Hong Kong Business High Flyers 2019

ANNUAL 2019

High

Flyers 2018

Hong Kong's Outstanding Enterprises 17 TOP INDUSTRIES REVIEWED BULL RUN ENDS ON HONG KONG'S PROPERTY MARKET

2019 WAGES: ARE YOU GETTING PAID ENOUGH?

Contents Annual 2019

2019 OUTLOOK 6

Hong Kong’s economy is treading

rough waters amidst lower exports

8

Residential prices to fall 15% in 2019

10

Up to 4% salary hike awaits tech workers

12

China drives growth in accounting sector

14

Hong Kong welcomes stores of the future

16

Foreign lawyer restriction hits industry

MOST READ IN 2018 18

A month-by-month review of Hong Kong’s

top stories in 2018

10 12

COMPANIES AND INDUSTRIES

22

Banking on close economic ties for sustained growth

24 Online shopping drives clothing industry 26

Re-export growth boost electronics industry

28

Hong Kong’s promising processed F&B industry

30

MobileTV shapes entertainment scene

32

Footwear players goes for retail overseas

34

OEM and ODM orders buoy gifts and premium industry

36

Opportunities from China’s eco-environmental stance

38

Pressure heats up between Mainland and local firms

40 Jewellery makers to go into retail and distribution 42 Hong Kong’s lighting industry revs up systems 44

China market opens new chapter in publishing scene

46

Fashion trends push spectacles industry growth

48

Sporting good industry enters casual wear market

50

Textile industry revs up for upmarket products

52

Asian demand boosts wine market in Hong Kong

54

Sea transport industry is riding on wave of success

16

Contents Annual 8

2019

High-Flyers 2018

60 72

74

94

96

60 Athena Best Financial Group 62 AV Consultant Int’l Ltd 64 Dorsett Hospitality International 66 Dorsett Wanchai, Hong Kong 68 Elite Concepts Ltd 70 FTLife Insurance Company Limited 72 Hang Seng Bank Limited 74 Hang Seng Insurance Company Limited 78 Lan Kwai Fong Hotel @ Kau U Fong 80 Lifestyle Insurance 82 LINDT 84 MassMutual Asia Ltd 86 Mayfare Group 88 Memorigin Watch Co, Ltd 90 PrimeCredit Limited 92 Shama Serviced Apartments 94 Standard Chartered Bank 96 Standard Chartered Bank 98 TMA 100 Vastcom Technology Limited 102 WTT HK Limited 104 Zchron Design 106 Zung Fu Company Ltd

106

ANNUAL 2019

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ECONOMy OUTLOOK

Fitch’s forecast for Hong Kong’s 2019 GDP is at 2.5%

Hong Kong’s economy is treading rough waters amidst lower exports Exports suffered the worst blow which recorded a decline from 13.1% to 4.5%. Will it recover in 2019?

H

ong Kong’s economy has taken a beating over the last few months hitting exports the worst, falling from 13.1% to 4.5%. Meanwhile, retail sales plunged from 9.4% to 2.4%.

According to Fitch Solutions, Hong Kong’s economic activity decelerated further in Q318 to 2.9% y-o-y in real terms, from 3.5% y-o-y in Q218, bringing growth in the first three quarters of 2018 to 3.7% y-o-y,. With headwinds likely to persist over the coming quarters, Fitch’s forecast for Hong Kong’s 2019 GDP is at 2.5%, respectively lower from the 3.0% previous forecast.

“The performance of Hong Kong’s economy has remained resilient in 2018 on the back of solid consumption,” said Alicia GarciaHerrero, Natixis chief economist for Asia and the Pacific, adding however that with Hong Kong’s economy closely attached to China and the monetary policy linked to the United States, the situation

6 HONG KONG BUSINESS ANNUAL 2019

“With headwinds likely to persist over the coming quarters, Fitch’s forecast for Hong Kong’s 2019 GDP is at 2.5%.

will be increasingly difficult for the territory.

Samuel Tse, economist for China and Hong Kong at DBS, explained that the trade spat between the US and China will only make it difficult for Hong Kong, which heavily rely on its reputation as a major trading hub, to recover any momentum for its export activities.“China and [the] US are Hong Kong’s top two export destinations. Exports to China and the US accounted respectively for 79.1% and 12.4% of Hong Kong’s GDP. If China and the US impose tariffs on the rest of [the] goods traded between them, it will hurt Hong Kong’s re-exports performance.

Paul Ho, divisional president 2018 for Greater China at CPA Australia, elaborated some of policy actions to help the Hong Kong government deal with the looming effects of the trade tension. “We suggest that the policy action should include expanding Hong Kong’s trade

relations through new free trade agreements and comprehensive double taxation agreements and expanding the Hong Kong government’s global network of economic and trade offices,” he said.

Subdued outlook According to survey findings from CPA Australia, businesses and other stakeholders’ sentiment regarding Hong Kong’s economic outlook for 2019 is understandably subdued as compared to that of 2018. The survey revealed that whilst 62% of respondents expected Hong Kong’s economy to grow by 2% or more in 2018, only about 38% of respondents expect the economy to grow at 2% or more in 2019.

“Given emerging global risks, we are not surprised that respondents have lower growth expectation[s] for Hong Kong’s economy than they did in 2018,” said Ho. “Our surveys show that the potential for a trade war, anticipated lower economic

ECONOMy OUTLOOK growth in mainland China and high property prices are the factors most likely to have a negative impact on the Hong Kong economy in 2019.

Falling confidence in the city’s competitiveness is also likely to be contributing to a less positive outlook for Hong Kong in 2019.”

Ho, however, noted that whilst the advent of more negative externalities besetting macroeconomic indicators for Hong Kong as trade tensions escalate, businesses remain on a “wait and see” mode regarding how they will implement day-to-day adjustments in their operations as well as in their medium and longterm growth strategies.

“It appears that most companies are taking a ‘wait and see’ approach to the potential trade war rather than taking action, with 51% of respondents either stating they have yet to take any measures or believe the potential trade war will not have any impact on their company,” he said.

Ho further elaborated that whilst there are concerns with the impact a trade conflict may have on Hong Kong’s economy, these concerns are not necessarily translating (yet) through actions at company-level— at least in terms of human resources and staff count. Survey results by the company reveal that almost half, or 44% of respondents expecting their employers to increase the number of their staff pool in 2019 compared to 37% and 31% in 2018 and 2017, respectively.

Rate hikes, mainland factor Other risks continue to loom over the horizon for Hong Kong’s economy for the rest of 2018 and 2019, two of these are the continued rate hikes expected from the United States Federal Reserve and the orchestrated slowdown of mainland China’s economy—although mainland China, with its increasing number of tourists and businesses continuing to operate from and set up shop in the territory, will continue to remain a significant driving force of Hong Kong’s economy.

“The major risk for Hong Kong is not only the trade war but the broader trend in the containment of China, which could ultimately have an impact in Hong Kong,”

said Garcia-Herrero. “First, trade activities through Hong Kong could reduce due to increasing protectionism. Second, any sign of a change of treatment of the US on Hong Kong would dampen the advantages [of the territory] as an Asian trade hub, and more importantly, the role as an international financial centre.”

Natixis’ Herrero noted that higher interest rates, triggered by the rate hikes, will likely have an impact to Hong Kong’s housing market, which have been softening over the last few quarters. Data from DBS revealed that Hong Kong’s property market has started to soften after 48 months of stellar growth around 50%. The trade tensions have also dented business confidence and sentiment of Hong Kong’s businesses in mainland China, particularly in the Greater Bay Area. This is significant given that Hong Kong is the largest source of realised foreign direct investment for China at 53.1% in 2017, especially in the province of Guangdong.

