shifted gears and set out to understand our customers through digital analytics,” explains Edward Moncreiffe, CEO of Insurance Hong Kong, “By creating a simple, purely digital solution that is unmatched in the market in terms of value for money and ease of online application, HSBC seeks to create a long lasting change in how our customers interact with us.”

Applying for the HSBC Term Protector– which offers coverage of between HKD250,000 and HKD5 million online – takes a market-leading five minutes, and applicants need

only answer three medical questions. “We launched our first, award-winning online products with great success,” notes Moncreiffe.

“Since product launch in October 2016, customer uptake has been strong, with more than 50% growth in sales registered.” This year, the concept was advanced further with the introduction of HSBC Cancer Term Protector, first of its kind in the Hong Kong online insurance market which covers both life and cancer protection. In support of the initiatives for cancer prevention, HSBC Insurance will donate HK$100 to the Hong Kong Cancer Fund for each issued policy.

“With the medical technology advances people have the chance to get better treatment, but the funds required for such treatments are increasing at a rate faster than one may be able to afford. Insurance is a key tool to manage risk and offer protection, and we would like to make it more accessible to Hong Kong people by offering an easyto-apply product at reasonable price,” Moncreiffe says.

Continuing its pursuit of innovation throughout 2017, HSBC Insurance introduced ONEdna, which offers the market-first feature of genetic cancer screening embedded alongside other cancer and genetic testing methods into six designated protection plans. Genetic testing empowers

ENTERPRISE AWARD

HSBC: Leading INSURANCE into an era of innovation

HONG KONG BUSINESS ANNUAL 2017 2018 71

​HSBC Insurance (Asia) Limited HSBC Insurance customers with their own genetic knowledge to take predictive, proactive, and preventative actions in managing their health and wellbeing. These innovations have not gone unnoticed, with ONEdna awarded the 2017 Most Innovative Award – Health Specialty, by the Hong Kong Federation of Insurance.

A customer-centric approach The company’s embrace of customer centricity has not only been given full play in the products HSBC Insurance sells, it has also had a major impact on its entire service proposition, both internally and externally, with the launch of the HSBC Insurance Academy at the start of 2017.

HSBC Insurance provides customers with a whole host of services, including protection, wealth, education, retirement and other planning needs, but, to ensure it can offer such an innovative range of services, the company has invested heavily in the training and development of staff so they are able to deliver it.

“The training curriculum is designed based on Engage-DiscoverRecommend-Act-and-Service (EDRAS) sales process, which provides a framework to train the staff and partners based on customer- and user-centric approach,” explains Moncreiffe.“This transformation from the previous product-centric training covers the required technical knowledge, skills and sales quality in the end-to-end customer journey.”

Ever mindful of the needs of Hong Kongers at every stage of their lives, HSBC insurance also launched its Wealth Goal Insurance Plan in 2017, a development driven by its most recent Future of Retirement survey, which suggests people, particularly Millennials, HSBC_Communication_A1Poster_B_op.pdf

1

8/5/2017

6:13 PM

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Y

CM

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are advised start saving early if they are to enjoy financial security later on in life.

The report indicates that more than two thirds of Hong Kong Millennials believe they will need to support themselves for much longer than their forebears. But they will also do so in a much more flexible manner.

Whilst Millennials say they expect to retire at the age of 61, two years younger than the working-age average, nearly two-thirds of respondents to the survey believe they will have more retirement options, such as continuing to do some form of work whilst ostensibly retired.“This report points to a ‘new normal’ of more flexibility in requirement,” according to Moncreiffe.“The challenge for our Millennials is to prepare early by taking advantage of a number of savings channels available to them such as basic wealth and insurance planning and the active review of their Mandatory Provident Fund savings, which they can grow and rebalance as their life and financial situations evolve over time.”

Under the Wealth Goal Insurance Plan, policyholders also have the option to lock-in some of the plan’s value depending on when they need more financial certainty or security.

Evolving with clients Millennial’s shifts in lifestyle and other priorities were also at the top of HSBC Insurance’s mind with the launch of its creative platform ‘NOW’S GOOD,’ based on the various ‘Moments of Truth’, both good and bad, which individuals may encounter on their life’s journey that require insurance or other solutions, most notably term life policies.

“Based on our proprietary study, we found these moments of truth include life events like the start of a new family or birth of a child. We then leveraged findings in our marketing communications, providing trigger points which echo customers’ personal experience and drive them to look at taking up a policy,”

72 HONG KONG BUSINESS ANNUAL 2018

Outstanding Enterprise Award FAST FACTS •

Founded since 1865, HSBC serves around 46 million customers worldwide from over 4,400 offices in 71 countries and territories.

•

HSBC Insurance was established in 1977. It is one of the top players in the Hong Kong insurance industry.

This page: HSBC Insurance NOW’S GOOD Truck was launched to engage customers in 2017 Christmas; Over 30 mentors and mentees participated in 2017 Staff Development Programme Opposite page: ONEdna offers genetic cancer screening embedded alongside other cancer and genetic testing methods into six designated protection plans; HSBC Insurance bagged The Hong Kong Insurance Awards 2017; HSBC Insurance launched its creative platform ‘NOW’S GOOD.’ says Moncreiffe.“The slogan ‘NOW’S GOOD’ reminds customers that despite other priorities, it is always a good time to seek protection for their loved ones, especially during these moments of transition in their lives.”

To optimise this platform, HSBC Insurance used potential client’s browsing behaviour including webpages visited and the frequency of those visits to promote its online products across news webpages, social media platforms, word search, and other online platforms. Besides, the company also promoted ‘NOW’S GOOD’ through a mobile truck to further engage customers during Christmas in 2017.

A company that cares HSBC is a Hong Kong bank enjoying a unique position in the hearts of Hong Kongers. It’s with that in mind that HSBC Insurance has introduced several initiatives to engage and grow with staff and also make them feel part of the wider community, not just a company.

In 2017, HSBC Insurance established a Staff Development Programme to foster community within the organization, including

mentorship programmes, teambuilding workshops, ‘lunch and learn’ events and other networking events where staff at every level, including executives, can share their experience. As for its wider community outreach, Moncreiffe notes, this year has seen more staff join HSBC Insurance’s corporate sustainability initiatives than ever before, and contribute more of their time to this programme.

As for its future developments, HSBC Insurance acknowledges that its sector may not have been the first to take up vanguard financial technologies such as artificial intelligence and big data techniques. At its heart, however, this leading insurer aims never to lose sight of its core responsibility – to meet customers’ personal insurance needs and help them attain their other goals in life.

As Moncreiffe puts it: “Besides keeping pace with the technology advancements, as usual, we put customer in the heart of everything, we conduct customer surveys regularly and understand the trends and giving the most suitable products and services to our customers. The ONEdna free offer and the launch of our online products are good examples. Customer-centricity is an important reason our customers stay with us.”

HONG KONG BUSINESS ANNUAL 2018 73

7

aBLE Communications Group

ACG propels clients’ success with world-class service

I

n a world where consumers are bombarded with information on a daily basis, Able Communications Group is an expert at ensuring that their clients stand out. Customer intimacy is at the heart of ACG’s business, and it is the trusted ally of over 5,000 enterprises including banks, retailers, securities companies, government units and charities.

“As an innovator in enterprise communications, software development and strategic marketing, we’re on a mission to serve our clients exclusively at the highest standards,” notes Sandy Li, General Manager at Able Communications Group.

“Our three global brands, Able Mobile, EaseSales and Lofty, are the embodiment of our passion for highest standards. We have integrated the superiority of our three companies so as to offer customers an integrated service with the utmost synergy.”

Stay connected ACG’s global brands ensure that all of their clients’ needs are covered. ABLE MOBILE, a licensed Hong Kong telecommunication operator, provides professional and reliable mobile solutions to a diverse set of enterprises. Easesales, meanwhile, is the first open O2O platform providing a full range of online and offline sales, marketing, analysis, communication and automation tools.

It unifies the consumer experience across channels and devices, streamlining retail operations from purchase to post-sales service.

74 HONG KONG BUSINESS ANNUAL 2018

Lastly, Lofty is a full service media and advertising agency which specialises in branding, public relations, O2O e-commerce solutions, web design and app development as well as tailor-made marketing campaign and events. “With all of our experts who bring together strategies, technologies and social content, we are able to react to emerging trends faster than any others,” Li says.

With its full suite of professional services, it’s no wonder that ACG is the partner of choice for some of Hong Kong’s largest and most established firms. ACG’s impressive roster of clients includes Kerry Logistics, Centaline Property Agency, Koon Wah Food, and Casablanca Group. These corporate leaders have nothing but praise for the quality of ACG’s services.

“Our business model has been an innovative one, so we chose to use the SMS service from ACG,” says Richard Lui, Associate Director of Operations for Kerry Logistics. “ACG helped us design a stable and instant communication plan, which has helped us to increase our efficiency in logistics services.”Kerry Logistics uses ACG’s SMS messaging service in their logistics workflow. “Moreover, they are our strategic partner as Kerry is our built-in service provider in the Easesales system. We have connected with Kerry Logistics API and the arrangements are all automatic,” Li says.

Lui adds that by using ACG’s high capacity and ultra-stable SMS service and Easesale, Kerry Logistics has added nine independent states to its global network. “In our future business development,

Reliable Enterprise Communications PHILOSOPHY

FAST FACTS

At Able Communications Group (ACG), customer intimacy is in our roots. We have integrated the superiority of our 3 global brands: Able Mobile, EaseSales and Lofty, so as to offer customers an integrated service with the utmost synergy. We’re on a mission to serve our clients exclusively at the highest standards with advanced big data analytics, marketing automation, O2O strategy and face recognition technology.

• With more than 10 years’ experience of providing cutting edge enterprise solution • Achieved ISO 27001 Information Security Standard since 2015 • Cooperated with many big partners in market: e.g. HKPC, Kerry Logistics, Octopus and more • Headquartered in HK, we have expanded our global offices to Shenzhen, Taiwan and Shanghai

This page: We take our client’s business to the next level with the professional services provided by our 3 global brands.

Opposite page: Our 3 global brands, Able Mobile, EaseSales and Lofty, are the embodiment of our passion for highest standards. we hope to incorporate big data analysis and business intelligence to refine our logistics service process. With our partner ACG, we can seize the opportunity with confidence,” Liu notes.

For Melody So, Executive Director of Centaline Property Agency, ACG has been invaluable in ensuring the agency’s success. “In order to expand the business of Centaline, we have used various digital technologies and integrated corporate communication services from ACG,” So notes. For internal communications, Centaline uses ACG’s mobile application, CentaChat. It assists the agency’s sales department in receiving and staying on top of market trends. The app also allows Centaline’s frontline sales staff to build a reliable relationship with its customers.

“Digital technologies and corporate communication services in ACG have helped us bridging the gap between internal and external communications. By reducing the cost of information exchange, we are always one step ahead. ACG allows us to concentrate on our business expansion,” So says.

New sales strategies in O2O battle Koon Wah Foods, the legendary snacks retailer, also vouches for the quality of ACG’s service. ““ACG brings our business into the world of technology by opening an online store for us. With our online store, our business can target potential young customers in Hong Kong and all over the world,” says Vincent Yip, CEO of Koon Wah Food. Koon Wah Food used ACG’s EaseSales solution to create an online store, to target younger shoppers.

EaseSales offered a one-stop platform where Koon Wah was able

to set up their online store, which integrated logistics and payment methods.

“ACG is very professional in meeting our expectation and generating has generated a set of tools that fit our marketing strategy,” Yip says. “With effective digital sales strategy, ACG enables us to create personalised shopping experience to attract young new customers.”

ACG is also a driving force behind the expansion of Casablanca, its corporate communications services supported Casablanca Group’s expansion into the Greater China Region. Nowadays, the Casablanca Group sales network covers 80 developed cities and owns over 250 points of sales. “Casablanca Group started using ACG’s integrated communication platform a few years ago,” explains Vivian Cheung, Marketing Director of Casablanca Group.

“It can deliver our Group’s news and new product information to our members instantly. For fulfilling the needs of various groups of clients, we now rely on EaseSales’s big data analysis to examine the needs of different groups, so as to provide personalised and characterized sales for them.”

“Through big data analysis, EaseSales generates automative matching and marketing programs based on our customer’s habits and lifestyles. At the same time, through the Referral Program

by EaseSales, we hope to build up a digital brand image, and to attract more potential spending groups,” Cheung adds.

Able Communications Group was honored at the 2017 HKB High Flyer Awards under the Reliable Enterprise Communications and Innovative Retail Solutions category.

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7

Athena Best FINancial Group

Athena Best: Ten years of growth with a purpose

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n an era of buzzwords, Athena Best Financial Group has been steadily building up its business based on core principles rather than progress for its own sake. The Group consistently strives towards a quartet of aims - to be Asia’s most reputable independent financial adviser; offer access to the best offshore products and platforms; be the most innovative, technologically advanced asset management company; and build the region’s most dynamic, ethical and responsible management team of financial leaders.

To these ends, Athena Best provides a diversified suite of products, services and solutions which serve clients’ personal wealth, investment planning and indeed lifestyle needs at every stage of their lives, whether it’s taking the first steps on a successful professional career or planning an active retirement.

Expanding their footprint in Asia The company enjoys a geographically diverse client base – covering Hong Kong, Japan, Korea, Malaysia, Mainland China, Taiwan and many more – always mindful that the solution, and delivery mechanism, which best suits a client in one country is not always the same for a client elsewhere. In addition to its growing geographical footprint, Athena Best has also sought to diversify its product, service and solutions offering over the past 10 years.

“Unlike many other companies in Hong Kong, Mainland China

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isn’t the only important market to us. Our footprint has been expanding in terms of geography so we now cover most countries in Asia,” explains Managing Director Danny Tse. “But we have also been expanding our business lines, from originally being a broker for insurance and securities products to stepping into the fund management industry and then launching family offices for HNWI (high net worth individuals).”

Athena Best offers personal financial planning, backed by a range of insurance products and investment tools which aim to cover every possible eventuality and goal in clients’ live, as well as investment planning through its bespoke fund platform, which offers a broad range of portfolios and other investment vehicles.

Furthermore, it offers mutual funds via partnerships with a wide range of top global financial institutions; insurance planning to help clients tackle unexpected events, with products ranging from whole life insurance to critical illness protection; and, for the most sophisticated clients, Athena Best provides customised fund management services.”

The professional private wealth management team at Athena Best has close partnerships with numerous marketing leading banks and financial institutions to ensure it leaves no stone unturned in seeking the best possible solutions for clients. The Group’s technological expertise and resources mean it is dedicated to seeking new and innovative ways of delivering its high quality

Wealth Management and Financial Advisory PHILOSOPHY

FAST FACTS

Athena Best Financial Group committed in “Partner for SUCCESS”.

Not only putting our clients and business partners as the top priority, but also invest into our staff development and engage in society responsibility.

• Our services cover a wider array of retail and B2B Brokerage Services, Financial Platform Services Servcies, Financial Planning Consultancy Services and Asset Management Service.

• We offer one of the most sophisticated Portfolio Management Services that aims to suit different investment expectations and levels of risktaking • We expanded into other areas of business including Fund Management, Information Technology and Education Development

This page: This page: Athena Best joined “Oxfam Walkathon” fundraising event; Athena Best company trip to Taiwan this year.

Opposite page: Danny Tse, Managing Director of Athena Best Financial Group products, services and solutions. But just its rapid growth over the past decade has been “growth with a purpose”, so the company views technological innovation not as an end in itself, but as a way of continuing to serve its clients in the best way possible. It would not have been able to continue its expansion over the past 10 years without making technology work for it, and its clients.

Personalised service for all “We will continue to excel in our core services, but also strive to create our own competitive edge. The market changes very rapidly, and it is our job to educate families about new ideas,” Tse says.

“So, when we develop new ideas we always build something that will benefit our existing base. Any original idea must also be something that benefits our business right now. We are constantly adding innovative options, Tse added. “Athena Best is looking at vanguard ideas such as robo advisory, but strongly believes

many clients will continue to require the high-touch, personalised service of conventional wealth management. Many clients in Asia, especially the high net worth ones, still enjoy personal interactions, more traditional services, and these will never fade out. But we need to follow market trends, so are well prepared for the next development,” Tse notes.