“The year ahead generally looks positive. However, downside risk of a global trade war is adding a strong element of uncertainty that is impacting confidence,” said Ho. “But Hong Kong is a resilient city that has overcome similar challenges due to its solid foundations built on a low an simple tax system, strong work force, and business-friendly regulatory environment.”

Other sectors Other sectors like tourism and retail is likely to buoy Hong Kong’s economy with the number of tourists expected to increase following the opening of major infrastructure’s connecting the territory to the mainland. This boom in tourism and tourist spending will likely get a significant boost with the onset of same-day tourists, particularly from mainland China, given the opening of several high-profile infrastructure projects this year linking Hong Kong from the rest of mainland China.

For instance, the opening of Hong Kong’s high-speed rail, officially known as the Guangzhou-ShenzhenHong Kong Express Rail Link will help reduce the travel time between Hong Kong and Shenzhen from 50 minutes to 14 minutes, whilst

Alicia GarciaHerrero

Samuel Tse

Paul Ho

Lawrence Wan

a journey from Hong Kong to Guangzhou will only last about 48 minutes long.

“The other prominent development is the Hong KongZhuhai-Macau Bridge, which connects Zhuhai to Hong Kong and Macau to form a ‘tourism triangle,’ driving demand for shopping complexes, integrated resorts, and [meetings, incentives, conferences, and exhibitions] facilities,” said Lawrence Wan, senior director for advisory and transaction services for retail at CBRE Hong Kong.

“Tourism-oriented retailers such as those related to cosmetics, healthcare, electronic gadgets, and watches and jewellery did their part to boost leasing activity in 2018, and with this infrastructure in place, they will be taking an even stronger role in retail sales.”

Respondents from CPA Australia’s survey, meanwhile, noted that included in the industries most likely to have the highest growth potential in Hong Kong are healthcare and medical services, innovation and technology, and e-commerce. Ho said that the bright outlook especially on healthcare and medical services is not surprising given Hong Kong’s ageing population. “What is more surprising is the high number of respondents selected innovation and technology, e-commerce, and biomedicine as sectors having the strongest growth potential in Hong Kong in the next three years,” he said.

“It is a signal that Hong Kong’s economy may be undergoing a transformation to a more knowledge-based, innovation-driven economy.”

Hong Kong exports to selected countries (YoY)

Source: Bloomberg, Natixis

HONG KONG BUSINESS ANNUAL 2019 7

PROPERTY OUTLOOK

Residential property prices have already started feeling the heat as prices have begun falling by 1.4% over the last two months of 2018.

Residential prices to fall 15% in 2019 Hong Kong’s almost 10- year housing market bull-run looks like it is coming to an end.

T

he freewheeling days of Hong Kong’s residential market are finally coming to a close as home prices in the world’s most expensive property market are expected to fall 15% in 2019, according to real estate consultant JLL. In the worst case scenario that stock markets continue to slump and trade tensions escalate, JLL notes that home prices could crash by as much as 25%.

“Hong Kong’s almost 10- year housing market bull-run looks like it is coming to an end,” Joseph Tsang, Executive Director at JLL in Hong Kong said.

Early signs Residential property prices have already started feeling the heat as prices have begun falling by 1.4% over the last two months of 2018 after 28 consecutive months of growth. Although the prices of smaller housing units under 430 sqft still edged up by 0.3% in August, the value of all larger units fell up to 1% on average, data from Knight Frank show.

8 HONG KONG BUSINESS ANNUAL 2019

“I don’t think there is any question that housing prices are at elevated levels in Hong Kong and that we are susceptible to a correction.” said Denis Ma, head of research at JLL”

In September, global investment bank UBS declared that Hong Kong faces the greatest risk of a housing bubble amongst 20 developed financial centres globally, with the risk “soaring” over the past year.

“I don’t think there is any question that housing prices are at elevated levels in Hong Kong and that we are susceptible to a correction, which we are already starting to see,” said Denis Ma, head of research at JLL. “How much housing prices fall, however, will largely depend on the macroeconomic environment.”

Ma said the one that seems to have the most impact is the requirement for developers to launch no less than 20% of units being built per batch of units launch as it discourages developers from drip-feeding supply -- or what locals commonly refer to as “squeezing toothpaste.”

“No doubt, we’ve started to see the residential market in Hong Kong come under increasing pressure in the last couple of months,” said Reed Hatcher, head of research, Hong Kong at Cushman &

Wakefield.

“And whilst impacts on the local economy have been relatively muted so far, it’s increasingly likely that we will see some slowdown as the trade war drags on. Barring any speedy resolution to the trade war, we are currently of the view that home prices could drop by as much as 10% through the first half of 2019,” Hatcher added.

This is follows another of prices increases in mass-market residential, which he expects to finish 2018 higher by between 5% to 7% from the prior year, as well as in luxury residential, which should see a more moderate rise of between 3% to 5%.

Meanwile, David Ji, director and head of research and consultancy, greater China at Knight Frank disagreed with the assessment of a Hong Kong bubble, citing the demand for housing.

“If there is a price correction, some buyers will enter the market.

Experiences during past downturns have shown that house prices are still on the up in general,” he said.

PROPERTY OUTLOOK The projected declines in massmarket house prices in 2019 come as the government has become more proactive in addressing issues in housing supply and affordability, according to Hatcher.

“The proposal to undertake land reclamation off Lantau is significant and very much welcomed for its potential to address Hong Kong’s longer-term supply issues,” he said.

“Given the scale of the scheme though, it will be critical that the government carry out a thorough and long-term planning on the transport infrastructure to avoid public transport systems becoming overwhelmed.”

As the impact from land reclamation plan could be a long ways off, Hatcher said the government made the right move to include measures that address supply issues in the short- and medium-term horizon.

Hatcher said the proposal to reactive the Industrial Revitalisation Scheme is likely the most suitable solution to boost housing supply in the short-run, but the government should either provide incentives to developers to demolish or rebuild structures, or to allow more flexibility in design requirements, an aspect in which industrial and residential have substantial differences.

However, Hatcher was doubtful on whether the vacancy tax will have a significant market impact.

“Whilst it will stimulate sales, there’s not enough unsold supply to bring much relief in the short-term to the overall market,” he said, citing Cushman & Wakefield research.

Ma reckoned that dwindling land supply for residential, as well as commercial, remains a concern.

“Without adequate land supply, living standards in Hong Kong will inevitably decline. Moreover, the shortage in land supply is not only limited to housing. Hong Kong also has a chronic shortage of commercial land supply,” he said.

Investor caution on office sector Market uncertainty has also begun to weigh on the office property sector, with leasing activity projected to continue experiencing a slowdown in the

coming year. Hatcher reckoned that in the first three quarters of 2018, net absorption was at about 2 million sq. ft., the highest level of take-up since 2015. “That’s quite a high benchmark to top under any circumstance,” he said.

Leasing from Mainland Chinese firms, who had been a key source of demand in Central in the past few years, have decelerated, according to Hatcher, although non-core locations such as Hong Kong East and Kowloon East still benefit from multinational firms that are on the hunt for cost savings.

“With several buildings in Kowloon East set for completion next year, I expect them to do well in the current environment,” he said.

“Another big source of demand in the year was from the co-working sector, with operators leasing more than 400,000 square feet in the first three quarters, more than four times that in all of 2017.”

Ji shared the less sanguine outlook for the Hong Kong office sector in 2019, citing the deteriorating external environment that has dampened sentiment and will impact leasing activities. He expects office rents in core areas to see some corrections in 2019 after growing by 5% in 2018.

Ma likewise pointed to the escalating trade tensions between China and the U.S. as a notable drag on the Hong Kong office market, but projects rents to remain stable in 2019. “We believe rents will hold at current levels given that vacancy remains extremely tight across the market outside of Kowloon East; less than 2% in Central, Wanchai/ Causeway Bay, Tsimshatsui and Hong Kong East,” said Ma. Bright spots in industrials, hotels For 2019, the industrial and hotel sectors represent the bright spots in the Hong Kong property market as analysts expect healthy demand.

“I think data centers and other new industrial properties are only beginning to spread. Whether Hong Kong can take the lead over Shenzhen largely depend on plans by [information technology] companies and landlords,” said Ji. The industrial sector’s leasing performance in 2018 was good,

Joseph Tsang

Dennis Ma

Reed Hatcher

David Ji

buoyed by strong demand for data centers, according to Hatcher. “It’s difficult to say, though, whether it will outpace the office sector which has also seen strong demand.”

He added that the industrial sector has seen robust investment demand after the government announced it would explore re-activating the Industrial Revitalisation Scheme, and the trend will likely continue. “Investment into industrial property in recent months has held up relatively well as compared to commercial property, which saw a steep drop in the third quarter.” Hatcher expects industrial rents in 2018 to have risen moderately, with project annual growth of 3% to 4%.

Whilst the industrial property market is likely to receive support from the Industrial Revitalisation Scheme, Ma reckoned the degree of this boost will depend on the performance of other property sectors.

As for the hotel sector, Ma holds an upbeat outlook and foresees Revenue Per Available Room, or RevPAR, to climb by over 10% across the board in 2018, making Hong Kong the fastest-growing major hotel market in Asia. He added that the market is wellpositioned to maintain its positive momentum in 2019, supported by the new transport links such as the High-Speed Rail Link and Hong Kong-Zhuhai-Macao Bridge that will help bring in more Mainland Chinese visitors while new hotel supply remains “relatively subdued.”

Smaller units, bigger demand

Source: JLL

HONG KONG BUSINESS ANNUAL 2019 9

HiRing and salary OUTLOOK

Salary premiums in small markets with limited workforces may hit up to $40,539 annually by 2030

Up to 4% salary hike awaits tech workers The demand will be driven in large part by fintech companies, as banks apply for their virtual banking licenses and are required to comply with e-banking regulations.

M

ore companies are beefing up their payrolls in a desperate bid to retain and attract talent.

Tech professionals can expect particularly lucrative offers from both startups and multinationals as more financial institutions pour funds into fintech initiatives.

“Talent specialising in cyber and data security is expected to be in high demand as companies seek to keep operational risks in check,” said Ricky Mui, director for legal & compliance and commerce finance & contract division at Robert Walters Hong Kong. “We anticipate an increase in the adoption and integration of technology solutions in financial service institutions, in areas of automation, cloud-based applications and data analytics particularly,” he said.

As a result, sectors such as artificial intelligence, automation and fintech will see salary hikes of up to 3.8% to 4.1%, with both large and small firms willing to pay premium for talent. The

10 HONG KONG BUSINESS ANNUAL 2019

“Sectors such as artificial intelligence, automation and fintech will see salary hikes of up to 3.8% to 4.1%, with both large and small firms willing to pay premium for talent.”

demand will be driven in large part by fintech, as banks apply for their virtual banking licenses and are required to comply with e-banking regulations.

According to KornFerry, salary premiums in small markets with limited workforces may hit up to $40,539 annually per highly skilled worker by 2030 in an effort to retain skilled workers.

Hong Kong, alongside Singapore, could expect salary premiums equivalent to more than 10% of their respective 2017 GDPs as companies beef up their payrolls to keep highdemand workers within their teams.

Meanwhile, human resources firm Hays noted that experienced candidates can demand as much as 30% in salary increases following the growing demand for financial institute relationship managers (FIRMs) in Hong Kong.

The Greater Bay Area has also fuelled demand for relationship managers (RM) and thus prompting candidates to take advantage and become aggressive in their salary

demands.

Stiff competition “The fintech, banking, retail and food & beverages industries along with startups have faced stiff competition under a candidate-short market. Hence, some have on some occasion paid above the market rate to attract talent,” noted Peter KH Chan, talent consultant at Mercer.

According to a study by business consulting firm KornFerry, Hong Kong’s financial and business services industries stand to be the hardest hit across the region if labour shortages are not addressed.

It may result in lost revenue that is equal to a staggering 12% of its total economy. Singapore on the other hand only stands to lose around 6%.

Hong Kong ranks fifth in the Asia Pacific markets surveyed by KornFerry that stands to lose the most if it fails to plug its labour deficit which is poised to hit 1.88m by 2030.

Overall, Hong Kong’s total unrealised output is expected to hit

HiRing and salary OUTLOOK $1.73t (US$219.8b) by 2030 if it fails to find a solution to its worsening skilled talent shortage. But Hong Kong’s healthy economy and appetite to hire post a comparatively slower 2017 contributed to the country’s strong hiring landscape amidst a tech talent shortage.

On the legal and compliance front, Mui said that companies will actively be seeking legal professionals with experience in mobile payment, as well as financial regulations in virtual banking and cryptocurrency following the rise of fintech.

“Regulatory specialists will also be highly sought after,” he added.

Mui expected that by the end of 2018, 220 companies would list raising $300b, with a surge of listings in biotech and technology companies as a result of changes to listing regulations.

Howard Chan, regional director for Michael Page Hong Kong, however said that employers would likely take on a more conservative approach to hiring in 2019 following uncertainties with macroeconomic conditions involving global trade, interest rates and GDP growth.

Mercer talent consultant Peter KH Chan shared this sentiment as he expects that 66% of firms are likely to keep their workforce at its current state going into 2019. Of those firms who will be making changes, Chan said that 30% of firms might look to hire more employees whilst 4% could reduce their staff.

The production and manufacturing facilities in Hong Kong are expected to diminish in time as companies move their operations to alternative countries such as Sri Lanka, Vietnam and Cambodia, Chan explained.

Operational or administrative roles Banking and finance services

Source: Michael Page Hong Kong

that are of the mundane level will be outsourced to either other countries or taken over by AI and automation.

Ricky Mui

Peter KH Chan

Howard Chan

Shifting work mindsets Whilst the rise of fintech may signal red flags for those who could potentially see their jobs cut, firms in the co-working space and personal concierge services and customer services are on the rise thanks to Hong Kong’s improving language capabilities where some professionals are bilingual, and in some cases, trilingual.

Chan observed that language was a key component for firms, with a stronger emphasis on soft skills that overrode technical skills competency.

“The gap between expat and local workers has gotten narrower as their language, soft skills and technical competencies are similar,” he highlighted. “Employers also looked for candidates with the right level of strategic mindset to ‘think out of the box’ and to challenge the norm.”

The market is also seeing a shift in the traditional mindset towards specialists, Chan said which echoed Mui’s observations on how in 2018, some candidates preferred contract work over permanent roles in order to broaden their project exposure.

“Both candidates and companies are more open to contract roles and have acknowledged the benefits a dynamic workforce can bring in a fast-paced economy,” Chan highlighted.

Mui also added that Hong Kong could see more companies building ‘smart workplaces’ in a bid to promote mobile, flexible working arrangements and more efficient access to information.