Athena Best invests so much in its staff development, and is planning an employee shareholding scheme – firmly believing that if the company invests in its staff, its staff will in turn find the best solutions for the company’s clients. Just as it is dedicated to advancing clients lives and careers, so it is dedicated to providing staff with the opportunity, and incentive, to grow with the company. “Our turnover is quite low compared to the rest of the industry. Our objective is to create harmony,” Tse concludes – further testament to Athena Best Financial Services’ long termcommitment in its areas of business.

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7

British Airways

Fly in the lap of luxury with British Airways

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ritish Airways soars far above its peers when it comes to ensuring unrivalled service for its customers. With its convenient flight schedules, luxurious airline lounges and top-of-class cabin amenities, British Airways is the airline of choice for travellers who seek unmatched comfort and personalised service.

As its centenary approaches, British Airways is spending £4.5bn on an aggressive modernisation plan to further enhance customer experience. “We need to reach our special milestone stronger than at any point in our history, so we continue to modernise and lead change,” says British Airways chief executive Alex Cruz.

“Our £4.5bn investment plan is a proof that we are determined to take this next step on the journey, to stay ahead of the competition and improve the experience of British Airways’ customers in whichever cabin of the aircraft they choose to fly,” he adds.

Excellence honed by time British Airways is a true pioneer in Hong Kong’s aviation market.

The airline has been flying to Hong Kong for over 80 years, and currently offers amenities and services that other carriers can only hope to match.

Passengers can expect even better service with the airline’s ambitious investment plan. Over the next five years, British Airways

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will take delivery of 72 new aircraft, unveil new interiors for its existing fleet, open up new routes, roll out best-quality Wi-Fi for all short-haul and long-haul flights, provide in-seat power for customers in all cabins, and upgrade catering for its long-haul economy customers. British Airways is also investing £600m specifically in Club World, its business class service. These include catering upgrades, and a partnership with the White Company for luxurious bedding - plus, from 2019, a new seat with direct aisle access.

“We are known as a premium airline committed to customer choice and one that is a byword around the world for British know-how and excellence. Our values as an airline are special and timeless: our essential Britishness; our proud history of innovation; our expertise and professionalism; and our personalised service that puts quality and reliability first. These things make up our DNA. As we modernise, we must always look to preserve and strengthen them,” says Cruz.

All flights from Hong Kong arrive at its hub airport: London Heathrow Terminal 5, which is regularly voted as the world’s best airport terminal. Its loyalty programme, Executive Club, offers great benefits such as lounge use with complimentary catering, priority seat selection, check-in and boarding for members. Meanwhile, its Avios scheme gives members points when flying or shopping to spend on future flights.

AIRLINES PHILOSOPHY

FAST FACTS

The motto ‘To Fly. To Serve.’ is part of the DNA of British Airways. It is on our coat of arms, and it is worn in crew uniforms. And it has real meaning and resonance for today. It encapsulates our expertise for flying and our commitment to customer service. It describes our purpose.

British Airways: • Flies to over 200 destinations across almost 80 countries • Operates around 280 aircraft, including Superjumbo Airbus A380s and Boeing 787 Dreamliners, the most technologically advanced model in the fleet • Currently has approximately 40,000 employees including 15,000 cabin crew, 3,600 pilots and 5,500 engineers

This page: Alex Cruz, British Airways’ chief executive; Noella Ferns, British Airways’ executive vice president for Greater China; British Airways Revamp of its flagship Concorde Room at London Heathrow Terminal 5 Opposite page: British Airways is the only airline to operate the Superjumbo Airbus A380, the world’s largest commercial aircraft, non-stop between HK and London.

“We are the only airline to operate the Airbus A380, the world’s largest commercial aircraft, non-stop between Hong Kong and London,” says Noella Ferns, British Airways’ executive vice president for Greater China. “Our convenient flight schedule with our two flights every evening from Hong Kong, which arrive before the business day begins in London, enables our customers to make the most of their working day.”

By summer 2018, British Airways will be flying 264 routes, 38 more routes than two years ago – an increase of 17 per cent. It has recently added new routes to holiday destinations such as Brindisi in Italy, Nantes in France, and Zakynthos in Greece.

Going the extra mile British Airways truly goes the extra mile to ensure that end-to-end convenience for its valued customers. For instance, it has recently launched a partnership with The White Company, a British luxury lifestyle brand to provide a double-sided pillow, a super-soft woven blanket with satin trim, a luxury duvet and a padded mattress to its customers in Club World business class.

Business class customers flying from London Heathrow to New York JFK will also enjoy a new restaurant-style dining experience.

Travellers will be able to select their choice of freshly prepared starters and desserts from new display trolleys, which will be served by the crew on to new table settings. The airline has also added Graham’s Six Grapes, the Port favoured by Sir Winston Churchill, to its business class drinks menu starting August.

Since April 2017, customers in all cabins have started to enjoy the latest generation Wi-Fi services across its long-haul network.

Short-haul Wi-Fi services have also commenced, with the aim of having 90 percent of its total fleet connected by 2019.

“Customers will be able to use their own devices to browse the internet, access email and check social media. In addition, they will have the ability to stream video content from popular sites such as Netflix and YouTube,” Ferns notes, adding British Airways is the first airline to offer connectivity using Europe’s first ever 4G high-speed inflight network.

British Airways is also aggressively revamping its lounges across the world’s major airports, starting with the new complex at Gatwick Airport’s South Terminal. With sweeping views of the runway, the new First and Club lounges have 40 per cent more floor space than the airline’s former lounge in North Terminal.

An investment of HK$860 million (£88 million) is planned on lounge facilities in the US. New York’s JFK Terminal 7 will receive over HK$508 million (£52 million) worth of investment over the next two years; a refurbishment of the First and Club World lounges as well as improvement to the customer experience at check-in, security and the boarding gates.

Boston’s new lounge has already opened to coincide with the Airbus A380 starting on the Heathrow-Boston route. The facility is 30 per cent larger than the previous lounge, has direct gate access and stunning views over the stunning Boston skyline.

“The British Airways motto, ‘To Fly. To Serve’ means we do everything with our customers in our hearts. It has always been this way, and it will always stay this way. We will continue to do all that we can to provide the best possible service to our customers from around the world,” Ferns says.

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7

Dorsett Hotel

Dorsett Wanchai Breathe New Life Into Family Time

S

itting against the backdrop of the vibrant hospitality market in Hong Kong is The Dorsett Wanchai, offering family value and new services tailored to changing customer needs and the new company brand. The Dorsett Wanchai is part of Dorsett Hospitality International, a Hong Kong hotel brand with 52 hotels in Hong Kong, China, Singapore, London, Malaysia, Japan and Australia.

“We focus on delivering a stylish, comfortable, and affordable accommodation through our vibrant Hong Kong-inspired hospitality,” says Anita Chan, General Manager at the Dorsett Wanchai. “The Dorsett Wanchai, previously known as the Cosmopolitan Hotel, is our flagship hotel in Hong Kong, rebranded in October 2016. Now a 4.5-star hotel, we are an award winner in several international and local categories for the family. Our vision is to be the preferred family hotel in Hong Kong by offering comprehensive family-friendly amenities and innovative themed suites that cater to the travel needs of family travelers.”she says.

Their key offering s incude The Family Quad Room, which accommodates up to four people with connecting rooms and triple rooms. Guests who stay with their little ones in any of the luxurious hotels’ family rooms can enjoy a full range of amenities for their kids: a snack box, teddy bear, kid’s dental kit, slipper, bathrobe, mobile storybook library, in-room sweet treat as well as a colorful candy bar, available everyday from 6pm to 7pm in

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the hotel’s lobby. The Dorsett Wanchai also works with a variety of popular brands to co-create themed suites to suit a wide range of travel preferences and lifestyles. “Our themed suite collection features an Ocean Suite, Jockey Suite, Sony 4K 3D Experience Suite,Osim Massage Suite and the soon-to-be-launched Glycel Supreme Beauty Suite,” says Anita. “Each themed suite comes with different extra perks; if a guest stays in our Jockey Suite on a Wednesday night, we will offer you a Happy Wednesday welcome pack comprising an entry pass to the Happy Valley Jockey Club as well as some free drinks coupons, our beauty-conscious guests who stay in our Glycel Suite can enjoy a full set of facial, hand and body treatment valued at HK$3,500 in our Glycel beauty spa salon, in addition to a set of complimentary skincare and free use of beauty devices in the room during their stay.”

Flexible Times Moving with the times the Dorsett Wanchai now offers new services; a 1-hr Response Guaranteed, website live chat and the recently launched ‘26 Hours A Day’ feature. “This allows flexible check-in time and a full 26-hour stay in our hotel,” says Anita, “This means that if a guest checks in at 4pm they can stay until 6pm the next day without any extra charge. This special feature is exclusively for direct bookings on brand.com, with three days notice required prior to arrival.” With the extra hours, guests can

Best Family Hotel in Hong Kong PHILOSOPHY

FAST FACTS

Dorsett Wanchai, Hong Kong is a newly rebranded 4.5 star hotel well situated amid the bustling and hustling city centres – Wan Chai and Causeway Bay, where guests can immerse themselves into both the local interests and the contemporary lifestyle in this vibrant city.

• A vibrant kid-friendly hotel with a range of theme suites to offer such as Ocean Suite, Jockey Suite, Sony 4K 3D Experience Suite, Osim Massage Suite & Glycel Supreme Beauty Suite • Provides free use of smart phone in each guestroom with unlimited 4G internet and IDD calls to 8 countries and premium Wi-Fi (up to 200 mbps & 10 devices at a time) • Offer little touches in the room to enhance one’s stay - Water Bar, Ladies’ Love Box and Snack Box with Teddy Bear

This page: Box of goodies for kids; Dorsett Wanchai lobby; spacious rooms Opposite page: Anita Chan, General Manager at the Dorsett Wanchai. make the most of their time to explore the city and neighborhood, just like a local. The Dorsett Wanchai also introduced an ‘Eat & Shop Like a Local’ travel guide, a handy guide that features a list of recommended shops and restaurants to visit nearby. “Our guests come from all over the world; UK, US, Australia, Europe, Singapore and Korea. PRC is still our largest market with 99% of our guests being Fully Independent Travelers,”Anita noted.

Vibrant new brand Anita has embraced the challenge of rebranding creatively. “We continue to refine our brand since our name changed,” explains Anita, “Specifically, as a Hong Kong brand, we associate our brand with the unique character of Hong Kong itself; vibrant, flexible, efficient and cultured. At the Dorsett Wanchai, our guests experience an exciting stay filled with fun events such as the Rugby 7s Best Dressed Contest and Dorsett Wine Hour, as well as other thoughtful offerings such as our shuttle bus, a handy phone and Water Bar.” Aligning their new brand with local culture aims to make guests feel like their stay is as ‘vibrant as the city that never sleeps’. Anita proudly adds, “Winning several important awards such as the ‘Best Family Hotel in Hong Kong’, awarded by HK Business Magazine, has further elevated our ‘family-friendly’ image in the industry.”

Over the last few years the hotel industry has seen large disruptions with new players. Anita’s shares her insights, “The emergence of share accommodation sites like Airbnb is really changing the way travelers book hotels today.

Because travelers are looking for more than just accommodation nowadays, they search for a deeper connection with the city they are visiting, often beyond the touristy destinations. Travelers want to get more local insights and know more about the cultures and the people that form the city. So two years ago we launched the ‘Eat & Shop Like a Local’ travel guide which includes specially curated lists of places Hong Kong people go to and we encourage our guests to experience the same too.” The Dorsett Wanchai also offers meal vouchers from local well-known ‘cha chaan teng’ to allow guests to try what a HK-style breakfast is like and even to get a taste of the world’s cheapest Michelin-starred dim sum restaurant.

Anita’s leadership involves a vision for the future. “We have many great plans ahead. One of them is our group-wide CRM programme spearheaded by myself and our e-commerce team.

I oversee the development of the group website as well as our loyalty programme. We are launching new features on our groupwide website which provides an additional channel to book direct with our hotel and with more, personalised features,” she noted.

The CRM programme will allow guests who view a family promotion in the website to receive similar promotions when they next visit the hotel groups’ other websites. “CRM allows us to better understand guests’ preferences by analysing their previous stays at our sister properties. This means we can better serve their needs and reward guests. These are exciting developments that will truly benefit guests staying at the Dorsett Wanchai and other Dorsett properties,” concludes Anita.

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7

Elite Concepts

Elite Concepts’ yè shanghaiThe Enduring Flame

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ince the discovery of fire, man has aspired to master its flames. The successful came to be the elite. In China, the elite continued this mastery with the creation of awe inspiring experiences through their development of fireworks and the Eight Culinary Treasures. Now as it was then, Elite Concepts Hong Kong has mastered the flames and fanned them into a bushfire of inspired culinary experiences that is successfully spreading across Asia. Inspiration, passion, and comfort all have their fire.

And like the Olympic flame which came from the heavens and was given to torch bearers to carry across the lands, Elite Concepts Hong Kong has emulated that excellence since they opened their first flagship restaurant in 1991. Now, with brands such as NINETEENFORTYNINE, Nanhai No. 1, Eyebar, Duck De Chine, Deng G, they have kindled the flames of inspiration, passion, comfort, and delight through culinary excellence throughout Asia.

The yè shanghai experience Elite Concept’s strongest and steadiest flame, though, is yè shanghai. Celebrating its twentieth anniversary in its Hong Kong Island store, Mr. Damien Chang, General Manager of Yè Shanghai Group shares, “yè shanghai was created to celebrate the nostalgia of Shanghai’s glorious past heyday, where the East was seducing the West with a blend of decadence and romanticism. Our twentieth anniversary renovation was intended to evoke the spirit

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of those glorious days,“ he said. “We want the diners to experience the feeling of dining in the past whilst in a modern and stylish environment, hence our motto, ‘Now as it was then’. Old Shanghai, the birthplace of greatness, yè shanghai continues to instill the joie de vivre of old Shanghai with its other locations in Tsim Sha Tsui, Taipei and Shanghai.

When asked if dining at yè shanghai was gastronomic or epicurious, Mr. Chang replies, “A combination of both really. You can’t define your guests by either of them. We cater for all kinds of guests, families, business groups, tourists, curious, and critics.”

Much like the heyday of Old Shanghai where all were attracted to Shanghai’s flame. Industrialists and financiers, refugees from Europe, Chinese from the countryside, artists, politicians, seekers, finders, and celebrants; now as it was then, all dine at yè shanghai taking in this spirit.

Today, the ambience at yè shanghai though modern resonates with the greatness of the past. One can easily visualised characters from the past dining in yè shanghai. In one corner of the dining room Tian Han and Nie Er are collaborating on a song for “the Children of Trouble Times” movie. Opposite them Pan Yuliang, just back from France, sits at a table in front of a nude painting studying the center of the room seeking inspiration. Black and white photo collages share captured moments of life in Old Shanghai.

Innovative F&B Concepts PHILOSOPHY

FAST FACTS

Elite Concepts believes that every hospitality concept must show an understanding of local tastes and maintain a strong connection with the people and their culture.

With both a firm footing in the soil and a limitless capacity for innovation, Elite Concepts will continue to set the course for hospitality trends in Asia.

• Elite Concepts was founded in 1991 to bring high-quality free-standing restaurants to Hong Kong. It has evolved into a dynamic enterprise which transforms visionary ideas into commercial successes.

• Elite Concepts continues to forge new trends in Beijing with the 1949 series. The first 1949 complex — 1949 The Hidden City — opened in Beijing in 2008.

• Ye Shanghai gained the 10th Michelin star in 2017 since Year 2010.

This page: Yè Shanghai’s enduring flame Opposite page: Mr. Damien Chang, General Manager of Yè Shanghai Group Movie handbills featuring future icons Rita Hayworth and Marlene Dietrich announce their Shanghai premiere. Throughout the spacious main dining room would be the likes of China’s own movie stars Wang Renmei, Qin Yi, and Gong Quixia all celebrating in the company of mysterious well to do men. Jazz, cigars, and liquor were plentiful. Mystery and intrigue were rife in Old Shanghai. Greatness was on the horizon.

Mastery of flame And there is no greater way to nurture greatness than with the cuisine of Old Shanghai. Greatness is at yè shanghai.“My personal favorite at yè shanghai is the Braised Sea Cucumber with Scallion.