Meanwhile, the labour market’s shift to a newer and younger generation brought with itself key challenges with staying competitive in the dynamic market space in 2018.

“Aside from salaries, candidates would also evaluate the whole employment package such as attractive benefits, work-life-balance, employer branding, flexibility, working environment, accelerated career paths and attractive titles that are more superior than large conglomerates or MNC’s,” Chan

said.

As a result, employers will need to be creative to come up with hiring propositions that attract the most active workforce - the millennials - and keep them engaged, Chan noted.

“Employers who are open to integrating popular technologies and platforms into the workplace can have a powerful advantage in attracting and retaining talent – millennials in particular,” Mui echoed.

Eyes on the whole prize It is important to note though that monetary benefits are somewhat becoming overlooked due to shifting perceptions towards a more holistic employee package, according to Chan.“Professionals will also look at additional benefits such as work-lifebalance, work-at-home or flexi hours arrangements,” he highlighted.

A survey by human resources consultant Randstad amplifies this sentiment, which found that Hong Kong is the most open to flexi work in the Asia Pacific (APAC) region with 91% of employees embracing the setup as it allows them to maintain a work-life balance.

According to the study, the openness of Hong Kong employees to such work setups is significantly higher than the global average of 82%, as well as the APAC average of 89%. “Agile working is believed to promote autonomy as Hong Kongers want to be given the responsibility to manage their work with greater flexibility,” Ranstad said in a statement.

Amongst those surveyed, more women embraced the concept (92%) than men (89%), whilst across age groups, those in the 3554 age bracket showed the highest preference (92%) for flexible work arrangements. This was followed by newly starting employees aged 18-34 (89%) and employees between 5567.9 who have been in the industry for some time (86%).

“Apart from the monetary benefits, they are also focused on career progression in the company, as well as what kind of learning and development programmes or leadership opportunities are in place,” Chan said.

HONG KONG BUSINESS ANNUAL 2019 11

ACCOUNTING OUTLOOK

Salary premiums in small markets with limited workforces may hit up to $40,539 annually by 2030

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 also expected to increase.

China’s Belt and Road Initiative will also be a major driver for growth and transformation in the sector,

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 2019

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, vice-chairman, 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 decision-

making 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 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

ACCOUNTING OUTLOOK Salary range - Finance and Accounting

Derek Lai

KT Tam Source: Robert Half Hong Kong 2017 Salary Guide

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 innovation across various industries

Paul Phenix

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 2019 13

RETAIL OUTLOOK

Alipay HK’s unmanned shop. Photo courtesy: Tofugear

Hong Kong welcomes stores of the future Cost-efficient equipment like face-scanning, QR codes, and mobile tech could replace warm bodies to accommodate customers. Will Hong Kong’s retail scene fully embrace unmanned shops in 2019?

T

he opening of unmanned retail stores of both Alipay HK and Okashiland in Hong Kong in early September 2018 signals what is likely to be the future of retail. Alipay HK’s store, located in Olympian City in West Kowloon, and Okashiland’s shop, located in Gala Place in the famous Mong Kok area, both share two things: there are no staff to manage the space and every nook and cranny of the shops are equipped with cutting-edge technology to ensure accuracy and efficiency.

Notably, technology from the first two unmanned shops in Hong Kong are readily available and are relatively cost-efficient, which include face scanning, QR codes, and mobile technology—which signals the replicability and likely proliferation of this trend in the retail sector. For Alipay HK, for instance, customers only needed to have their faces scanned upon entry. The process generated a QR code on a screen outside the store and is key for them to gain access. They can pick

14 HONG KONG BUSINESS ANNUAL 2019

“The emergence of unmanned stores as part of a new retail trend that will sweep Hong Kong’s retail sector in the next years to come.”

up goods from the store, which is automatically tagged and identified through a Radio Frequency Identification (RFID) system. After verifying the list of the pr oducts they shopped for, customers can pay through QR code scanning, with Alipay HK employing its own online payment application.

Lawrence Wan, senior director for advisory and transaction services for retail at CBRE Hong Kong, noted the emergence of unmanned stores as part of a new retail trend that will sweep Hong Kong’s retail sector in the next years to come.“Unmanned stores are a major part of the ‘New Retail’ trend, which his becoming widely popular in the mainland. One of the reasons for their emergence is cost efficiency. With the help of technology, the cost of unmanned retail is much lower than that of traditional retail forms,” he said. “For example, unmanned convenience stores cover a smaller area and do not require manpower management, so they cost one-

tenth as much to open as a normal convenience store.”

Slow adoption?

Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, echoed this sentiment saying that despite the launch of the two stores of Alipay HK and Okashiland being trial runs for now, the concept of unmanned stores would be perfect for the landscape. “Hong Kong is perfect for this. Shopping space is small. Consumers know products well and adore efficiency,” she said.

“Unmanned shops will flourish in Hong Kong unless the government regulates it so as to keep jobs.”

Whilst unmanned stores are likely the (immediate) future of retail in Hong Kong, the rate of adoption and implementation of these technologies into actual retail stores may take some time, particularly in more front-facing subsectors like food and beverage as well as fashion.

Wan explained that whilst the technologies behind the concept of unmanned stores provide efficiency

RETAIL OUTLOOK

Okashi Land unmanned shop

and convenience, some products and services in the retail sector still require human interaction, at least, for now. Wan added that Hong Kong’s prestige as a premier tourism and shopping destination will also play a big role as tourists from other developing markets may still prefer traditional shopping experiences of interacting with salespersons at every point of contact in a store, which may still be reflective of how retail experiences are in their home countries.

“The traditional models of having staff at counters and around the shop are well received by local and tourist consumers in Hong Kong,” he said. “2019 is too soon to talk about unmanned stores in Hong Kong, but we will be seeing more automated elements.”

Some of the retailers that are incorporating new technologies and tools in their businesses to revolutionise shopping options to reduce lifecycle and overhead costs include the installation of self-service checkouts of EASYJOY, a convenience store brand run

by Sinopec, in its new location at the Hong Kong Convention & Exhibition Centre in Wan Chai, Alipay HK’s unmanned store in Olympian City, and the promotion of the use of WeChat Pay in Hong Kong through the $13m investment partnership of Tencent with Sun Hung Kai Properties.

roles of physical stores, with some consumers still preferring to visit physical stores and see and feel the products themselves or try them on in the case of fashion brands.

“In Hong Kong, brick-and-mortar is still king. But the role of physical stores has changed. Whilst Hong Kong is slower than other regions in embracing e-commerce, this year, we have seen more retailers start their online sales channels and go more creative in formulating their omnichannel strategies,” he said, citing the example of fashion brands that only offer discounts for orders made online Wan explained that pop-up stores are also gaining popularity this year, and like the next, for their effectiveness in gaining crows and marketing their brands.

This preference in physical stores is still seen in some segments in the retail sector. According to data from Knight Frank, luxury goods sales recorded the highest growth amongst the various categories, up 21.6% year-on-year in August— prompting a number of luxury retailers to expand their retail physical presence. For instance, jewellery retailer Lao Feng Xiang from mainland China expanded its footprint in Causeway Bay, renting a 1,000sqft shop at 24-30 Percival Street for $350,000 per month.

This is the brand’s second shop in Causeway Bay, after opening its first shop in Paterson Street last year.

Changing role of physical stores Along with this, Wan noted that retailers are also starting to understand and adapt the changing

Sector outlook Given the likely surge in tourism from mainland China on the back of better transport connectivity to Hong

Lawrence Wan

Alicia GarciaHerrero

Kong, CBRE noted that demand for shops near the new border gates will likely remain significant with sales of tourist-oriented goods such as cosmetics, healthcare, and watches and jewellery expecting a bump.

Demand for retail space, despite the scarcity of new real estate in Hong Kong, will remain high with retailers operating in the previously mentioned sectors will continue to look for leasing opportunities.

“Retailers in other sectors are expected to retain a cautious approach towards leasing in the short-term,” the CBRE report revealed. “Expansions or store upgrades are unlikely to involve aggressive rental levels.”

In terms of specific retail subsectors to watch out for in the next 12 months, Wan said that homegrown personal care retailers will remain popular with their strategy of hiring personal health consultants that consumers can talk to and consult on the spot.

He further noted that the trend of pursuing healthier lifestyles and fitness will also bring a boon to the retail sector, apart from Hong Kong’s attraction as a gateway city for tourism and economic activities.

“The growing pursuit of healthier lifestyles and fitness in Hong Kong brings new demand for retailers offering related products,” he said. “It is important to note that Hong Kong is a perfect springboard for retailers’ further expansion into neighbouring markets. Hong Kong is a global gateway city for all businesses as its trusted legal and simple taxation systems give retailers confidence and ease to run their business. Brands all over the world always view Hong Kong as one of the most preferred destinations to boost their brand profile.”

HONG KONG BUSINESS ANNUAL 2019 15

legal OUTLOOK

Will international law firms ditch Hong Kong for Singapore or Shanghai?

Foreign lawyer restriction hits industry According to the Law Society’s proposal, Hong Kong firms would have to employ two local lawyers for one foreign lawyer, up from a ratio of one to one.

A

game-changing rule may hurt Hong Kong’s status as a legal hub. In early October 2018, the Law Society had sent a letter to consulting firms proposing fresh restrictions on lawyers who practice law outside Hong Kong.

Under the new guidelines, they would only be able to offer legal advice on cases that involved the jurisdictions they were registered in. Further, Hong Kong law firms would also have to employ two local lawyers for one foreign lawyer, up from a ratio of one to one.

A number of global law firms, including Linklaters and Kirkland & Ellis, are challenging the proposal, stating that the move could result in “colossal negative repercussions” for Hong Kong. In a previous interview, Martin Rogers, partner at Davis Polk said that the concern lies on the bigger impact of imposing restrictions to the industry. “If the Law Society takes the view that better enforcement is required to restrict what foreign lawyers are allowed to do, that’s unobjectionable.

16 HONG KONG BUSINESS ANNUAL 2019

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

What really concerns us is the arbitrary idea to deal with the ratio and to restrict lawyers from coming,” Rogers said.

Meanwhile, should the new rules be rolled out, international firms may choose to move their operations and regional headquarters to other markets such as Singapore and Shanghai, according to Asian Legal Business.

As of 2018, Hong Kong is a hub for over 10,000 practising solicitors and barristers, making it Asia’s international law capital. The SAR saw over 903 solicitor firms and 83 foreign law firms set up by H1, including more than half of the Global 100 law firms with a presence in Hong Kong. There are 1,500 registered foreign lawyers from 34 jurisdictions working in Hong Kong, accounting for 15% of practising lawyers in the competitive legal market. Aside from 906 local firms, there are 85 pure foreign firms completely practising non-Hong Kong law and 30 joint associations between

Hong Kong and foreign firms.

The practices range from business transactions, litigations, to offshore wealth management. If the numbers are anything to go by, foreign law firms continue to play an important role in Hong Kong’s legal market.

Saving grace Marta Verderosa, manager for Michael Page legal in Hong Kong noted that a silver lining is in the horizon as 2018 witnessed the effects of the introduction of a concessionary tax regime promoting the Hong Kong aircraft leasing industry with a number of openings in both the in-house and private practice space. The fintech industry which is sealing their expansion have paved the way for strong hiring activity amongst regulatory lawyers.

“This is an interesting lead to thinking further about other areas including cashless payment systems, cybersecurity and white-collar violations,” Verderosa said.

KPMG also notes that due to the strong pipeline for IPOs in place,

legal OUTLOOK M&A Deal Activity in Hong Kong

Marta Verderosa

Source: Robert Walters Salary Survey 2017 Source: BakerMcKenzie

Psyche Tai

the growing demand for services related to finance will also stimulate continual demand for legal services.

“Across the firm, we are seeing increasing demand for legal project managers, but also for our senior lawyers to take the lead on project management,” Clifford Chance regional managing partner Geraint Hughes said.

Areas to look forward to In a previous interview, Psyche Tai, head of Norton Rose Fulbright’s Hong Kong office, said that aside from traditional banking and corporate experts who can do M&A work, strong hiring 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.”

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.

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.

Geraint Hughes

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.

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.

“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.”

Tai said.

Will international law firms ditch Hong Kong for Singapore or Shanghai?

HONG KONG BUSINESS ANNUAL 2019 17

TOP NEWS IN 2018

MOST READ

HKMA cuts down a third of virtual banking applicants About a third or 10 of the roughly 30 applications received by the Hong Kong Monetary Authority (HKMA) in its first batch of virtual banking applications will not be processed anymore. The applicants who aim to provide the full suite of retail banking services without the need to set up branches, failed to submit sufficient information.

Daily news: www.hongkongbusiness.hk

Hong Kong economy to slow to 3.2% in 2019: IMF Hong Kong economy, as measured in terms of real GDP, is projected to slow from 3.8% in 2017 to 3.2% in 2019, according to a global economic outlook published by the IMF. The city’s muted growth forecast is tied to a moderation in the Mainland’s economy, according to BMI Research, as Beijing embarks on a more sustainable growth.

Bull-run finally ends: Hong Kong home prices to fall 15% in 2019 The freewheeling days of Hong Kong’s residential market are finally coming to a close as home prices in the world’s most expensive property market are expected to fall 15% in 2019, according to real estate consultant JLL. The worst case scenario envisions prices to crash by as much as 25%.

18 HONG KONG BUSINESS ANNUAL 2019

Half of Hong Kong companies lost new recruits amidst poor onboarding A third of firms had employees resign in their first month.

Half (54%) of financial employers in Hong Kong admitted to losing employees on probation period due to unsatisfactory onboarding processes, according to a survey

by HR consultant Robert Half.

In fact, a little over a third (35%) of employers cited that they lost an employee in the first month, marking an alarming statistic on long-term talent retention in manpower-short Hong Kong.

Hong Kong’s largest accounting firms in 2017 Our annual accounting survey revealed that PwC, EY, Deloitte, and KPMG cemented their positions last year, with PwC taking the lead with a total number of employees at 4,000, up 100 from last year’s figures.

EY comes at second with 3,000 employees, also up 100 from last year’s 2,900.

Deloitte Touch Tomatsu grew the most with 235 new recruits to add to its 2,265 employees in 2016. KPMG and BDO retained their fourth and fifth places with steady 2,200 and 1,100 employees, respectively.

Hong Kong set to vault to the top of global IPO league with $300b haul A strong Q3 performance has boosted expectations of the SAR taking the top spot.

In defiance of the subdued market environment that has seen better days, Hong Kong is well-positioned to claim the spot as the highest performing global stock exchange by end-2018 on the back of blockbuster listings and an IPO pipeline that’s fit to burst.

Hong Kong looks set to reclaim IPO crown with nearly US$300b haul in JanuaryNovember Proceeds from New York IPOs only hit US$205b as it settles for a tentative second place.