It’s a simple dish that is hard to standardize and perfect as it is a delicate dish that takes up to 4 days to prepare. It shows great skills to be able to deliver the same delicious dish every time. It’s quite healthy dish, great for summer,”recommends Mr. Chang. yè shanghai’s cuisine requires a mastery of the flames to braise, roast, quick-fry and steam. It also requires the best and freshest ingredients to achieve culinary greatness. “At yè shanghai we strive for quality. We have a back office that sources the freshest ingredients, and then we rely on our seasoned staff to keep improving,”he adds. yè shanghai’s dedication has earned them ten Michelin Stars since 2010. That mastery is spreading throughout Asia bringing opportunity for new inspirations. “Having 4 venues in different cities, we get the opportunity to do research and see the viability of, for example, bringing crabs from Yang Cheng River, or special

teas from Taiwan for our Chakeli.”continues Mr. Chang “To update on our menu we worked together with famous chefs: Zhu and Ge. They brought fresh eyes to our menu improving some dishes, adding news ones. It’s also very important that our chefs learn new ways of cooking and different skills. “ Mastery of flame In Hong Kong one could dine at a different restaurant for every meal of the day without repetition for many years. Mr. Chang shares yè shanghai’s philosophy on their success, “In the F&B industry, you have to listen to your guests, but also innovate. It is a balance between knowing your market, and also how to disrupt it, by improving their dining experiences. But the most important factors are the consistency of the cuisine we are serving, as well as the quality of service we provide. Our staff has been with us for a number of years, they all recognize our regulars by name, know their families and friends. That makes the decision easy for many guests.”The flames of comfort are kept by Mr. Chang who has been there from the beginning.

“We are always looking for new ways to innovate. We are working on it. At the same time there are brands within yè shanghai, like Chakeli that we will be pushing early 2018, so watch out! Be prepared for 2018, because it’s going to be amazing! yè shanghai, Now as it was then, enduring and ever brighter.”

Elite Concepts, the group behind yè shanghai is a recipient of this years Hong Kong High Flyers Award for Innovative F&B Concepts category.

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FTLife

“HealthCare 168” Critical Illness Protector

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FTLife takes leadership with top-notch financial products

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lawless customer service is at the core of FTLife’s leadership of the Hong Kong insurance market. Everyone in the company is committed to ensuring clients receive the best possible insurance and wealth management service. In fact, FTLife’s products and services have earned a glowing reputation locally and abroad.

Best-in-class products FTLife offers a range of products to suit different clients and lifestyles, and the “MediCare” Medical Insurance Plan is one of the latest such examples. It provides comprehensive medical coverage with first-in-market1 features such as double major medical benefit when diagnosed with common severe urban chronic diseases, upfront no-claim discount for successful applications and a “Loss of Income Medical Booster” to suit clients changing jobs or going through involuntary unemployment. The plan also offers home-care benefit to help take care of domestic issues during hospitalisation.

FTLife has also unveiled two flagship products – the “Regent” Insurance Series2 and “HealthCare 168” Critical Illness Protector.

“Regent” is renowned for several market-first features, including a long protection period up to the age of 128, flexibility in changing the insured person and a high rate of return, offering policyowner an ideal wealth succession solution whilst making provision for future generations to have the means to realise dreams in life.

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The other flagship product of the company “HealthCare 168” also boasts a number of first-in-market3 features, including full coverage of 168 illnesses. The plan also provides coverage up to 160% of the sum insured on respiratory diseases and all future premiums will be waived after diagnosis and claims made in respect of severity level 2 or 3 critical illnesses. “HealthCare 168” provides critical illness protection and a means for savings to stand out in the market in both coverage and customer return.

Tip-top service A powerful manifestation of the company’s commitment to clients is the HK$60 million FTL Prestige Customer Service Centre in Tsim Sha Tsui, which is believed to be the first of its kind to be offered

by Hong Kong’s insurance industry. Covering 14,000 square feet, this luxurious facility combines wealth and health management with advanced facilities and tip-top customer service.

Elegance, comfort and hospitality are hallmarks of the FTL Prestige Customer Service Centre, which provides panoramic cityscape views over Victoria Harbour. Facilities include a concierge, business centre, meeting rooms, multi-function rooms, children’s play area, massage chairs and a tea spa. Complimentary refreshments and beverages are always available to visitors.

FTLife takes its responsibility as “Health Manager” seriously and encourages customers to maintain healthy lifestyles. To this

Life Insurance PHILOSOPHY

FAST FACTS

Capitalising on a heritage of professionalism and excellence in serving clients, FTLife seeks to become a world-class customer-centric insurance company that achieves long-term growth by flourishing in Hong Kong, thriving in mainland China and expanding throughout the rest of Asia.

• Its financial status is confirmed by global rating agencies (A- by Fitch Ratings, and Baa1 by Moody’s).

• It has a wealth of professionally trained and highly skilled consultants.

Seven percent of them have so far received the honour of the Million Dollar Round Table (MDRT).

This page: FTLife is the only insurance company in Hong Kong to display two neon signs overlooking Victoria Harbour.

The state-of-the-art FTL Prestige Customer Service Centre; The amazingly versatile hummingbird is the centrepiece of FTLife’s logo. end, it launched two new initiatives - free health consultation and self-service health check station. Customers can consult registered dietitians, western medicine and Chinese medicine practitioners.

The free service enables customers to get a professional explanation on their medical reports, as well as medical and health advice on healthy diets, nutrition, weight management, exercises, and other personal health issues. Devices for measuring bone density, blood pressure and BMI, along with a portable ECG, are all in place at the Self-service Health Check Station in the FTL Prestige Customer Service Centre, for customers to get an instant general analysis of their health conditions.

FTLife was previously known by its Chinese name, . It underwent a branding exercise after becoming a wholly-owned subsidiary of Tongchuangjiuding Investment Management Group (JD Group) in September 2016. Headquartered in Beijing, JD Group is a well-established investment management company with offices in China, North America and Asia. Its main lines of business are investment, Internet finance and insurance. JD Group’s

investors include respected financial institutions, state-owned enterprises, foreign funds and high-net-worth clients.

Capitalising on a heritage of excellence stretching back 30 years, FTLife seeks to become a world-class customer-centric insurance company that achieves long-term growth by flourishing in Hong Kong, thriving in mainland China and expanding throughout the rest of Asia. It maintains prudent investment strategies, a fact recognised by the high ratings awarded by relevant global agencies. FTLife is served by some 2,800 highly-skilled financial consultants and staff. Outstanding performance amongst consultants has been honoured on a global scale because many are members of the Million Dollar Round Table (MDRT), a premier international association for financial professionals.

Remarks: 1. Compare with similar medical insurance plans.

2. The Regent Insurance Series includes Regent•Prestige Insurance Plan and Regent•Premier Insurance Plan.

3. Compare amongst critical illness insurance plans of the same type.

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7

GODIVA Chocolatier (Asia) Ltd.

GODIVA’s new collection shows how to update an icon

H

ow do you innovate a classic?

The answer, it turns out for premium Belgian chocolatemaker GODIVA, comes in the form of its new designer collection — the “Gold Discovery,”a modern-day take on the brand’s iconic “Gold Collection” which is the result of more than a year of recipe creation and fine-tuning of GODIVA’s team led by award-winning chocolatier Chef Jean Apostolou. Delving into the Gold Discovery box reveals a symphony of contemporary new flavours, colours, shapes and textures, leaving chocolate-lovers with a one-of-a-kind impression of the GODIVA brand.

The Gold Discovery offers 16 new flavors, from nutty pralines and smooth caramels to intense ganaches and lively, fruity pieces.

The alluring new collection not only celebrates the Belgian chocolate mastery the Gold Collection is known for, but also presents an avant-garde meeting of heritage and innovation.

“We crafted tantalizing and unexpected flavors that bring in front of the stage indulgent fillings,” says Chef Apostolou.

“The Gold Discovery box is filled with a brand new flavor offer and concept.” Apostolou, whose connoisseur Reserve Privée collection was a 2015 gold medalist in the Belgian edition of the International Chocolate Awards, says the Gold Discovery was inspired by the team’s collective passion for complex textures and refined flavour combinations.

Closely working with industrial designers, the Gold Discovery

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team crafted ultra-modern and sophisticated new chocolate shapes. The new collection also hints of colours that excite the eyes. The end product? A visually stunning update to a timeless classic that surprises and seduces the palate.

“We made about 40 different proposals for this Gold Discovery Collection, created about 120 iterations in total behind the 16 flavours,” says Chef Apostolou. The assortment includes creative combinations like passionfruit and pink pepper and strawberry and lychee, as well as a new innnovation called the “blond” chocolate, which has a distinct caramel flavour.

Delicious New Innovation Consumers can enjoy a pair of blond pieces in the collection — the Artisan Caramel and the Ecusson II Blond. The Artisan Caramel is a milk chocolate piece infused with blond chocolate and caramel mousse. The Ecusson II Blond, meanwhile, goes all in with the caramel. It is a chocolate caramel piece surrounded by caramelflavoured blond chocolate.

The Eclipse Fraise Litchi and the Eclipse Passion, both fruity pieces, are inspired by the Chinese culture. The Eclipse Passion is a fresh passionfruit ganache with a hint of pink pepper flavouring in a dark chocolate shell. “From the study with our consumers in China, fruity combined products are very welcomed,” says Apostolou. “The Eclipse Passion is a gift we designed for Chinese

Premium Chocolatier PHILOSOPHY

FAST FACTS

For over 90 years, GODIVA has created the world’s most elegant, hand-crafted chocolate to please and delight customers, from royalty to workers, adults and children. Only the finest quality Belgian chocolate is used, along with high-quality ingredients for fillings and decorations. The company strives to be a business whose goal is customer satisfction and delight.

• With exquisite taste, premium quality, seasonal packaging, exclusive boutiques and innovative products, GODIVA Chocolatier is dedicated to over 90 years of excellence and innovation in the Belgian tradition.

• GODIVA Chocolatier produces many different chocolate pieces that fall into different categories and are often mixed and matched to create a wide range of collections for personal, sharing, holiday and special occasion use.

This page: 2017 GODIVA Gold Discovery Collection consumers.” The Eclipse Fraise Litchi, on the other hand, is milk chocolate filled with strawberry- and lychee-infused white chocolate mousse.“We did a few food pairings when selecting the ingredients and we believe the freshness of the lychee element matches this piece and it elevates the flavor of white chocolate mousse,” explains Chef Apostolou.

Nutty Experience Fans of nuts in their chocolates are rewarded in the Gold Discovery Collection. The Allure Pécan is a pecan and creamy chocolate praliné surrounded by milk chocolate whilst the Volupté II is milk chocolate filled with hazelnut praliné with crunchy shortbread and macadamia nuts. The Couer Lait II and Couer Blanc II, meanwhile, are milk chocolate and white chocolate pieces infused with GODIVA’s signature hazelnut praliné respectively.

Other pieces in the collection represent subtle takes on classic flavours. The Couer Blanc II is GODIVA’s signature hazelnut praliné in a white chocolate shell whilst the Lady Noir II is a dark chocolate piece filled with creamy white chocolate ganache laced with vanilla. The Egérie Noir, which Chef Apostolou originally created for GODIVA’s 90th anniversary, is also included in the Gold Discovery Collection. It is a smooth raspberry ganache with a delicate hint of rose petals surrounded by dark chocolate.

But the Amande Marquise is Chef Apostolou’s favorite amongst the 16 new chocolate flavors, calling it “One of the best things GODIVA can deliver.”The milk chocolate exterior envelopes a creamy almond center with whole roasted almond filling.

“It’s a very exciting multi-sensorial experience when you bite inside. There is a very rich chocolate and nutty flavor,” says Chef Apostolou. “It’s classic and modern at the same time.”

Chef Apostolou recommends to start the chocolate journey into the Gold Discovery by beginning with a chocolate ganache, followed by a nutty or praline piece, then to the warm notes of vanilla or coffee, next moving to a touch of caramel, before closing with a fruity piece. “The flavors expansion and innovation from hazelnut praline, pistachio praline, to creamy chocolate praline will enrich customers’ expectation,” he says. The sequence, he points out, allows the palate to perceive all the subtleties and nuances of the Gold Discovery Collection from the first to the last chocolate.

A pale gold satin ribbon crowns the Gold Discovery Chocolate Gift Box, a finishing ornament befitting the GODIVA brand. The Gold Discovery Chocolate Gift Box is not only meant to be enjoyed alone but is also very much perfect for sharing amongst family and friends and comes in boxes of six, nine, 15, and 20. For one of GODIVA’s visionary chocolatiers, the Gold Discovery Collection is a culmination of his early exposure to chocolate-making. Chef Apostolou’s childhood was filled by chocolate aromas from the nearby chocolate factory near his home in Brussels.

At the age of 12, Chef Apostolou decided that he wanted to become a chocolatier. After more than three decades in the industry, Chef Apostolou continues to discover exciting possibilities with chocolate. “Our brand’s heritage is always in our hearts, but we are building a new horizon in premium chocolate craftsmanship, one that is daring, unexpected and utterly beguiling,” he says.

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7

HANG SENG BANK

ENTREPRENEURS’ LONG-TERM PARTNER for growth minimum logo size : 8mm

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ounded in 1933, Hang Seng Bank has for more than 80 years served the businesspeople of Hong Kong, and their customers, through its trusted brand, large and loyal customer base and extensive distribution network. Hang Seng Bank today provides a full suite of commercial banking services – from business account, loans and trade financing to receivables and payment solutions – across eight Business Banking Centres.

Ten years ago, this banking brand established a wholly-owned subsidiary in mainland China. The Hang Seng brand also forms one of the bedrocks of Hong Kong’s capital market through the independently operated Hang Seng Index – globally acknowledged as the key indicator of sentiment in Hong Kong.

But it’s not only this impressive presence and renown which gives Hang Seng Bank its status as a leading commercial lender in Hong Kong. As of mid-2017, Hang Seng Bank has a market capitalisation of HK$312.2 billion. Furthermore, its commercial banking arm posted a pre-tax operating profit of HK$2.99 billion, up 21% in first half of 2017, stellar growth adding to several milestones over recent years.

In 2010, Hang Seng Bank was lead arranger of the first ever CNY-denominated syndicated loan, marking a breakthrough in offshore finance to complement its status as the second largest syndicated loan arranger in Hong Kong/Macau by deal number and third largest by deal amount in first half of 2017.

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To retain its status as a mainstay of commercial banking in Hong Kong, Hang Seng Bank, in the words of its Head of Commercial Banking, Donald Lam, regards itself as a long-term partner to its clients. To that end, it sees its syndicated loans business as just one part of a desire to meet the cross border financing needs of Hong Kong enterprises with operations in the Pearl River Delta, as well as those looking to ‘go global’.

Providing long term partnership “We will support commercial customers as they seize business opportunities created by major developments such as the Guangdong-Hong Kong-Macau Greater Bay area and the Belt & Road initiative,” Lam comments. “A dedicated team has been established to coordinate different departments to follow up business under Belt & Road, providing loan facilities and insurance coverage for their infrastructure construction and industrial investment projects.”

For clients to seize this cross-border opportunity, Hang Seng will strive to provide a more diversified range of financial products, utilising its South China network; and enhance its transaction banking and liquidity management services, so it can support businesses regardless of size of sector. It continues to improve its cross-border infrastructure, offering a full suite of financial management solutions, and of course seek to enhance its own

BEST COMMERCIAL BANK PHILOSOPHY

FAST FACTS

Strive for service excellence & build long-term relationships with customers.

• Founded in 1933, Hang Seng Bank serves over half of Hong Kong’s adult population through about 260 service outlets.

• They have a team of professionals in 8 Business Banking Centres to provide a full range of commercial banking services, from business account opening to loans and trade financing, as well as cash management, etc.

business by taking advantage of mainland China reforms.

Financial technology is the main trend for banking industry.“As well as introducing financial technology to commercial banking services, we have constantly optimised our digital services,” Lam says. “These include upgrading Business e-Banking platform and expansion of the Business Banking Mobile App, where we aim to provide customers with greater convenience, speed and choice as to when and how they manage their financial needs.”

This year Hang Seng has an enhancement of its Business Banking Mobile App through which clients can upload business loan and credit card applications, and purchase insurance to speed up the application process and manage finance on the go.