Even with one more month to go before the year closes, Hong Kong appears to have already achieved its plans to climb its way back to the top of the global IPO league as it wrestled the top spot from the New York bourse in firsttime share sale proceeds from January-November 2018.

Hong Kong’s estimated IPO haul nearly hit $300b (US$38.4b) in the first 11 months of the year.

Cash is still king in Hong Kong as only a fifth embrace e-payments Nearly 70% cite that they remain unfamiliar with the tech required to go cashless. Cash still reigns supreme as the top payment option in Hong Kong as an overwhelming 99% of residents use it as their regular payment option in the past year compared to the 20% who embrace mobile for their regular payment needs, according to the inaugural AlipayHK Smart Payment Popularity Index released by the Hong Kong Productivity Council.

Hong Kong’s spiralling home prices to crash as buyer demand takes hit Sentiment has soured especially in Kowloon and Hong Kong Island.

Residential property prices in Hong Kong may have already peaked as they are expected to fall by 0.2% over the next twelve months following a heated uptrend that lasted two continuous years and gave Hong Kong the unenviable distinction as the world’s most expensive property market, according to the Royal Institute of Chartered Surveyors (RICS) Hong Kong residential market survey.

TOP NEWS IN 2018

MOST READ

Daily news: www.hongkongbusiness.hk

Fintech will go mainstream in Hong Kong by 2018: KPMG The industry is entering a new era of Smart Banking.

With the revolutionary way fintech has reshaped the banking landscape in the past years, it comes as no surprise that it is projected to be up for mainstream adoption in most, if not all, banks by next year, according to KPMG’s 2018 Hong Kong Banking Outlook.

9.9% followed by fuels and food, alcohol and tobacco both at 8.5%.

Relax, robots are not out to take your banking jobs Robotics mostly serves as a stopgap measure to overcome flaws in tech infrastructure. Whilst several banks in Hong Kong have increasingly adopted advanced robotics technology to automate office processes and increase operational efficiency.

Converting properties to coliving spaces can push rental yields up by 12.1% Students and young professionals are seen to be the most receptive to the co-living scheme. Residential developments stand to gain 12.1% increase in rental yields once they convert their buildings into co-living spaces, according to a research paper from JLL. Retail sales up 3.9% to $37.5b in October Thanks to the ongoing recovery of inbound tourism.

Total retail sales value rose 3.9% YoY to $37.5b in October mainly due to positive consumer sentiment and continued revival in inbound tourism, according to the Census & Statistics Department.

Sales of medicines and cosmetics posted the largest increase at

Kowloon office already 70% leased even before April opening Bloomberg reports that New World Development Co. said that the office component of the HK$20.3b Victoria Dockside complex in Kowloon is already 70 percent leased, and will be fully rented by March or April when the entire building opens.

Tenants include Mizuho Bank

Ltd., which leased six floors and moved into the building named K11 Atelier in October, relocating from Pacific Place. Rents are $85/ sqf monthly.

Banks apply tech, data analytics to combat money laundering One of the major amendments is to leverage technology on nonface-to-face account opening.

Hong Kong banks will increasingly explore and leverage the use of technology and data analytics to combat anti-money laundering (AML) and counter-terrorist financing in 2018, according KPMG China.

Nine jobs that are most in demand in Hong Kong in 2018 Accountancy & Finance has the highest demand for skilled professionals.

Chinese capital investment in asset management firms and private equity fund houses has created job growth in the nonbanking financial services industry, according to recruiting experts Hays.

Tourist arrivals up 6.6% to 5.28 million in October Visitors from South Korea and Japan posted the largest growth.

Tourist arrivals increased 6.6% YoY to 5.28 million visitors in October, according to data from

Hong Kong Tourism Board.

Tourists from Mainland China posted 8.3% growth to 4.03 million visitors. Visitors from short haul markets registered 6.9%.

More than half of Hong Kong banking professionals willing to work in GBA cities Four in five banking professionals in Hong Kong believe that opportunities will arise in their midst through the GuangdongHong Kong-Macau Greater Bay Area (GBA), a survey by the Hong Kong Institute of Bankers (HKIB) found. In fact, 63% of them are willing to work in the GBA cities.

The survey found that those working for senior management positions (72%) and professionals with less than 10 years of experience (71%) were the most eager for possible relocation.

Housing market defies cooling measures amidst aggressive market takeup Bloomberg reports that Hong Kong’s heated housing market continues to defy cooling measures to curb its runaway growth as buyers remain enthusiastic over new projects with Wheelock & Co.’s nonlanded property in Kowloon selling out all 750 apartments over the weekend. Wheelock & Co. sold all 750 apartments amidst a slew of 9,800 applications.

HONG KONG BUSINESS ANNUAL 2019 19

TOP NEWS IN 2018

MOST READ

main source of spending loses incentive to shop.

The renminbi depreciation brought about by the ongoing US-China trade dispute is poised to weigh in on the sector’s rental performance.

Daily news: www.hongkongbusiness.hk

Property sales plunge 48% in November Hong Kong’s real estate market continued to weaken as property sales plunged 48% YoY and 26.4% MoM to 3,953 sale and purchase agreements in November, according to a government statement.

The total consideration for sale and purchase agreements in November hit $43.3b which represents a headline figure down by 35.1% YoY and 4.9% MoM.

Hong Kong inches closer to Singapore in digital transformation: study Hong Kong placed third in the Asian Digital Transformation Index developed by The Economist Intelligence Unit. Its score of 62.3 made it jump one spot to seal its place next to Singapore and Japan which finished at first and second ranks, with 7 in 10 having access to superfast internet connectivity.

20 HONG KONG BUSINESS ANNUAL 2019

Cathay Pacific hit by massive $6.45b fuel hedging loss Bloomberg reports that Cathay Pacific is struggling to take off as it reports its fourth consecutive year of deficits amidst massive fuel-hedging loses worth $6.45b in 2017 with analysts expecting a turnaround by 2019.

Even though the airline has reduced the proportion of fuel it hedges, the effects still weigh on the company’s financials as the futures contracts were locked in years ago. The airline posted its fourth straight year of deficits.

Housing correction of 15% possible in 2019 Bloomberg reports that housing correction of as much as 15% in the world’s most expensive property market may take place in the first half of 2019 as monetary policy tightens and Chinese liquidity into Hong Kong recedes, according to Kenneth Gaw, president of Gaw Capital partners.

Prime street shop rents to fall by at least 5% in 2019 The weak renminbi and stock market are to blame.

Prime street shop rents are set to drop by at least 5% in 2019, according to real estate consultant Knight Frank, as Hong Kong’s

Hong Kong banking industry needs to amp up skills on cybersecurity: study The Hong Kong banking industry might need to pump up programmes for its manpower as 6 in 10 practitioners in the field think that the sector is facing a serious skills gap, a survey by the Hong Kong Institute of Bankers (HKIB) found. Only 2 in 5 industry professionals have gone through fintech training courses.

Hong Kong’s healthcare system beats Singapore as the world’s most efficient: Bloomberg Absolute healthcare cost in the SAR stands at US$2,222.

Hong Kong has once again beat Singapore, Japan and Norway for the title of the most efficient healthcare system in the world, according to the Bloomberg Health Care Efficiency Index.

The SAR has an efficiency score of 87.3 although Singapore is fast closing in with an efficiency score of 85.6. Life expectancy in the SAR is also the highest at 84.3 years old, attesting to the quality of the SAR’s healthcare institutions.

A third of Hong Kong workers go through mental health problems during employment The impact is largely seen in junior employees who have just jumpstarted on their careers.