In cash management, the bank in 2016 launched Global Liquidity Solutions, allowing customers to track their balances and utilise auto-sweeping to make the most efficient use of idle funds. Its commercial card proposition now includes a virtual card number – Pay Smart – to help clients control disbursement and procurement spending. They have also brought in round-the-clock online foreign currency exchange.

Hang Seng Bank will continue to expand its services to ensure it meets the needs of existing commercial customers and attracts new ones. “In addition to traditional customer segments such as manufacturing, tourism, retail, wholesale, trading, catering and real estate businesses, we will expand our customer base by supporting

Opposite page: Donald Lam, Head of Commercial Banking, Hang Seng Bank This page: Hang Seng headquarters; Their Business Banking Centres have teams of professionals empowering your business growth with tailored solutions; A series of videos to share the true spirits of entrepreneurs. new industry sectors, including information technology, biomedical, infrastructure and energy industries,” Lam says.

Utilising fintech and other advanced technologies and techniques – whilst never losing sight of its core strengths – means Hang Seng Bank will continue to serve its clients more efficiently and gain greater insights into their needs. “Our investments in technology, data analytics and our physical and digital service channels have improved our ability to engage more effectively with customers, offer them greater convenience and choice, and respond quickly to their changing needs and market developments,” concludes Lam. The bank offers not just daily banking, but also business advice for companies at different stages of development. It set up a dedicated YouTube channel to share the real stories of customers as a guide for emerging business talent. “The channel also includes 19 videos with practical information to demonstrate our solutions to different businesses, including tips on business account opening, digital banking, cash management, loans and trade finance, amongst others, as well as specific solutions for retail and catering businesses,” explains Lam. As well as disseminating this information via YouTube – where it received more than two million clicks within six months of release – Hang Seng also gives mainland Chinese clients the benefits of its client’s experience, and it also serves as a reference about its commercial banking product suite, through its official Hang Seng Bank (China) WeChat account.

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Wilson Tang Chief Executive Hang Seng Insurance Company Limited 90 HONG KONG BUSINESS ANNUAL 2018

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Hang Seng Insurance Company Limited

Hang Seng Insurance paves way for a hassle-free retirement

W

ith rising living costs, longer life expectancies and a rapidly aging population, it’s no wonder that majority of Hong Kong people are wracked with worry over how to secure an adequate retirement fund. Indeed, it is never too early or too late to start planning for the ideal retirement, whether you’re at the peak of your career, or about to take a midlife leap.

A recent government survey showed that the average monthly spending of a retired couple household ranges from HK$6,600 to HK$38,300. MPF assets and family contribution can render only partial support, retirees need to accumulate substantial savings before they can live in a self-reliant manner.

The same survey revealed that Mandatory Provident Fund (MPF) assets are inadequate to cover retirement needs. On average, a scheme member only had HK$144,000 in MPF assets, which could meet less than two years of spending of a retired couple household.

In other words, even with family support and MPF assets, elderly persons still need to accumulate substantial saving before retirement.

As living standards continue to rise, more and more people are realizing their desire for a comfortable retirement. Rising prices lessen the value of MPF assets, with local inflation rising from -0.4% to 4.4% over the past decade. To beat inflation and realise the ideal retirement life, a prudent financial plan with both wealth accumulation and protection features is necessary.

Whilst the Hong Kong Mortgage Corporation (HKMC) is planning to launch the Life Annuity Scheme in mid-2018, only citizens aged 65 or above are eligible for this program. This means that those who require earlier or more flexible retirement planning methods need to look for other products which can support their needs.

Zoning in on retirement and wellness This is where Hang Seng Insurance provides an edge. Backed by decades of experience and financial strength, Hang Seng Insurance’s diverse range of products provide customer-centric service for all ages and backgrounds.

For more flexible retirement planning such as early retirement, one may consider insurance annuity plan. Hang Seng Insurance offers different kinds of annuity plans with protection elements, such as Accidental Death Benefits, Unemployment Benefits and Terminal Illness Benefits. Some plans may also allow you to opt for Cancer Benefits, Wavier of Premium Benefits, and Payor’s Benefits to suit different needs of clients. Some plans embedded with Annual Dividends and Terminal Dividends for boosting wealth accumulation. The age limit for application is comparatively flexible, which fits clients with different retirement plans.

Retirement insurance plans are vital to help clients build up wealth through comparatively steady asset accumulation whilst offering capital and life protection, paving the way for a hassle-

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Hang Seng Insurance Company Limited

Hang Seng Bank’s Prestige Banking Centre

Hang Seng Bank is the parent company of Hang Seng Insurance

Hang Seng Bank’s iPoint Sales & Service Centre

free retirement life. At the same time, family members will enjoy much-needed protection whilst legacy planning can be laid down on a solid track. When a medical protection plan is in place as well, clients will be able to enjoy utmost protection after retirement.

Hang Seng Insurance offers universal life insurance products targeting different segments that the sum insured can be flexibly adjusted according to different needs of customers at different stages of their lives, creating an integrated solution covering life protection, wealth accumulation and legacy planning altogether.

For health, Hang Seng Insurance provides enhanced protection products with different levels of protection to cater for different customer needs. PreciousLife Critical Illness Life Insurance Plan, for example, provides coverage for 128 early to late-stage critical illnesses that safeguard against the strike of critical illness. It also offers Severe Child Illness Benefit(1) providing critical illness protection for life insured under 18 years of age, and allowing parents to provide care to their children.

A diverse product portfolio At present, Hang Seng Insurance offers various products ranging from education funds, retirement planning, mortgage protection, legacy planning and critical illness protection to provide a wealthand-health total solution for customers who have different insurance needs. Hang Seng Insurance’s plans provide choices on the payment term and cash withdrawal options to better cater for the needs of different individuals for retirement savings, protection and legacy planning. Some plans also allow the life insured to adjust the sum insured and pay unscheduled premiums or withdraw cash from the policy account when needed, giving him or

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her greater financial flexibility in the long term.

Some supplemental benefits are also available, such as the waiver of premium on disability benefit and the payor’s benefit, which can help ensure the continuity of the policy despite any sudden changes. Besides offering a wide range of life insurance products, Hang Seng jointly provides medical protection schemes with the health insurance specialist in Hong Kong.

In this year, Hang Seng Insurance’s products focused on savings plans. But with the evolution of customer lifestyles and in consideration of the uncertainty of the investment market and global economy, customers were requesting products that suit their goals in different life stages.

For such, Hang Seng Insurance went on to launch annuity insurance products which provide guaranteed interest and life insurance coverage with flexible payment terms. Its product launches over the years mirror the company’s keen attention to the needs of its customers, as well as market demand.

In 2006, in response to the public concern about health and medical protection due to the attack of SARS and swine influenza, Hang Seng Insurance launched a series of protection plans that provide critical illness protection, followed by a corporate term life plan in 2008. Meanwhile, to cater to the insurance needs of the elderly, the company launched SavourLife II Annuity Life Insurance Series and Exquisite Universal Life Insurance Series for retirement and legacy planning.

How is Hang Seng Insurance able to provide these? As a whollyowned subsidiary of Hang Seng Bank Limited (“Hang Seng Bank”), Hang Seng Insurance is able to leverage on its parent’s competitive edge to serve its customers.

Outstanding Insurance Company INSIGHT

FAST FACTS

The future is filled with uncertainty but Hang Seng Insurance helps customers to eliminate it by providing a total solution with both wealth and health-related products.

• In early 2018, Hang Seng Insurance will launch a new online insurance program, which provides coverage to life insured against cancer in terms of medical treatment cost.

• Hang Seng Insurance ranked number 2 in RMB life insurance market and number 4 in bancassurance market in the Q1 - Q2 2017 (source from Insurance Authority, Quarterly Release of Provisional Statistics for Long Term Business January June 2017).

Hang Seng Insurance provides a wide range of product solutions that suits different customer needs

Leverage on strength With the highest rated banking services in Hong Kong for 12 consecutive years(2), Hang Seng Bank brings not only comprehensive services to customers, but also convenient channels for quick and easy bank access. Customers are confident of the bank’s credibility and competence in its long history of outstanding service for over 80 years in Hong Kong. As a testament to this, Hang Seng Bank has been named as “Best Domestic Bank (Hong Kong)” by the Asiamoney in 2017. Hang Seng Bank was also perceived as the Most Recommended Bank by customers in Hong Kong according to the TNS Banking Study 2016(3), and as a Trusted Banking Partner for over half of Hong Kong’s population.(4) Taking advantage of Hang Seng Bank’s extensive branch network, Hang Seng Insurance is able to provide insurance services to customers in a more convenient manner. A capable and competent team of professional relationship managers stationed throughout the branch network are readily available to formulate tailor-made insurance solutions based on different customer needs. Further, iPoint Sales & Service Centres located in convenient locations allows customer representatives to serve customers who are only available outside office hours, specifically until 7:30 p.m., with some locations even operating on Sundays.

What’s next for Hang Seng Insurance?

As a true innovator, Hang Seng Insurance is working hard in the area of product innovation: developing products in response to customers’ changing needs and market trends. It is also able to offer customers a wide range of products with premium services before and after the application of plans. The current trend is for consumers to go digital for banking and insurance services.

Therefore, Hang Seng Insurance will launch a new online insurance program.

The new program allows an easy, straightforward online application for life insurance policies, which means that clients will no longer be constrained by traditional face-to-face application channels. The program ensures that clients can get the life insurance protection that suits for their needs, whilst at the same time improving efficiency and speed.

Finally Hang Seng Insurance expects to be busy developing and executing several expansion and growth plans. For mainland customers applying for policies in Hong Kong, Hang Seng Insurance plans to roll out product and service enhancements to meet the uptrend market coming from one of the world’s economic powerhouses. In particular, the focus will be put on legacy planning products to cater to the rising demand due to the boom after the economic reform, and to address the concern about the uncertainty of succession planning policy in mainland China. Hang Seng Insurance is also working on products and services which would assist mainland clients with their retirement planning needs. For Hong Kong’s own high-net-worth market, meanwhile, the company will continue to develop tailor-made services and products.

At the end of the day, Hang Seng Insurance aims to be a total solutions provider—providing an integrated insurance package that best serves its customers. Through its products and services, Hang Seng Insurance hopes to help customers arrive at the right product to suit their concerns, with the goal of achieving peace of mind and better living. For Hang Seng Insurance, this means minimizing interruption brought by the unexpected, and maximizing future possibilities, all for a better future for its customers.

Notes: (1) Claims for Severe Child Illness Benefit must fulfil respective definitions together with the terms and conditions as stated in the Plan’s policy schedule. For details, please refer to policy provision.

(2) According to TNS Banking Study 2005-2016, amongst personal banking customers of the 8 major banks in Hong Kong.

(3) According to TNS Banking Study 2016, amongst personal banking customers of the 8 major banks in Hong Kong.

(4) Based on the provisional estimate of Hong Kong Population aged 18 or above in end 2016 released by Census and Statistics Department and the number of Hang Seng Bank Customers aged 18 or above holding HKID card of the same period.

Remarks: The above information is a product summary of information for reference only.

Please refer to the product leaflet/ flyer and contract for the detailed coverage, exact terms and conditions and exclusions of the relevant life insurance plans.

The above designated Life Insurance Plans are underwritten by Hang Seng Insurance Company Limited (“Hang Seng Insurance”). Hang Seng Insurance is authorized and regulated by the Insurance Authority of the HKSAR. Hang Seng Bank Limited is an insurance agent authorized by Hang Seng Insurance.

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7

Ladycode

Ladycode is making waves in the fashion industry

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hile the second-hand luxury market is in full swing in the West, it is yet to be recognised in most parts of Asia. Ladycode, an versatile e-commerce platform newly founded by fashion designer Heidi Chan and nine other partners, is poised to blaze a trail for the online fashion consignment and second-hand luxury wearables models across Macau, Hong Kong and China.

With a dedicated website and an up-coming mobile app, the Macau-based e-commerce site is borne out of a desire to help women glam up themselves with a combination of services including pre-owned consignment, buying agent and made-toorder fashion. All these combined have set Ladycode apart from the mushrooming e-commerce crowd and snatch this year’s online luxury consignment services award.

The idea of Ladycode begins with a plethora of designer gowns that were gathering dust in the wardrobes of Heidi and her friends.

“A lot of women should have come across the situation where you have a pile of clothes that are worn just several times and you simply don’t know what to do with them. It’d be a waste to give them away,” says Chan.

“Ladycode serves as a platform for shoppers to trade in processions that they no longer want and allows them to keep refreshing their wardrobes by paying less.”

Secondhand apparel is now a $18 billion industry that is

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expected to grow by around 11% each year to $33 billion by 2021.

Resale items on Laydycode code are gently used and authenticated luxury goods spanning designer clothes, handbags and jewelleries with a price tag from a few thousands to hundreds of thousands of dollars. The site will collect sellers’ processions at their homes and estimate the market prices right away.

Buy-to-order model The site now carries a curated mix of more than 20 types of brand new and pre-owned fashion and accessories available for purchase and for rent.“For those who have occasional events but can’t afford to buy luxury gowns every time, rental could be a solution,” Chan notes.

The site also sells vintage luxury items sourced from all over the world to target the fashion savvy, as it supports individuality and adds uniqueness to the wardrobe without breaking the bank.“Vintage iconic labels, particularly branded handbags, are sought-after worldwide,” says Chan. Shopping at brick and mortar stores allows consumer to touch and feel the products. But searching for what you have in mind could be a herculean errand.

Ladycode is happy to do the heavy lifting.

With fashion buyers scattered around the world, Ladycode also runs with a buy-to-order model where shoppers can request certain items and receive them in weeks. “Shoppers brief us and we’ll

On line luxury consignment services PHILOSOPHY

FAST FACTS

Beauty is in the heart of Ladycode’s philosophy. The e-commerce site is built upon a relentless focus on bringing out the beauty in women by exploring their needs and providing them with fast and quality-assured luxury deliveries from all over the world. To celebrate women’s beauty, the site is designed to benefit both the sellers and the shoppers, where sellers can seek for the next owner of their precious items whilst shoppers can enjoy a plethora of luxury items from wearables to skincare products.

• Launched last year, Ladycode is an e-commerce site that offers pre-owned consignment, buying agent and made-to-order services. Shoppers can trade in their processions at no less than $5,000.

With professional buyers around the world, the site carries a mix of around 20 types of brand new luxury

This page: Ladycode showroom Opposite page: Heidi Chan, Ladycode have our buyers to source the requested items right away from around the world. Normally it would take a week or two for simple requests like branded handbags. It may take longer for exclusive fashion items of course,” says Chan.

Luxury on point But Ladycode doesn’t rest on laurels. To better achieve its tailored customer approach, an made-to-order service is also on the list to target the premium end of the market, starting from $20,000.

Dedicated butlers will be sent to shoppers’ homes and get the body measurement for bespoke gowns and clothing.

Ladycode has deployed a group of buying agents who have a vast network of trusted sellers mainly in the UK, France and Japan for the latest luxury items, not only for the ladies but also for the dandies. “We receive a lot of requests for luxury watches. Many customers come to us for premium watches because tax regulation is high in China,” says Chan.

Products on the site are generally 20% cheaper than market price, as the shopping agent model allows the company to keep inventory levels low. “We don’t keep too many items in stock as we mainly source products for clients upon request.”

Just like many renown fashion labels, Ladycode has also branched into skincare including a branded face mask range. “It is every woman’s dream to look pretty, and this will never change.

Our mission is to help women look beautiful from head to toe,” Chan continues.With four staff so far, the business is perhaps small in size, but big in ambition. The company is set to enter Hong Kong next year with mainland China in the pipeline,” says Chan. Our first customers were our friends. We started to promote the business with mainly word-of-mouth and referral; but as the business grows, we are rolling out more multi-channel marketing campaigns to widen our customer base. One drawback of online shopping is that you can’t try the items on. So we are looking at the possibility of a pop-up store down the road,” Chan concludes.

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7

Lan Kwai Fong @ Kau U Fong

Culture meets comfort at Lan Kwai Fong Hotel

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t’s easy to get lost in the hustle and bustle of Hong Kong for travellers, that standing out may seem like a hopeless cause.

But Lan Kwai Fong Hotel @ Kau U Fong has done just that – become a haven for comfort, art, and style for the young and young-at-heart who need a break from the city noise. Located somewhere between the bustling urban district and the culturerich Sheung Wan, the Lan Kwai Fong Hotel caters to discerning travellers who are seeking a boutique hotel that can keep up with their fast lives.

Immerse in culture “We aim to offer a taste of arts décor, interior design and amenities provide a unique experience that put our guest deep into lifestyle and culture. We continue to stand out ourselves with its attention to details and passion for inspiring travelers,” says general manager Rebecca Kwan. She says they keep these in mind as they strive to differentiate their services and strengthen the loyalty of their customers, 32% of whom are European, 23% Chinese, 12% American, 8% Australian, and the rest hailing from Japan, Korea, and other Southeast Asian countries. “Nowadays, travelers appreciate a place for people to co-mingle and bring them together for interaction. We constantly create unique experience and activities that make our guests interest to coming back, and have different experiences that could share with the

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others,” says Kwan.

The Lan Kwai Fong Hotel’s daily happy hour features complimentary wine and snacks as well as other evening activities for guests at the Breeze Lounge, for example, wine tasting events, cocktails, and live music.

Hotel also partnered with The Hong Kong Arts Centre to invite well-known artists to the Hong Kong, where talked and shared their art projects, and discussed their philosophy to our guests; and Professor Wong from the Old Master Q to sign autographs and present his original drawings to the hotel guests.

The master pieces of a famous French street muralist can be discovered on the façade of hotel, and now it becomes a popular tourist spot to take pictures. Various art pieces have also been displayed in Hotel lobby. For example, a Fine Chinese Painting which is one of the most famous collections from Sotheby’s Auction, and “Lost City” ; a designer lamp from a well-known local artist. Kwan says nowadays travelers want to experience the authentic local instead of just a place to stay. “We have prepared a hand drawn travel guidebook with local advice about the neighbourhood of our hotel. This is a unique guidebook that specially selected and designed by our Team,” she says. Being a neighborhood in the area for 12 years, our team has tried out all of the restaurants and knows all the best and up-to-dated local recommendations.

Boutique Hotel PHILOSOPHY

FAST FACTS

“We enjoy transforming hotels into truly interesting destinations with a fascinating Hong Kong character for travelers. It is always important to explore, to experience, to stay flexible and innovative all the time,” says the general manager of the Lan Kwai Fong Hotel.“ We develop platforms for our associate to further develop their talents, and we value how our team inspires themselves to creating guest experience,” adds Kwan.

• Lan Kwai Fong Hotel @ Kau U Fong is one of the boutique hotels of d.Collection being owns and manages by Dorsett Hospitality International, which is under the Far East Consortium Limited. The group currently owns, operates, and develops 52 hotels, providing around 11,000 rooms to customers in key destinations such as Hong Kong, Malaysia, Singapore, China, London, Australia, and Japan.

This page:The Breeze Lounge; Deluxe Harbour View Room

“It has been shared with all our guest and they are really impressed with that. In between those skyscrapers, travellers may discover that there is actually a cosy coffee shop hidden at the corner, an extraordinary designer shop on the alley, a quintessential dai pai dong in the centre of a street,” says Kwan.

Unique partnerships Hotel also has strong partnership with restaurants, unique shops in the area, associations and arts & cultures organizations etc … which offer discounts or special promotions, and we are also able to secure complimentary tickets for some of the major events in town for our in-house guests. “We do make sure we are part of the conversation in the city’s scene, also providing experience that the guest couldn’t otherwise get,” says Kwan. These elements, she explains, make the boutique hotel attractive to the adventurehungry young crowd that prowl the streets of Hong Kong. “The hotel industry is rapidly changing to reflect the travel trends of this hip, youthful generation. It is this desire for authenticity that drives millennial travellers to seek out hidden gems, local food, and

Opposite page: Rebbecca Kwan, general manager at Lan Kwai Fong Hotel @ Kau U Fong gathering places,” says Kwan.

“We are geared more towards millennial crowd because of our design, central location in an amazing neighbourhood,” she adds. This kind of philosophy even extends to the Lan Kwai Fong Hotel’s own employees. If creativity in service is the goal, then it begins with an empowered crew, says Kwan. “We recognize our staffs have more to offer in skills and talent than they are currently being asked to demonstrate at work, we have created platforms for our associates to further develop their talents,” she says. She then shared the case of their bell captain in the concierge team, who plays the saxophone during his off-work hours. Upon learning about their worker’s musical talent, the hotel management invited him to perform live performances at the Breeze Lounge.

He has the passion and feeling more engaged when interacting with our guests,” Kwan says. Now, the Lan Kwai Fong Hotel is on the lookout for more dynamic events on arts and culture so that they can enrich their guests’ experience even further. Kwan says they aim to connect people “with the ideal place to stay through sharing stories about hotel and the local culture.”

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Lifestyle Insurance

Avoid crippling litigation costs with proper insurance

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t takes twenty years to build a reputation, and just five minutes to ruin it. Professionals should keep this old adage in mind when offering their services to clients, as they expose themselves to the possibility of litigation should anything go wrong. A lawsuit can make or break a business, with rising litigation costs that cannot be easily shouldered by most professionals.

“In today’s world, in which litigation is increasing, people are eager to take advantage. A lawsuit can be brought against any professional for alleged or actual mistakes and even if no error was made, simply defending these suits can be very costly,” warns Neil McCormick, Senior Manager, Insurance & Estate Planning, Platinum Financial Services. “Any claims against you, be they legitimate or unfounded, will typically require significant funds to investigate, defend and settle. The damage to reputation can also take a financial toll on your balance sheet.”

All-around protection This is where a Professional Indemnity (PI) or Professional Liability Insurance policy comes in handy. Professional Liability Insurance will indemnify insured parties for losses that they become legally liable to pay as a result of claims alleging a breach of their professional duty in the provision of their professional services. It also covers associated legal costs in defending these

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claims. Professional indemnity insurance provides protection for businesses, sole traders or freelancers that offer advice or services to third parties including both the general public and other businesses. “As a result of the professional service that you offer you owe a duty of care to those who might rely upon what you tell them. This means that a vital part of your insurance will be Professional Indemnity cover,” says McCormick.

The PI policy can offer coverage for compensation which a professional might need to pay to correct a mistake. It covers any legal costs due to negligence, such as giving incorrect advice or making a mistake in one’s work.

Traditionally, the coverage was closely connected with high-risk professions such as lawyers, doctors, engineers, accountants and financial advisors. At present, however, the term “professional” is applied broadly and as such many different professions should have Professional Indemnity in place.

There are a variety of ways in which professional services providers can make mistakes from which a lawsuit can arise. For instance, professionals can overlook a critical piece of information, misstate a fact, or be misunderstood. They may also be sued by their clients over allegations such as: error, omission, or negligence in providing a service; failure to provide a service, fraud, improper documentation, malpractice, nondisclosure, violation of state and federal law. “We now live in a world with ever-increasing demands

Insurance Broker – Business & General Insurance PHILOSOPHY

FAST FACTS

Our guiding principles are Independence, Competence, Client Support & Innovation combined with a holistic product range that enables us to offer the most appropriate solutions for our clients’ needs.

Business Class Group Core values • Committed, loyal, client focused team • Staff have a depth of specialist experience coupled with ongoing training and mentoring to strive for continuous improvement • Led by Directors with a passion for perfection & drive for success • PFS is well respected by clients for it’s core values of honesty & integrity

Opposite page: Mark Kirkham, chief executive of Platinum Financial Services being placed upon the services that we offer and mistakes are not easily forgiven. Place this against a backdrop of a stricter regulatory and contractual framework that we must all work within and the risks are clear. No professional is safe without the right PI insurance to protect them from civil liability as well as financial and reputational loss,” McCormick notes.

Backed by the best Professionals should absolutely not take the chance that litigation costs might cripple their company. Consider, for instance, the experience of an Interior Designer who accepted a contract for the design and fit-out of a boutique hotel. When the configuration of the lift and lobby area did not meet the original project specifications as there was not sufficient room within the concierge and reception area, the client was saddled with additional costs, materials and overall delays to the project. The interior designer was held liable for this breach. With professional indemnity coverage, the interior designer can rest easy knowing that the insurance policy will address litigation costs.

When providing a quotation, insurers consider a number of factors in determining the type of coverage and terms and conditions that will be imposed. Considerations include (but not limited to): scope of professional services provided; annual fee income or projected revenue; split of activities across different jurisdictions; claims history; the scope of coverage including the limit of liability and deductible required.

“Policies may vary according to the insurer but a professional

indemnity insurance policy would typically not cover the following: Insolvency, Terrorism, Intentional damage or wrongdoing, pollution, general liabilities including property damage or bodily injury, pending or prior circumstances and/or claims,” McCormick adds.

Platinum Financial Services offers a number of policies from top institutions, to cover virtually all requirements. Lifestyle Insurance is the dedicated independent General Insurance arm of Platinum Financial Services. Lifestyle Insurance aims to provide a first class, impartial, comprehensive General Insurance service that provides value for money and reliable, straightforward service to save clients both time and money.

Platinum Financial Services is the ideal financial services provider of the 21st century - combining core traditional values of excellent service and sound independent financial advice with innovative client-oriented products and services. It guarantees some of the most competitive premiums available anywhere, and offers a diverse range of tailored financial and investment products, such as capital investment, retirement planning, life insurance, general insurance, offshore banking, international income protection and mortgage repayment, amongst others.

Platinum Financial Services is a member of the Business Class Group. The Business Class Group consists of a number of specialist operating brands providing a comprehensive range of quality services to the professional expatriate and high-net worth local community across Eastern Europe and Asia. Headquartered in Hong Kong with offices in China and Thailand the Business Class Group assists both private individuals and corporate businesses.

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7

MassMutual Asia

Living the Dream with MassMutual Asia

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n a fast developing world, MassMutual Asia emphasizes innovation in their products and professional services. “We are living the vision of “MassMutual – where dreams are made”, says Jeanne Sau, Chief Marketing Officer of MassMutual Asia.

“We place great emphasis on innovation and developing flexible solutions in risk- and wealth-management to help customers realise their long-term goals and dreams through professional financial planning services”. MassMutual Asia’s unique market positioning and distinct branding strategy are extremely important in helping the company meet the competitive challenges of and make itself stand out in the highly competitive market environment.

Flexible Innovation MassMutual Asia is an energetic and progressive company that has been able to grow steadily with double-digit average annual growth in new individual business.

Back in 2002, MassMutual Asia was the first insurer in Hong Kong to offer a guaranteed lifetime annuity plan. The company remains at the forefront of the industry, enjoying around 50% share of the local annuity market in policy count. This success is largely down to its unique product design. MassMutual Asia’s Target Lifetime Annuity Saver is an innovative product specifically designed for the purpose to help customers hedge the financial

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impact of longevity risk. It is the only annuity plan on the market that offers a guaranteed lifetime annuity payout, without any pre-set period, even the insured lives until 100 years old or even longer. This effectively counteracts the costs incurred due to an unexpectedly long lifespan. These can be compared to other annuity plans on the market that only provide pre-set installment payments for up to a 10- or 20-year period and, as these do not provide a lifelong income guarantee, thus they may not be able to adequately cover the risk of prolonged life expectancy.

“One of our business strategies is to maintain our market leading-position in the retirement market by offering the market unique lifetime annuity and a comprehensive suite of retirement solutions,” says Jeanne, adding, “this allows us to fully cater for customers’ varying risk appetites and retirement needs.”

To respond to customers’ ever-changing insurance needs, MassMutual Asia introduced the very first universal life insurance plan to the Hong Kong market in 1995. Unlike traditional life insurance plans, the revolutionary universal life insurance offers flexibilities to increase the coverage. Best of all, the premium rate for new coverage will be based on the insured’s age when policy was first issued instead of current age. And it offers a number of financial flexibilities to cope with emergencies.

The number of hospitalizations due to critical illnesses has shown a steadily increasing trend, and critical illnesses are also

​Innovative Insurance Company PHILOSOPHY

FAST FACTS

Living the vision of “MassMutual – where dreams are made”, MassMutual Asia has developed one of the most innovative product and service platforms in the Hong Kong insurance industry, offering a suite of award-winning financial planning solutions in protection, retirement and investment. In addition, MassMutual Asia strives to uphold its commitment to serving the community and enthusiastically supports charity events.

• Established in 1851, MassMutual has over 165 years of experience in risk- and wealth-management services • Ranked in the renowned FORTUNE as one of the “Five Largest US Life Insurance Companies” • Enjoys exceptionally high financial ratings from A.M. Best Company (A++), Fitch Ratings (AA+) and Standard & Poor’s (AA+)

MassMutual Asia’s annuity campaign in the Tsim Sha Tsui MTR station platform and at Cross Harbour Tunnel; Target Lifetime Annuity Saver policy owner Rex Tso acts as spokesperson for MassMutual’s annuity products 目標必達終身年金保 Target Lifetime Annuity Saver

《彭博商業周刊》金融機構大獎2016-2017

退休保險計劃 - 卓越大獎

striking patients at a younger age. On average, one in every five women or four men may suffer from cancer. Worst of all, up to 40% of those newly diagnosed with cancer range from people in their 20s to 50s, and are often in the middle of their careers. Hong Kong people are increasingly concerned about health protection and many have critical illnesses insurance plans with coverage ranging from HK$500,000 to HK$1 million. “Cancer treatment can be extremely costly,” explains Jeanne adding, “especially if the newest treatments and drugs are used, and treatment is usually lengthy. In order to secure adequate benefits to cover the costs of cancer treatment, it is advisable for customers to take out a comprehensive critical illness protection plan.”

MassMutual Asia adopted a blue-ocean strategy by identifying unfulfilled risk- and wealth-management needs. “Taking a ‘breadth and depth’ approach in designing PrimeHealth Extra Care as an innovative solution, we bundled critical illness and life protection as well as savings into a single policy,” says Jeanne, “The plan allows multiple claims for common illnesses such as cancers.”

MassMutual Asia goes the extra mile with their PrimeHealth Extra Care enabling multiple claims for cancer. “Benefits are paid no matter whether the cancer is a recurrence or metastasis of the preceding cancer, or is an existing or a new cancer,” says Jeanne, “provided that the period elapsed between the diagnosis dates of the respective cancers is three years or more, which is substantially

《指標》2016年財富管理大獎

退休產品 - 同級最佳獎

Opposite page: Jeanne Sau, Chief Marketing Officer, MassMutual Asia Ltd.

shorter than the 5-year period required by similar critical illness plans in the market.

PrimeHealth Extra Care also offers the market-unique extension of life protection, which enables customers diagnosed with a critical illness to take out a permanent life insurance plan, without the need to provide proof of insurability. This provides protection to the insured and his/her family, just when they need it most.

The Way Forward Traditionally, insurers have limited interaction with those insured because a considerable proportion of communication relies on intermediaries. “Our solution for this is leveraging mobile technology, with specially designed mobile applications. We will be able to maximise more direct and effective touch points between our company and policyholders, and to create more opportunities to gain insight into customer needs,” says Jeanne.

Commenting on MassMutual Asia being named “Innovative Insurance Company” in the Hong Kong Business High Flyers Awards 2017, “It is a great honor for us to receive this award for four years running. The award means that we have taken the right direction in terms of product design and positioning, and is a great compliment to our product innovation capabilities and a tremendous endorsement of our business-development strategy.” says Jeanne.

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7

Mayfare Group

The secret to Mayfare Group’s gastronomic success in HK

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here’s something about a warm meal paired with a view of the spectacular Hong Kong skyline. But the high-flying restaurants of the Mayfare Group isn’t just about fine dining; there’s a hint of home in every bite, a twist in the familiar.

“Mayfare’s mantra of running the restaurant is simple…the Guest is God,” says Rajeev Bhasin, managing director. “We provide the fine food and personalised service to every customer so that each customer leaves the restaurant with a warm heart and sweet memories,” he adds.

And over the past five years, Mayfare has done just that, turning its five specialty restaurants the go-to spots to tickle the tastebuds with a variety of cuisines: Avant Thai at Michelin-recommended Namo, Indian at the tried and tested Gaylord, Pan-Asian at Tamarind, Thai and Vietnamese at Siamama, and tapas and wine at La Sala.