Three in 10 (35%) of professional workers in Hong Kong admitted that they have faced mental health problems at some point in their life during employment.

Mega transport projects accelerate Hong Kong’s construction boom It’s expected to grow 1.8% annually between 2018 and 2022.

The transport sector is projected to fortify Hong Kong’s construction industry over the next five years as a slew of high-value road, rail and airport projects cement the sector’s long-term growth prospects with analysts forecasting an average of 1.8% in real growth annually between 2018 and 2022, according to BMI Research.

The projects are expected to begin operations this year, spurring a fresh wave of construction projects.

23 building plans approved in August The Buildings Department approved a total of 23 building plans in August, according to a government statement. Of this number, six will be built on Hong Kong Island, five in Kowloon and 12 in the New Territories.

In terms of property type, apartment and apartment commercial developments accounted for the largest share at eleven followed by eight for commercial developments, three were for community services developments and one for factory and industrial developments.

TOP NEWS IN 2018

MOST READ

Daily news: www.hongkongbusiness.hk

Waiting time for public housing hits 18-year high The average waiting time for public housing in Hong Kong has hit its highest point in 18 years with residents forced to wait for five years and three months before they can be allocated a flat, according to official statistics.

This represents an increase of two months as of end-June.

Out of the 268,500 applicants in the past year, more than half (56%) were families whilst the rest 44% were singles.

Embattled Hong Kong hotels brighten up on tourism Declining tourist arrivals almost pushed Henderson Land to exit the Hong Kong hotel scene.

Hong Kong Business’ annual hotel industry survey revealed very minimal movements in the largest hotel rankings this year.

L’hotel Nina et Convention Centre retained its top spot with 1,608

rooms, followed by Regal Airport Hotel with 1,171 rooms.

Fresh grads’ salaries up 9.5% to $14,685 And they landed a job within three months post graduation.

Nearly all of Hong Kong’s most recent batch of university graduates (89%) found a job within three months of leaving school, and the majority of them (76%) are satisfied with their position, according to jobsDB.

F&B sector battered by exits in 2018 If there is anything that Hong Kongers are getting used to, it is the pain of seeing their newest favorite dining spot close up shop. From the vegetarian-andvegan havens HOME – Eat to Live and Maya, to the rooftop pizzeria 3/3rds, to the NEO Cocktail Club, there has been a bevy of closures.

HKIA passenger volume up 3.3% to 72.9 million passengers Hong Kong International Airport closed 2017 on greater heights as it registered sustained growth levels across all air traffic categories after handling 72.9 million passengers and 5.05 million tonnes of cargo and airmail in a year. Flight movements grew 2.2% YoY to 420,630.

Hong Kong is the least affordable housing market for eighth time in a row With a red-hot property market that not even the threat of a Fed rate hike can curb, it comes as no surprise that Hong Kong once again holds the title of having the least affordable housing market in the world, according to Annual Demographia International Housing Affordability Survey.

The survey uses the median multiple, which is median house price divided by median household income, to evaluate the affordability of housing markets.

Retail sales reverse September slowdown to hit $39.7b Retail sales in Hong Kong picked up pace after rising 5.9% to $39.7b in October following a dismal 2.4% growth in the previous month, according to the Census & Statistics department. “[R]etail sales picked up somewhat in October after a deceleration in the preceding month, supported by the faster increase in visitor arrivals and continued income growth,” a government spokesperson said in a statement.

SFC slaps $1.5m fine on SFM HK Management over short selling violations The Securities and Futures Commission (SFC) has slapped a $1.5m fine on the Hong Kong office of Soros Fund Management

(SFM) for failures relating to the short selling of Great Wall Motor Company Limited shares in 2015 on behalf of a fund it managed.

Hong Kong is 6th safest city in the world Hong Kong rose eight notches in the global law and order index to rank as the sixth safest city in the world with a score of 91 in 2018, according to a report by consultant Gallup.

It previously held 14th place last year with an index score of 88.

Singapore held the top spot for the third consecutive year with an index score of 97. European countries like Norway, Iceland and Finland occupy subsequent spots whilst Uzbekistan completes the top five.

Hong Kong medical inflation to hit 8.4% in 2018 Diagnostics for cancer-related illnesses are pushing costs up.

Medical inflation in Hong Kong is set to clock in at 8.4% by 2018 as the city’s ageing healthcare system is bearing the weight of increased demand brought about by a similarly ageing population, according to a report from Aon. The proportion of citizens aged 65 and older is projected to account for over a fourth (26.4%) of the population by 2036, according to the Census & Statistics Department.

HONG KONG BUSINESS ANNUAL 2019 21

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.

22 HONG KONG BUSINESS ANNUAL 2019

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 amidst a proentrepreneur 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

"The quality of Hong Kong’s banking system enables it to play a major role in serving well beyond its boundary."

2016, Hong Kong 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

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

(YOY) growth of more than 10%.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

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

market and extend the 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.

HONG KONG BUSINESS ANNUAL 2019 23

company and industry - clothing industry

Online shopping drives clothing industry

Clothes are amongst the most popular purchased items online in Hong Kong and the mainland China.

T

he clothing industry is a major manufacturing sector of Hong Kong. It is one of the largest manufacturing employers in Hong Kong, with 603 establishments hiring 4,027 workers as of March 2018.

Hong Kong’s geographic boundary has never constrained the development of the forward-looking clothing industry.

The majority of clothing manufacturers have set up offshore production facilities in an attempt to reduce operation costs.

Relocation of production facilities offshore has, however, resulted in a largely steady decline in the number of clothing manufacturers in Hong Kong.

Hong Kong is not only a leading production centre but also a hub for clothing sourcing globally. Companies doing garment trade in Hong Kong are experienced in

fabrics procurement, sales and marketing, quality control, logistic arrangements, clothing designs and international and national rules and regulations.

Hong Kong’s Exports of Clothing In recent years, traditional markets, such as the US, the EU and Japan, have rendered clothing exporters from developing countries, including ASEAN and Bangladesh, more preferential market access, which has in turn impaired the competitiveness of Hong Kong and mainland manufacturers. Along with rising labour costs and stricter environmental regulations on the Chinese mainland, an increasing number of Hong Kong and mainland clothing manufacturers have relocated their production of lower-end and mass products to Southeast Asian countries

"Hong Kong is not only a leading production centre but also a hub for clothing sourcing globally. "

like Bangladesh, Vietnam, Cambodia and Indonesia. Their manufacturing operations on the mainland are now focused on more sophisticated and higher value-added items or urgent orders.

Hong Kong’s total exports of clothing fell by 5% year-on-year in the first half of 2018 after a 7% decrease in 2017. In January-June 2018, Hong Kong’s domestic exports of clothing slid by 11%, whilst re-exports fell by 5% on par with total clothing exports.

Amongst the major export destinations, Hong Kong’s clothing exports to the US decreased by 9% in the first six months of 2017, whilst those to the EU were down by 7%. Clothing exports to major EU markets including Germany, the UK, the Netherlands and France fell by 5-18%. However, clothing exports to Italy rose by 21%. Taken together, sales to the US and the EU accounted for nearly 60% of Hong Kong’s total clothing exports. Source: Hong Kong Trade Statistics, Census and Statistics Department Sales Channels A few well-established local manufacturers have entered into the retailing business, either locally or in overseas markets. Many of them have retail networks with their own labels in major cities around the world including Beijing, London, New York, San Francisco, Shanghai, Singapore, Sydney, Taipei and Tokyo.