Satisfying adventurous palates Bhasin says they strive to preserve the tradition of each cuisine in every plate, whilst creating concoctions that appeal to the adventurous.“This allows us to cater to both client bases, the kids from the old-school and the new-block,” he says. Namo, for example, was launched in 2013 by a team led by Michelin star chef Alejandro Sanchez and Wijannarongk Kunchit. It was the first restaurant in Hong Kong to serve modern Thai cuisine,

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incorporating the most delicate of Asian dishes infused with the contemporary. Namo’s specialties, like the sous-vide and espuma from siphon bottles, propelled the restaurant to the 2016 Michelin Guide. Siamama is the favorite of the locals, whose palettes have been piqued by Master Chef Amoo’s creations. This new concept restaurant in PopCorn Tseung Kwan O serves Thai and Vietnamese “traditions with a twist.”

As for La Sala, it’s the only Mayfare restaurant that brings the West into Hong Kong. Bhasin says La Sala aims to transport the Spanish cities of Madrid and Barcelona into the Asian country, a taste of the foreign land in every bite. Then there’s Tamarind, which combines authentic Thai, Vietnamese, and Indian dishes under one roof. Its client base are mostly the executive crowd, who come looking for Tamarind’s outdoor lounge and two main dining rooms for cocktail functions, corporate events, themed parties, and even wedding celebrations.

“Be sure to stay tuned for our theme launch for this year’s New Year’s Eve ball!” says Bhasin. Gaylord, meanwhile, has become a household name, being the oldest Indian restaurant in Hong Kong. Its success in the past decades comes from a customer base composed mostly of Indians, expats, and tourists, who come back to Gaylord for some good old Indian food.

The twice-Michelin Guide recommended restaurant celebrates its 45th anniversary in Hong Kong this year, a tribute to its

F​ &B Management PHILOSOPHY

FAST FACTS

Mayfare’s mantra of running the restaurant is simple... the Guest is God. We strive to provide customers the best dining experience and get rewarded with their smiles & blessings for our team & restaurants.

• Mayfare Group was established in 2012 and now owns and manages 5 restaurants and a premier Catering Company in Hong Kong.

• 5 speciality restaurants with different concepts, Tamarind – Pan Asian, Siamama – Thai & Vietnamese, Namo – Avant Thai, La Sala – Spanish and the famous Gaylord Indian Restaurant, one of the oldest Indian restaurants in Hong Kong since 1972.

• Namo was launched in 2013 and recommended on Michelin Guide in 2016 whilst Gaylord has been recommended on Michelin Guide twice.

• Awarded as Caring Company by the Hong Kong Council of Social Service

This page: Namo’s alfresco lounge overlooking Victoria Harbour view.

Comfortable alcove seating in Gaylord. Silken Salmon in Chili-Lime Garlic Jus from Namo.

Opposite page: Rajeev Bhasin, Managing Director, Mayfare Group master chefs and service staff who have kept Gaylord going since 1972.“We are very grateful that we have come so far. In addition to the support of our loyal patrons over the years, Gaylord’s longterm success can be partly attributed to its innovative approach,” says Bhasin. Gaylord has come a long way, from being the first to serve an Indian buffet lunch in the 1980’s to pioneering an open kitchen and hosting live Indian music featuring Indian performers.

“Gaylord’s pioneering qualities are still evident. The celebratory 45 Years Anniversary Menu provides traditional Indian dishes such as the Tandoori Prawn and Lamb Saffron Korma, as well as inventive offerings like the Chicken Truffle Samosa that is sure to surprise your taste buds,” says Bhasin.

Gastronomic success This year, several typhoons and unpredictably bad weather slammed Hong Kong, leading to fluctuations in the number of customers going out of their homes for some grub. Mayfare would always open its restaurant doors in the evening, when the torrential rains and winds have stopped.

Thankfully, the customer base it has built over the years has unwavering loyalty. “With the support of our loyal patrons who come to dine-in on these days in addition to our special promotions on these days, we have been able to counter the negative affects of bad weather to some extent,” says Bhasin.

The high cost of food ingredients is a setback for the local food and beverage industry, too. “The supply of food has also

become a competitive market with a number of firms and it is our job to source the best suppliers in terms of price and without compromising quality,” he says.

The ever-changing market presents another challenge for Mayfare, which has learned to keep up with the times. “Small restaurants that are owned and managed by celebrity chefs are growing. Medium chains with franchised global restaurants have also been coming into Hong Kong over the last few years. In addition to this, other Asian cuisines are coming up in an evolving manner,” explains Bhasin.

This was why Mayfare decided to open La Sala, as few of the new restaurants specialise in tapas, the Spanish term for smalltaster portion dishes. “Namo and Gaylord have their very own tapas menus with smaller portions that allow previous customers to enjoy their favourite dishes. It also ensures that new comers of our venues can enjoy a variety of flavors,” says Bhasin.

“We are looking for potential sites to increase the number of restaurants in Hong Kong with different new concepts and open another branch of our modern Thai restaurant Namo and Hong Kong’s oldest Indian venue Gaylord,” says Bhasin. “Any business will come across difficulties. Competition, inflation and a dynamic environment are some of the factors contributing to the challenges,” says Bhasin.“But by learning the ropes, getting exposure, and gaining a broader understanding of your everevolving market, one can turn these difficulties into opportunities,” he adds.

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7

Mercedes-Benz

Mercedes-Benz: Three Essential Points FOR SUCCESS

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ercedes-Benz is the most valuable European premium automotive brand according to the latest rankings of the “Best Global Brands 2017” report published by wellknown US brand consultancy Interbrand. The brand with the three pointed star is the only European company to rank amongst the top 10 of the world’s 100 most valuable brands.

Mercedes-Benz has been the leading premium car brand for several years in Hong Kong and Macau under the leadership of President and CEO Mr. Andreas Binder who has consistently led the success of Mercedes-Benz in the southern Pearl River Delta.

On August 25th, against a glittering backdrop of the iconic Victoria Harbor and the Observation Wheel in the heart of the Central financial district, Mercedes-Benz Hong Kong unveiled the new Mercedes-Benz S-Class and the Mercedes-Maybach S-Class.

“Synonymous with luxury, the flagship S-Class features a suite of advanced innovations which enhance the safety, driving experience and pleasure.”said Binder. Through innovative intelligent systems the S-Class models are taking a more active role with Intelligent Drive being the next step in driving assistance systems. On board systems incorporate the use of information from extended range radar, low light capability cameras, and maps to assist in a more efficient, safe and comfortable journey.

“Our flagship S-Class is a manifestation of modern luxury with highest quality of materials and workmanship. The S-Class has

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been one of the most popular models from our model lineup for many years and it has been the benchmark in the luxury saloon category. With the advanced technology, we are confident that the S-Class we launched in August will still be the best selling luxury saloon in Hong Kong,” said Binder.

Intelligent drive at its finest The Mercedes-Maybach S-Class exceeds the long-wheelbase S-Class Saloon by 20 cm to the benefit of the rear passengers. The passengers can also enjoy executive seats and other exclusive details such as voice amplification. In the rear, the MercedesMaybach S-Class is the world’s quietest production saloon car.

“An absolute highlight for me is the new ‘Magic Body Control’, which allows the car to scan the road surface and adjust the damping of each wheel ahead of any bump. The feature is really magical and represents the incredible technology and intelligence of this vehicle,” he continues.

The S-Class intelligent systems allow it to be aware of all conditions and functions and will alert, assist or intercede along the journey. Maintaining safety margins in traffic, control of road illumination, observance of speed limits, lane integrity, blind spot monitoring, and situational acceleration and braking are but a few of the S-Class models’ INTELLIGENT DRIVE capabilities.

“Mercedes-Maybach stands for the ultimate in exclusivity and

Automobile FAST FACTS • Mercedes-Benz delivered 195,698 vehicles to its customers worldwide in November (+7.2%), thus achieving the 57th record month in succession. In the first eleven months of the year, 2,095,810 units were sold.

• For the three consecutive years (2014-2016), Mercedes-Benz was the best-selling European brand in Hong Kong.

• In 2017, Mercedes-Benz launched its flagship model S-Class, GLA, E-Class Coupe and Cabriolet. With the 50th Anniversary of AMG, the GTR, GT C Roadster and GLC 63 S were debuted.

This page: Mr. Andreas Binder; MercedesMaybach S-Class, Opposite page:Mercedes-Benz S-Class individuality. The brand combines the perfection of the MercedesBenz S-Class with the exclusivity of Maybach. We have achieved huge success with the car and a very high share of S-Class customers choose the Mercedes-Maybach,” noted Binder. “The S-Class has been the saloon of choice for global leaders, renowned superstars, and respected forward thinkers over the years,” he added. “The flagship of the Mercedes-Benz brand has a prestigious history and has always been a technological pioneer. We anticipate demand increasing for the new S-Class as customer appreciation for Intelligent Drive grows.”

World-class features The S-Class takes communications to a new level with the debut of Cantonese LINGUATRONIC voice control. Cantonese commands can be used to request journey data and to control comfort programs. Touch control panels located in the steering wheel allow control activation without removing hands from the steering wheel with movements similar to manipulating ones smart phone.

The Communications Centre in central arm rest hosts a wireless charger, device ports and media controls. The cockpit is designed to allow instantaneous unobstructed viewing of data displays.

The Mercedes Benz S-Class experience embraces wellness through its unique first of its kind ENERGIZING comfort control programs. Interior lighting, massage, music, temperature, and air purification/fragrancing are matched to profiles that enhance the customer’s mood, relieving stress, and through this enhancing

customer’s efficiency. One need not be afraid to pamper oneself.

“I’m sure customers enjoy sitting in the rear seats because of the unique level of comfort and space,” said Binder.

The Mercedes-Maybach and Mercedes AMG S-Class models extend the pinnacle of spacious luxury and high performance experiences to discerning customers. At the heart of the new S-Class models are new and more powerful engines. The new S-Class celebrates this evolution by sporting a new front grill, more authoritative front air intakes and exhaust systems, and distinctive head and tail lights. Sharing from the 2017 Macau Grand Prix, Mr. Binder said “For me, the best in performance is the AMG. Its speed, acceleration, and handling are an awesome experience”.

The Mercedes-Maybach is the ultimate in exclusivity and individuality. The Mercedes-Maybach S 650 with its V12 biturbo engine accelerates from 0 to 100 km/h in 4.7 seconds, unheard of in a saloon of this class. Exclusive touches underscore the flagship positioning of the Mercedes-Maybach S-Class.

Executive seating in an extended wheel base with panoramic sunroof, privacy and solar protection system, and prestigious exterior embellishments reflect great attention to detail. MercedesBenz sustained success is a unique trilogy of tradition, modernity, and constant innovation. It is the DNA of the Mercedes-Benz brand. “We are progressing to total autonomous driving in Hong Kong. The new S-Class is the next step. There are still external challenges but we will succeed. It is the intelligent thing to do.” concludes Mr. Binder.

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7

primecredit

Primecredit: Affordable and Accessible Financial Support

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rimeCredit, established in 1977, has for the past 40 years focused on being a friendly ‘brother’ to Hong Kongers and their day-to-day financial needs. Since starting out as a provider of consumer durable and cash loans, the company has been through many changes both in itself and in its business environment, testament to the durability of its relationships with customers and ability to stand the tests of time.

Amongst several landmarks since its foundation, the company in 2005 became the first consumer lender to offer a credit card; in 2010 acquired GE Capital’s consumer finance business in Hong Kong; and in 2015 was acquired by a consortium comprising China Travel Services (CTS), specialist lender Pepper Australia, and York Capital Management.

“If you look back since 1977, the company has come a long way.

We have gone through business changes, but what makes us most proud is we have come through the economic cycles and are still standing strong,” says Susanna Liew, PrimeCredit’s Chief Executive Officer. “Today, the top five personal loan lenders constitute about 80%-85% market share, and PrimeCredit is clearly the leader. We have grown with our customers.”

One of the key market environment changes has been the advent of more onerous regulation across financial services, but rather than fighting against this change, it’s something PrimeCredit, with its long-held focus on customer relationships,

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has welcomed.“The introduction of new conditions on money lenders issued in December last year to monitor the use of intermediaries, is a really good move,” Liew explains. “It is not just the lenders that have to be disciplined. Borrowers also have to be educated that they should not go to intermediaries and pay them a fee, which is entirely unfair to consumers.”

Staying ahead of the pack PrimeCredit has also maintained its leading position despite the challenge of low interest rates over recent years bringing more competition. It is always conscious of this and other factors which impact its clients’ daily lives, enabling it to achieve market leadership despite the number of competing lenders increasing to more than 1,800 from just 700 five or six years ago.

As Liew puts it: “I have been blessed to see the cycles effect our industry, and have learned to expect the unexpected. We always keep on our toes to see the trends that are emerging, or any opportunity we have as a company to ourselves shape trends.”

The rise in property prices in Hong Kong over recent years is one trend the company has tracked, as it has given many people a propensity to spend rather than save. This is particularly true of the “after 90s” generation, who have a growing taste for dining, travel, meeting with friends and enjoying life.

But rather than just rush in offering everything this young

OUTSTANDING FINANCE COMPANY PHILOSOPHY

FAST FACTS

With over 40 years experiences in offering financial products and services, PrimeCredit is committed to providing high-quality customer service, professional consultation and tailor-made solutions. Whilst ensuring all their staff are well trained with a high standard of product knowledge, PrimeCredit also emphasizes its understanding of what the customers feel, think and wish, in order to provide them with a comprehensive range of all-round, customer-centric and value-added services.

• PrimeCredit Limited is a leading finance company in Hong Kong established in 1977 focusing on Personal Loan and Credit Card services.

• In August 2004, Standard Chartered PLC acquired PrimeCredit, and PrimeCredit became a wholly-owned subsidiary of Standard Chartered Bank (Hong Kong) Limited.

• In May 2015, PrimeCredit was acquired by PrimeCredit Holdings Limited which is a consortium formed by a collaboration of China Travel Financial Holdings Company Limited, Pepper Australia Pty Limited and York Capital Management Global Advisors, LLC.

This page: WeWa Card App Interface (top) PrimeCredit App Interface (bottom) Opposite page: Susanna Liew, PrimeCredit’s Chief Executive Officer generation desires, PrimeCredit always emphasises its services must have three characteristics – affordability, availability and accessibility – to ensure it grows with customers, not at their expense.“When customers need something, whether it is for the short- or long-term, they want to know a lender is helping them.

We make sure every transaction or interaction with a customer makes their life more comfortable. It is part of our definition of affordability,” says Liew.

Availability, meanwhile, is testament to the longevity of PrimeCredit in the market. Where some lenders come and go, PrimeCredit has been around for its clients in good times and bad.

Accessible, meanwhile, is a more modern take on what has made PrimeCredit so successful over nearly half a century serving the people of Hong Kong. Over the past two years the company has built an innovative, interactive mobile platform for the “after 90s”, who often need short-term borrowing to serve their active lifestyles, and in the same spirit last year introduced credit card, WeWa. The card offered a special lucky draw on every spend of more than HKD400, with prizes ranging from an ice cream experience to a cup of coffee, or even a bill-free evening. To boost the attraction, PrimeCredit also this year introduced its ‘Share a Million’, where its customers can give them and their friends a chance of sharing

HKD1 million, and began to offer up to three-month interest free installments without having to go through merchant approval.

“We are entering a whole new space – it is very direct, very social, and viral – and we are planning more initiatives for next year. We need to become more social, more digital, our whole ecosystem has to live and breathe the life of these people,” adds Liew.

PrimeCredit believes technology will enable it to provide more personalised sevice customisation for clients. It has proven over the past 40 years its ability to pivot to new developments, and in coming months will introduce an instant payment service and 24-hour, Artificial Intelligence chatbot which will converse with customers after learning from more than 400,000 hours of digital conversations on record.

PrimeCredit intends to use this technology to forge closer links with merchants in Hong Kong, and its own clients, suggests Liew:“Technology will enable us to tie everybody together. We need to keep working on being first choice, so when people think about shopping, they think about WeWa credit card.”

Warning: You have to repay your loans. Don’t pay any intermediaries.

Complaint Hotline: 2111 2999 Money Lender’s Licence Number: 599/2017

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7

Shama Serviced Apartments

Value, flexibility key to Shama’s expansion

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hose in the hospitality industry will be the first to tell you that the boom of the sharing economy has not only made the industry more competitive, but also changed travellers’ preferences from longer length of stays to shorter ones. Despite this, the ONYX Hospitality Group sees these changes as new opportunities for growth. And it has remained aggressive by expanding its Shama serviced apartments brand not only in Hong Kong but also in the Asia Pacific.

ONYX Hospitality Group Vice President for North Asia Tommy Lai says the key is recognizing and adapting to the changing consumer appetite.“We observe that Shama’s traditional long-stay model is morphing towards shorter stays. In the past, most of our guests stayed with us for at least six to twelve months, and some even for years,” says Lai. “However, these days, there are more guests staying with us for one to three months, or even three days to a week or two.”

Lai credits the popularity of Airbnb for introducing leisure travellers to home-style accommodations.“I think the growth of the Airbnbs of this world is leading people to realise that, by staying in an apartment, you have a little more freedom and space.

Nowadays, people are looking at serviced apartments in a different way – you could call it ‘Airbnb with security and consistent quality,’” explains Lai. Five serviced apartments properties managed by the ONYX

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Hospitality Group are operating in Hong Kong under the Shama brand. On Hong Kong Island there are Shama Central, Shama Fortress Hill, Shama Midlevels, and Shama Hollywood, whilst on the Kowloon side there is Shama Tsim Sha Tsui.“We truly understand what our customers need and make sure all the properties under the management contract meet the Shama standards, including location, style, service and lifestyle offerings,” says Lai. Shama Island North Shama has responded to an increasing demand for studio or onebedroom serviced apartments by increasing the number of smaller units in new developments reconfiguring its apartment layouts.

ONYX’s sixth Shama serviced apartments property in Hong Kong, Shama Island North Hong Kong, is a testament to this.

Shama Island North, set to open in early 2018, is a hybrid apartment complex offering hotel rooms catering to travellers, as well as serviced apartments catering to longer stays. It will feature a total of 121 rooms, with studio, one-bedroom and two-bedroom configurations. All units will be fully furnished with some having their own private balconies or terraces.

Shama’s new property will also offer a wide range of facilities, from its own fitness centre, lounge and leisure areas, to a well-equipped business centre.“Residents have become more sophisticated and discerning. They would expect features such

Serviced Apartment PHILOSOPHY

FAST FACTS

Shama’s philosophy is to offer serviced apartments that epitomise comfort, style and luxury, offering everything that guests need to feel comfortable on both long and short stays. Guests will experience a warm welcome from the staff, who personalise the living experience with their professional ethos.

• ONYX Hospitality Group acquires Shama in 2010 • Shama currently manages 17 serviced apartments across Asia Pacific, including six in Hong Kong: Shama Central Hong Kong, Shama Fortress Hill Hong Kong, Shama Hollywood Hong Kong, Shama Midlevels Hong Kong, Shama Tsim Sha Tsui Hong Kong and Shama Island North Hong Kong

This page: Artist’s impression of Shama Island North, opening in 2018; Shama Chill at Shama Tsim Sha Tsui; All Shama apartments combine hip style with supreme functionality Opposite page: Tommy Lai, Vice President, North Asia, ONYX Hospitality Group as Wi-Fi as a ‘must have’ in a serviced apartment. Many of the expats would prefer having a gym room, lounge area and outdoor facilities, where they can work out and chill after work,” say Lai. “In all our upcoming new projects, we will have a hybrid model to cater the needs of not only corporate clients, but also the shortbreak seekers.”

Shama currently operates a total of 17 services apartments across the Asia-Pacific, with eight more under development.The Shama brand’s success in Hong Kong, says Lai, has enabled them to make forays in new markets like Australia and Malaysia.

Lifestyle provider But the Shama positions itself not only as a serviced apartment operator but also as a lifestyle provider.Tenants and guests at Shama Island North will be able to avail of Shama’s exclusive “no boundaries” programme, which includes hood-tours and other lifestyle activities.

The “no boundaries” programme also allows access to networking events, enabling guests to fast-track their social lives and easily fit in with their new locality.“Residents now tend to look for a lifestyle choice over and above merely an accommodation option. They would like to fast-track their social life in the host city,” says Lai. “Shama offers its ‘no boundaries’ programme, which recommends the best places to go in town and insider tips on how to live well in their new city.”

A serviced apartment like Shama fills this need whilst offering great value and flexibility.“Tenants can choose to stay on a

monthly, weekly or even daily basis. These options greatly benefit those companies that tend to send staff overseas for project-based work more frequently instead of fully relocating them to a new city,” says Lai. “Residents also enjoy priority in agreement renewals prior to expiration and this gives corporate clients greater flexibility, especially when the durations of these postings can change for various reasons,” he adds. Lai has noticed that there are fewer guests from the United States and the United Kingdom coming in for long-term stays whilst the number of guests from Southeast Asia and Australia continues to rise.

More Hong Kong residents have also been staying in Shama properties.“Some of them stay with us for a month or two when renovating their homes, whilst some help to arrange month-long accommodation for relatives or friends who are visiting for a month or two,” says Lai. Lai believes Shama’s aggressive expansion and strong brand makes its position secure in the highly competitive hospitality industry. Shama’s combination of value and flexibility, he adds, makes it a recommended brand by consumers despite the variety of options for residential-style accommodation.

“It is essential to have a clear value proposition, so consumers get to know your brand, become familiarised with your offerings, understand your distinctive positioning, and in turn choose to stay, return and recommend,” says Lai. “A strong brand develops confidence and recognition amongst clients, which in turn enhances business performance.”

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7

Standard chartered

Fintech is the new frontier for Standard Chartered Bank

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ith its global presence and unparalleled connections, the bank stays a cut above the rest by building synergies with its international partners. Cutting-edge technology, global partnerships and exclusive product offerings are Standard Chartered Bank’s weapons of choice in order to stay ahead of its competitors.

Whilst other banks are fretting over slowing growth and rising risks, Standard Chartered Bank remains committed to driving growth and providing exemplary service for its clients. “We have leading market position in many areas and we keep challenging ourselves to find opportunities to disrupt the market,” says Vicky Kong, managing director, head of Retail Banking at Standard Chartered Bank (Hong Kong) Limited.

Forging new alliances The opening up of China’s market will particularly fuel the bank’s growth momentum. “Our future growth is driven by both domestic and regional opportunities. In the future, we have more room to grow through the flow of mainland wealth,” Kong says. “We will build our competitive advantage and develop into the ‘superconnector’ for all segments, both corporates and individuals.”

Within Hong Kong, the bank has been leveraging synergies between its business segments as well as the strength of its size. For instance, Standard Chartered has unveiled a series of impressive deals this year, including a much-awaited partnership with Alipay, the world’s leading

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third-party online payment solution platform. With this partnership, Hong Kong consumers who are also Standard Chartered clients are able to top up their “AlipayHK” accounts anytime, anywhere through online and mobile banking, providing them a trusted and easier way to top up the Alipay accounts. It also enables Standard Chartered clients to shop and pay online in HK dollar with their “AlipayHK” accounts without paying a transaction fee.

“Following the successful corporate alliance with Hong Kong Disneyland Resort, Standard Chartered Bank has formed a new corporate alliance agreement with The Walt Disney Company and introduced the first co-branded ATM card between the two companies in Hong Kong – the Standard Chartered MARVEL ATM Card. The card features four unique card designs that combine stylish looks with classic characters from MARVEL, one of The Walt Disney Company’s most popular franchises.” Kong notes.

Fintech, the new frontier Standard Chartered has opened its innovation lab, the eXellerator, in Singapore in 2016 with the aim to expedite the implementation of digital solutions to deliver more value to its clients with improved service offerings and new business models for the new generation.

The bank is going to open a new innovation lab in Hong Kong to explore the use of emerging technologies and data sciences in support of its digital transformation strategy. In 2018, the bank also plans to

​Retail Banking PHILOSOPHY

FAST FACTS

We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East. Our heritage and values are expressed in our brand promise, Here for good.

• Standard Chartered has around 80,000 employees and a 150-year history in some of the world’s most dynamic markets.

• Standard Chartered PLC is listed on the London and Hong Kong Stock Exchanges as well asthe Bombay and National Stock Exchanges in India.

• Standard Chartered incorporated its Hong Kong business on 1 July 2004, and now operates as a licensed bank in Hong Kong under the name of Standard Chartered Bank (Hong Kong) Limited, a wholly owned subsidiary of Standard Chartered PLC.

This page: Standard Chartered named the first banking partner of Alipay HK; Brand New Standard Chartered Simply Cash Visa Card.

Standard Chartered Marvel ATM card Opposite page: Vicky Kong managing director, head of Retail Banking at Standard Chartered Bank Hong Kong. roll out a chatbot built with a conversational artificial intelligence (AI) platform which can interact with customers on Standard Chartered Hong Kong’s mobile app and website, to further enhance customers’ digital experience.

Kong highlights the main technological developments which will form the building blocks for the new era of retail banking. “One of the developments is the breakthrough in customer authentication and telecom security. Also, there is the Open Application Programming Interface (API) that helps the bank connect with third parties to expand the capability of our banking platform.” she says.

With the rapid growth in mobile usage financial transactions can now take place, be processed and stored in digital form at very high speed and low cost. New authentication technologies such as biometric have significantly increased the robustness and reliability in remote digital banking using smartphones or handheld devices. “Recognising these technological innovations and rising aspirations of customers for more personalised and integrated services, Hong Kong must proactively embrace the trend and seize the opportunity to upgrade our banking system, especially when we also have the regulator’s support who just

unveiled a number of initiatives that prepare HK to move into a new era of smart banking,” Kong states.

All of Standard Chartered Bank’s initiatives are geared at improving customer experience and building loyalty. Standard Chartered Bank has launched a brand new credit card, Standard Chartered Simply Cash Visa Card. Targeting young clients who prefer direct and easy rewards, the new card provides a straight-forward CashBack scheme. With no upper limit, card users can enjoy 1.5% CashBack on all categories of local and online transactions made in Hong Kong dollars, and 2% CashBack on spending in foreign currencies for overseas and online transactions. Upon successful application before 31 January 2018, transactions made within the first two months of card issuance will enjoy 100% CashBack of up to HK$1,000. The bank has also relocated its two branches in Central and Tsim Sha Tsui with enhanced presence and catchment to serve more customers at the strategic locations.

The branches are renovated with novel design and equipped Digital Tellers that aim to elevate customers’ banking experience. ”Our brand promise, Here for good, underpins everything we do. It guides how we do business and the decisions we make.” says Kong.

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7

Towngas Telecommunications Company limited

TGT - Ushering in a New Digital Age In connectivity

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acked by the more-than-150-year history of its parent, The Hong Kong and China Gas Company Limited (HKCG), Towngas Telecommunications Company Limited (TGT) has since its foundation in 2004 been dedicated to one mission – keeping its clients and customers connected. Whilst this commitment may not have changed over the company’s rapid growth, the ways which TGT delivers on its promise most certainly have.

Through the benefits of its parents’ unparalleled gas pipe network in Hong Kong, and an every-growing number of partnerships with companies in Mainland China, TGT is at the vanguard of delivering telecommunications infrastructure and network solutions for telecom carriers, service providers and large corporations through its pioneering Glass-in-Gas (GIG) and Glassalong-Gas (GAG) technologies.

A 1998 TGT innovation, GIG allows the company to place optical fibres within gas pipes, complemented by using optical fibre cable within small, underground casings to ensure the company maintains its pledge to provide reliable, sustainable services. This is the cornerstone of its Hong Kong connectivity offering, providing up to 100Gbps point-to-point fibre links and dedicated bandwidth services such as T3/DS3, STM-1, STM-64, GE and 10GE, as well as bespoke, reliable private, public and hybrid cloud computing platforms to corporations, international network service providers

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and professional clients.

GAG technology, meanwhile, allows TGT’s family of Mainland China partners to install telecommunications infrastructure at the same time as gas pipes, reducing installation time and environmental impact. Its joint venture companies across different provinces also provide carrier-neutral data centre and related engineering, consulting and R&D services.

High-quality network services “In provinces like Guangdong, Jiangsu, Shandong, Liaoning and other places where telecommunications pipe networks have been laid, high-quality network services can be built on top of these pipe networks,” says Mr. Joseph Lai, Head of Telecommunications Business of HKCG cum General Manager of TGT. At the same time as developing its pipe network business, TGT is also utilizing its heritage to work alongside Mainland China gas suppliers on the application of GIG, not least cabling services in residential and commercial buildings.

Ten years ago, TGT embarked on its expansion into Mainland China, and today, with the growth of big data, the rewards of its journey both there and in Hong Kong are starting to bear fruit.

“There is now high demand for data processing, and it’s here that TGT’s data centres have shown their value amid immense market demand,” explains Lai. “We now operate seven large scale

Most Innovative Technology in Connectivity PHILOSOPHY

FAST FACTS

Founded in 2004, TGT is a wholly owned subsidiary of The Hong Kong and China Gas Company Limited (Towngas). Adopting the company’s pragmatic approach to quality services, TGT is a carrier-neutral telecommunication service provider with a number of world-class data centres and network infrastructures operating in Hong Kong and Mainland China. Riding on the advantage of the colossal gas pipe network and synergizing it with the advanced Glass-In-Gas (GIG) European technology and by integrating reliable and high-speed connectivity with advantages such as outstanding infrastructure, TGT has also been able to provide fibre links, dedicated bandwidth services, flexible and reliable cloud computing platforms in the forms of private cloud, public cloud and hybrid cloud to reputable corporations, international network service providers and professional clients.

• Researched and developed the Glass-In-Gas (GIG) technology successfully in 1998 • Currently operates 7 large scale data centres in Hong Kong and Mainland China • Recognised as Caring Company since 2011 • Awarded with numerous worldclass international recognitions such as ISO 27001:2013, ISO 14001:2015, ISO 200001:2011, ISO 9001:2015, CSA STAR Certification for Cloud Computing Security, Level II Security Guidelines issued by HKSAR Government and LEED Gold Certification issued by the USGBC

This page: Mr. Joseph Lai (1st from right), Head of Telecommunications Business of HKCG cum General Manager of TGT, Mr. Alfred Chan (2nd from right), Managing Director of HKCG and the management team fully suppported the GIG project and visited the project site for supervision; TGT uses sophisticated patented technology Glass-In-Gas (GIG) to lay optical fibres within submarine gas pipeline, protected by polyethylene pipe. networked data centres in Hong Kong and Mainland China which can accommodate up to 15,000 server racks,” he added.

Moving into the cloud Connectivity with the cloud has been another milestone on TGT’s journey. In one of its most recent developments, the company established a one-stop, cloud computing solution – GOEZ! – which provides SMEs with a low upfront cost, streamlined service combining high-speed internet and a variety of business services.

With connectivity increasingly one of the essentials in businesses like Hong Kong’s famed catering sector, TGT aims for GOEZ! to become synonymous with the Chinese phrase “seven necessities to begin the day.”

Companies are now seeking to increase productivity, efficiencies and costs by moving many of their operations and services to the cloud. Even the largest, best resourced firms have bought into the ‘start-up’ culture, with some moving their staff into collaborative workspaces to foster innovation. But this cannot be successfully achieved without the right connectivity in place, which is why TGT persistently strives to give its customers the full benefit of its

unrivalled network infrastructure, and historical development, into full play.

“Flexibility, reliability and secure network connectivity is important regardless of the type of cloud an enterprise may choose,” says Lai.“ By partnering with a network provider, like TGT that has designed its network to satisfy a broad range of cloudconnectivity options, every enterprise can obtain a solution tailored to its unique operational and financial requirements and, thereby, achieve its cloud computing objectives.”

Technology, like time, never stands still, and TGT is already looking beyond its current service offering to the ‘next horizon’.

It firmly believes big data will get even bigger, with increasing demand for data processing and information technology solutions.

With its growing presence in the telecommunications market, TGT is well position to capitalise on this upcoming era which will be characterised by massive data transfer which unlocks new value for its clients and TGT alike.“TGT will continue to strive to provide diversified services that exceed customer expectations by leveraging our own technology advantages and further help customers as they embark on their digital transformations,”he said.

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7

TMA

Top deal-maker TMA connects Europe to China

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ith China firmly pushing its Belt and Road Initiative (BRI) development strategy, doors have opened for European countries to invest in the Middle Kingdom. The influx of European companies can be attributed to the years of ground work laid out by Chinese President Xi Jinping. Because of this many European investors have taken a second look in putting their money in China. Hong Kong-based deal-maker Thomas, Mayer & Associés (TMA) has taken this opportunity to service European clients in their investment projects in China.

Intimate knowledge TMA provides in-depth understanding of Hong Kong laws and taxation for companies looking to set up investment projects not only in the city but also in other parts of China. Established in 1995, the international law firm specialises in the economic migration of companies from Europe to Southeast Asia and China, and from Southeast Asia to Europe, specifically France.

Owing to its more than two decades of experience in the commercial and legal practices in the region, TMA’s knowledge of the economic and legal environments makes it the go-to law firm of companies seeking to do business in China. Amongst its practice areas are international business law, mergers, acquisitions, and joint ventures, corporate and commercial law, international tax law, international arbitration and litigation, as well as private

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international law and immigration law.

In China, specific legal requirements, such as a Wholly Foreign Owned Enterprise (WFOE), have to be satisfied and are even an economic necessity for foreign companies looking to do business there. Clients also seek TMA’s assistance on drafting and finalizing commercial agreements such as strategic planning of transactions, negotiation of contracts, deal implementation, and contract management.

TMA is able to survey the legal impact of international transactions, making it valuable to any foreign investor. The law firm also provides representation in institutional or ad hoc arbitration and alternative dispute mechanisms. It also handles immigration matters by helping foreign companies with their international transfers and cross-border recruitment of existing and new employees.

Its extensive knowledge of Immigration law and government practices and policies, as well as its expertise in handling work permit applications, make it easier for foreign companies to hire employees. TMA’s clients range from mid-sized companies to major conglomerates, including tech companies, food and beverage, construction, fashion and cosmectics, pharmaceuticals, medical, as well as financial technology firms and retail.

Its services and advice are tailor-fit for each client, taking into account practical solutions and extended practice areas. The law

Law Firm PHILOSOPHY

FAST FACTS

The firm’s philosophy goes beyond just giving legal advice. Our approach is to focus on making a valuable contribution to the progress of our client’s business in a complicated international environment.

•

•

•

The practice was established in Hong Kong 22 years ago and employs 30 staff Paris office is a subsidiary as TMA Hong Kong is the main office Practice areas: International business law, mergers and acquisitions, joint ventures, company and commercial law, international tax law, international arbitration, private international law, and immigration law, are its practice areas.

This page: Lippo Centre, Admiralty; TMA meeting room with partners and associates;

firm also aims to optimise its services by adopting strategies based on the client’s company size and available resources. The TMA team is composed of 30 people led by Senior Partner Eric-Jean Thomas and Managing Partner Eric Mayer.

Structuring Investments China’s local economy has also been rapidly shifting from being production-based to being geared more towards new technologies, services, and consumption. Its push for the BRI has also led to many European companies rationalising and restructuring their assets in the region. These companies have been consolidating disparate assets and optimising financial flows.

It is now necessary to rationalise structures, flows, and decisionmaking processes to keep up with the rapidly changing economic landscape.This is where TMA’s cadre of topnotch corporate lawyers comes in.

Its more than 22 years of experience on taxation, contracts, and company restructuring enables TMA to implement efficient solutions which take into account its extensive knowledge of tax and legal processes.

Whilst most companies choose amongst Shanghai, Singapore, and Hong Kong, the latter’s great number of benefits have made it the preferred hub for many European firms’ headquarters in Asia.

China’s stringent regulations regarding payments have not

Opposite page: TMA office deterred European investors. Instead, they have realised that the benefits far outweigh the costs.

Amongst the benefits of setting up shop in Hong Kong are more than 40 double taxation agreements currently in force, coupled with numerous commercial treaties and agreements with China such as CEPA and Trade Processing Agreements, and a unique role as the global hub of choice for RMB transaction.

This is apart from having a Grade A logistic hub, one of the leading airports for commercial freight in the world, dynamic commercial legislation, and an easily readable tax system.

In fact, foreign direct investments (FDI) in China via Hong Kong is back to the level it was 10 years ago prior to the 2008 financial.

FDIs from Hong Kong saw a drop of as low as 30% during the 2008 financial crisis, but it has since rebounded.

Hong Kong, currently, claims as much as 70% of the FDIs in mainland China. Apart from the BRI, China has also been relaxing its rules governing Chinese companies investing abroad.

This is another opportunity TMA is keen to take advantage of as more and more Chinese investors look to invest in Europe. As such, TMA established a subsidiary in Paris, France in 2010 with Emma Bensoussan-Crémieux as its local managing partner.

All lawyers of TMA’s Paris office are members of the Paris Bar, and as one of the top Asia-Europe deal-makers, it has also attracted lawyers specialised in international mergers and acquisitions.

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7

WTT

WTT poised to new heights with new corporate identity

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acked by its formidable new owners, the ICT powerhouse is committed to becoming the undisputed leader when it comes to providing enterprises’ technology needs.

A new era of unstoppable growth is dawning for WTT. Fuelled by its superb infrastructure and user-friendly, feature-rich customer portals, Hong Kong’s leading ICT service provider is gearing up to deliver better and smarter services to its legions of loyal customers.

“WTT takes pride in our ability to provide comprehensive ICT support to companies of all sizes,” says Mr. Vincent Ma, CEO of WTT. “We are keen on developing more best-of-breed ICT solutions to drive productivity, efficiency and reliability. Creating value to business customers and providing in-depth ICT service penetration to help enable businesses is our mission.”

The company’s HK$9.5 billion acquisition by MBK Partners and TPG in late 2016 will further solidify its position as Hong Kong’s most trusted ICT service provider for businesses. WTT provides mission-critical ICT services to over 55,000 enterprises ranging from large enterprises to SMEs. Its impressive roster of clients include all listed financial institutes in the Hang Seng Finance Index, global investment banks, and 90% of all HKSAR government departments.

The takeover by two of the world’s leading invest firms will inject further momentum to WTT’s growth. “Our partnership

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with Avaya and McAfee in 2017 has already benefited from the acquisition, which has strengthened our ICT services portfolio and extended our business reach,” notes Ma highlighting that MBK Partners and TPG have a long track record of investing in worldclass companies such as Spotify, Uber, and Gala TV to name a few.

Following the acquisition, WTT has also unveiled a new tagline and logo which reflects its deeper commitment to success. “WTT is committed to ‘Winning Together’ with Hong Kong’s enterprises.

It is a reflection of the company’s even bigger ambitions to connect and excel with the local business community,” Ma says.

The new logo design is a subtle evolution from its old logo, with the bird symbol gifted with more power, energy and freedom.

A tradition of excellence The firm’s commitment to success is embodied by its new brand ambassador, record-breaking Hong Kong high jump athlete Cecilia Yeung Man-wai. Cecilia shares a lot in common with WTT: born in the 1990s, young, energetic, but at the same time boosting a stellar professional track record, as well as driven by an overwhelming desire to strive for excellence and recordbreaking performances against all odds.

“Such spirit coincides with WTT’s never-ending endeavour to transcend itself. Our brand enhancement is more than a logo or

Fixed Network, Broadband & Cloud Services PHILOSOPHY

FAST FACTS

With an aspiration of “Winning Together” with our customers and stakeholders, we enable businesses using best-of-breed technologies and innovative ideas via top-class service. We promise not only to expand our service portfolio but also to create value for our customers. We strive to provide quality service, and be a true partner of all business sectors to drive our customers’ businesses forward whilst embracing Corporate Social Responsibility.

• The only “100% business brand” telecom operator in Hong Kong dedicated to serve the business sector • Rebranded from Wharf T&T to WTT in 2017 following the $HK9.5 billion acquisition by private equity firms MBK Partners & TPG • Licensed in 1995, WTT has been invested over HK$7 billion to build its own telecommunications network infrastructure in Hong Kong

This page: Mr. Vincent Ma, CEO of WTT; WTT was awarded a LOOP Platinum Label by WWF in 2 consecutive years for creating low carbon office environment; WTT’s well-prepared infrastructure and managed services to help enterprises go through digital challenges brand makeover. The most important thing of all, we are the same trusted Company that works tirelessly and smartly in enabling every success of customers’ businesses,” Ma states.

WTT’s unparalleled ICT service portfolio is built on a robust tradition of excellence. Licensed in 1995, WTT has invested over HK$7 billion to build its own telecommunications network infrastructure. Today, the company’s ultra high-speed Fibre-tothe-Desk (FTTD) network infrastructure serves 90% of business customers and links over 5,300 buildings in Hong Kong.

“As one of the key cloud enablers in Hong Kong, we adopt a hybrid approach to provide advanced and reliable cloud infrastructure for customers’ businesses,” Ma says.

Comprehensive customer support For instance, WTT’s FibreCloud’s core infrastructure is located at ISO certified tier 3+ data centre to ensure all cloud equipment and customer data are well-managed and backed up by multidimension security measures adopting the cutting edge backup and restoration technologies. WTT also takes pride in its ability to provide comprehensive customer support. Renowned for excellent service, its team of qualified ICT engineers possess all the necessary skills required to enable enterprises’ businesses.

“Our focus on business customers, our valuable experience on critical ICT projects, our close connection with all businesses of whatever nature, had made us the perfect ICT partners for enterprises requiring one-stop ICT services from designing, planning, implementing, installation and maintenance of

converged networks, voice, broadband, data storage, international connectivity, disaster recovery, business continuity planning, online marketing solution, business applications to cloud services,” Ma says.

“We are ready to cater to all enterprises’ needs, whilst redefining business-grade public cloud standards. Our instant activation of cloud resources for maximum scalability and performance means that businesses will not be held back and can grow and adapt to their own pace, and all of this within a secure environment, from the data centre, to virtual machines, to a customer portal featuring 360 degree all-round security,” adds Ma. In 2017, the company was named as the Technology Partner of Amazon Web Services (AWS). It has since launched the AWS Direct Connect Service, which helps bridge its customers with the AWS Cloud efficiently and securely. This new milestone also provides WTT’s clients a wider choice when it comes to implementing cloud strategies.

In the near term, WTT is looking to leverage on cloud computing and information security. “FinTech is the keyword of the upcoming decade and will become more and more prevalent.

Security requirements have never been so high, and the industry compliance requirements are strict,” Ma says.

“We promise not only to expand our network and ICT service portfolio, but also to create value for our customers through improving their efficiencies, productivity whilst catching on the latest trends, and in turn help enable their business and improve profitability,” Ma notes.

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Zchron

Refining standards in luxury interior

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etaining the interior design award for 12 consecutive years, Zchron is the name behind some of Hong Kong’s most glamorous and modern spaces, having completed countless interiors for an impressive roster of luxury residential and commercial clients under its belt.

Helmed by interior veteran Nison Chan, the firm is committed to bringing professionalism to luxury interior design by adhering to three principles - integrity, punctuality and budget control. These approaches, along with Chan’s design aptitude and extensive experience in the interior field, contribute to the success of his design firm which specialises mainly in high- end residences, as well as retail shops and office premises.

A keen understanding of space and unerring taste underpin Zchron’s work, which offers clients a thoughtful aesthetic bolstered by refined and sustainable materials, exquisite craftsmanship and well thought-out details that never lose sight of a client’s character. Zchron’s top level of design service and professionalism have distinguished the firm as a leader in the industry.

With a predominant focus on luxury residences, the firm has some 30 luxury residential projects on its plate, from deluxe condominiums, luxury duplex apartments, adjacent units to houses, with an average size of more than 2,000 square feet.

Amongst them are seven houses across Repulse Bay, Southern District, Kowloon Tong and the New Territories. Other condos

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include The Cullinan in Kowloon West and The Harbourside in North Point. “Design firms that can manage this amount of bigscale residential properties is rare in Hong Kong,” notes Chan. To maintain high-quality services, Chan believes in establishing both understanding and trust with clients in order to “deliver bespoke luxury spaces that tailored to clients’ needs,” he continues.

“A good design requires a comfortable balance between the designer’s insights and client’s wishes. A space design cannot be considered successful if the client doesn’t feel good in it. In our work, we bring our clients the latest material and interior trends from all over the world. But that’s not enough. It has to be combined with the client’s need to achieve a good design.”

Professionalism at its best Hong Kong’s interior designers are enjoying an expanding market as the affluent China market grows. But with more opportunity, more players are joining to fray to grab a slice in the burgeoning market. Increased competition amongst industry players has led to unfair trade practices such as inflating initial quote, unreasonable upfront deposit and substandard craftsmanship.

To address the bad practice, honouring the spirit of a contract and professional integrity are at the centre of Zchron’s philosophy.

“Clients coming back to us because we honour our commitments with them.It is this core value that sets us apart from the market

interior designer PHILOSOPHY

FAST FACTS

Our ‘design and build’ concept aims to provide one-stop shopping for interior building work, from the design brief to completion and handover for a set price, delivered at a set time, based on professional standards.

• 1995 – Conceived and improved the ‘design and build’ concept for commercial clients, such as Hang Seng Bank, Sincere Deparment Store, Wellcome Supermarket and SaSa Cosmetics Company and others • Zchron has 30 luxury residential projects on its plate, from deluxe condominiums, luxury duplex apartments, adjacent units to houses, with an average size of more than 2,000 square feet.

• Zchron’s flagship is located in Happy Valley, a traditional area for luxury residential furniture and interior design firms.

This page: House project by Zchron; Duplex with roof top; Interiors Opposite page: Nison Chan, Zchron norm.”He stresses that good client relationship is built on trust.

“Long-lasting client relationships occur only when clients trust you completely.Keeping the promises we make to clients, delivering on time and keeping our project cost estimations accurate are key to solidify client relationships,” Chan says.

Some of the firm’s proudest re-appointed projects include a residential assignment at SOHO, Sheung Wan for the Chairman of Maxdo Group, a year after completing a 3,500 square feet house design at Villa-Rosa in Tai Tam for the client; another re-appointed assignment is a residential project for Dr Reborn’s management on a duplex apartment at Park Avenue, after delivering a commercial project for the medical beauty group on its 10,000 square feet flagship store at World Trade Centre a year earlier.

Interior design concerns itself not only with visual enhancement of a space but also the functional aspect of the space to fit the

occupant’s lifestyle. Material plays a big role in achieving that.

Apart from its sizeable share of housing projects, the firm has also established a prestigious commercial portfolio under its belt, including SaSa, Dr.Reborn, Escada, DKNY, Carlsberg and Fortress, to name but a few. Looking ahead, Chan says the Zchron team will continue to approach each project with professionalism, and to deliver works that exude the essence of luxury with a harmony between aesthetic and functionality. To stay ahead in the competitive interior design market, Chan reiterates that the company will maintain its firm stand on quality and integrity to delivery works that not only aims to impress, but also to fit client’s needs, and to express the uniqueness of each client. “We’ll continue to step up efforts to remain as a leader in the cluttered luxury interior sector with professionalism and integrity in mind,” he concludes.

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Index

STATISTICAL TABLES AND CHARTS

Following an alphabetical listing of the statistical tables and the pages where they appear

Labour force, unemployment, and underemployment

56

GDP and its main expenditure components at current market prices

57

Nominal Wage Indices for employees up to supervisory level

58

Number of Establishments, Persons Engaged and Vacancies Analysed by Industry Sectionl

59

Number of Regional Headquarters in Hong Kong by Country/Territory where the Parent Company was Located 63 Population by Age Group and Sex

63

Seasonally adjusted Consumer Price Indices

64

HONG KONG’S HIGH FLYERS Outstanding Enterprises 2017

70 H ​ SBC Insurance (Asia) Limited

98 Lifestyle Insurance

74 Able Mobile Limited

100 MassMutual Asia Ltd.

76 Athena Best Financial Group

102 Mayfare Group

78 British Airways

104 Mercedes-Benz Hong Kong Limited

80 Dorsett Hotel

106 PrimeCredit

82 Elite Concepts

108 Shama Serviced Apartment

84 ​FTLife Insurance Company Limited

110 Standard Chartered Bank (Hong Kong) Limited

86 GODIVA Chocolatier (Asia) Ltd.

112 Towngas Telecommunications Co. Ltd.

88 Hang Seng Bank

114 TMA

90 Hang Seng Insurance Company Limited

116 WTT

94 LadyCode

118 Zchron Design

96 Lan Kwai Fong Hotel @ Kau U Fong

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