As a global sourcing hub in Asia, Hong Kong attracts a number of international trading houses and major retailers. Many international premium designer labels in Hong Kong through their buying offices or other intermediaries.

Hong Kong’s fashion designers have been gaining worldwide reputation for their professional expertise, sensitivity to current trends and ability to blend commercialism with innovation.

Trade fairs and exhibitions remain common places for buyers and suppliers of clothing to congregate. To establish connections and explore market opportunities, Hong Kong manufacturers and traders have involved themselves actively in international shows.

Online shopping is increasingly popular in Hong Kong’s major clothing markets, including the Chinese mainland where

24 HONG KONG BUSINESS ANNUAL 2019

clothing industry - company and industry

Value Domestic Exports Re-exports of Chinese mainland origin Total Exports

2016 Growth %

Value

2017 Growth %

Jan-Jun 2018 Value Growth %

0.5

-40

0.3

-39

0.1

121.1

-15

112.6

-7

48.5

-11 -5

108.1

-16

100.1

-7

42.6

-6

121.6

-15

112.9

-7

48.7

-5

Source: Hong Kong Trade Statistics, Census and Statistics Department

there are 533 million online shoppers in 2017. Across the board, clothing is among the most purchased items online in the Chinese mainland where online retail sales of clothing saw a 20.3% growth last year.

Industry Trends The growing variety of online shopping sites plus the bloom of group shopping and mobile retailing, are expected to boost online shopping and sales further. The continuous improvement of third party payment also helps popularise online shopping. It is estimated that global retail e-commerce sales will hit US$4.5 trillion by 2021, up from the 2017 level of US$2.3 trillion. This trend has also encouraged the development of some online shopping technologies such as virtual fitting, video shopping and mobile snapshot for clothing.

Private or house labels, in essence, have become an increasingly effective marketing tool among garment retailers, especially when many consumers in developed markets still remain conservative in view of the nascent economic recovery.

In order to differentiate as well as upgrade the image of their products, major retailers have started to put a stronger emphasis on their own labels.

Consumers are becoming more practical, thoughtful and socially conscious. The drive to embed sustainability within the clothing industry will likely bring forth new materials and innovative ways of production, whilst the concept of a circular economy will become more

widely applied throughout the supply chain by committing to such ideas as end-of-life collection and closed-loop fashion products to enable the reuse and recycling of textile fibers and fabrics.

The rapid expansion of mainland’s economy has drawn the attention of both Hong Kong and foreign clothing companies. Chinese consumers are becoming more fashionable and brand-conscious.

Product Trends Consumers in mature markets continue to resume spending on fashion products, but still opt for items that offer comfort, function and value-for-money – and nothing too radical.

Longevity remains an important element, whilst items with recognisable, fashionable brands and decent quality are still highly sought-after.

Childrenswear continue to shape the clothing industry.

The global market for children’s wear is forecast to top US$200 billion by 2021. In light of the economic recovery in the developed markets and growing middle class in emerging markets, parents worldwide are becoming more willing and able to pamper their children with more exquisite apparel.

Men are increasingly concerned about the clothes which come to their wardrobes.

According to Euromonitor, the men’s clothing market is forecast to rise to US$490 billion by 2021, up from US$ 420 billion in 2017. Moreover, men have been spending more on their outfits each year for more than a decade now, thanks partly to the growing popularity of

“The growing variety of online shopping sites plus the bloom of group shopping and mobile retailing, are expected to boost online shopping and sales further.”

online menswear shopping that is expected to show an average annual sales growth of more than 14% between 2015 and 2020.

Promising markets Ageing population becomes a common phenomenon in many developed countries in Europe, Japan as well as the US. United Nations projects that population aged 60 or over in more developed regions accounts for 33% of their respective population.

The plus-size market has been an area of growth for many years, and the trend is expected to continue.

Clothes made of stainresistant and wrinkle-free fabrics are well received in the market.

It is estimated that over a quarter of apparel is now made of easycare fabrics, and its popularity is expected to continue.

Thanks to the growing awareness on health and quality of life, the demand for functional clothing is climbing. Along with the rapid development of functional clothing innovation, apparel with various functions can easily be found in the market.

The growth of technology allows consumers to search the internet and find a way to create their own custom made outfits. This is the modern way to express their creativity on making their own fashion designs and clothes.

Concerns over both dressing green and product comfortability are always on the rise, making clothes made of natural fibers popular among consumers, especially in the developed markets.

HONG KONG BUSINESS ANNUAL 2019 25

company and industry - electronics industry

Re-export growth boost electronics industry

A substantial portion of such exports are regarded as high-tech products, related to telecoms, semiconductors and computer items.

H

ong Kong’s electronics industry is the largest merchandise export earner of the territory, accounting for 66.2% of Hong Kong’s total exports in 2017. A substantial portion of such exports are regarded as high-tech products, especially those related to telecommunications equipment, semiconductors and computer items.

The Chinese mainland is both the major source and the major destination of Hong Kong’s trading in such electronic products.

World’s largest exporter According to the latest available statistics Hong Kong was the world’s largest exporter of electronic integrated circuits; the second largest exporter of computer parts/ accessories and video recording apparatus; and the world’s third largest exporter of telephones/mobile phones and sound recording apparatus in value terms in 2016.

This is thanks to the huge re-export business handled through the territory, as Hong Kong is among the major trading hubs in the globe.

26 HONG KONG BUSINESS ANNUAL 2019

Parts and components constitute about three quarters of Hong Kong’s electronics exports, of which the majority are reexported to the Chinese mainland for outward processing production. Finished goods constitute about one quarter of the exports, of which the majority are consumer electronics for domestic use, including a wide range of audio-visual equipment, computer products and telecommunications equipment.

Most Hong Kong manufacturers have relocated their production facilities to the Chinese mainland to reduce cost. Their Hong Kong offices now focus mainly on R&D activities, product design and development, management, logistic support, marketing, etc. Their setups in Hong Kong are largely classified as non-manufacturing establishments statistically, despite the fact that they have manufacturing activities across the boundary.

Against the fast changing markets and advancement in technology, Hong Kong companies emphasise quick response to ensure effective services to their customers.

"Thanks to the huge re-export business handled through the territory, as Hong Kong is among the major trading hubs in the globe."

Also, many Hong Kong companies have further strengthened their quality assurance and environmental management systems, and are accredited with ISO 9000 – an internationally recognised standard for quality management system, ISO 14000 – a standard for environmental management system, etc.

Hong Kong’s electronics exports rose 9% in 2017. The major export markets were the Chinese mainland (accounting for 63.1% of the total exports in 2017), the EU (7.8%), the ASEAN (6.4%) and the US (6%). Exports to the Chinese mainland grew by 9% on the back of steady input demand of mainland’s outward processing production.

Distribution Channels Hong Kong companies engaging in parts and components business are capable of producing on custom-made basis and offering total solutions for famous US, European and Japanese companies, e.g. parts and accessories of computers, RF modules for telecommunication purposes, chip-sets for LCD modules, etc.

Meanwhile, standard components are usually exported directly to distributors and manufacturers in overseas markets, whilst some Hong Kong companies also have their own sales offices and/or representative offices on the Chinese mainland and other overseas markets.

Notably, Hong Kong is an important trading hub for electronic parts and components in Asia-Pacific. Many items from the US, Europe, Japan, Taiwan, and South Korea are re-exported via Hong Kong to the Chinese mainland, and vice versa.

A number of multinational manufacturers of parts and components have set up their offices in Hong Kong, engaging in sales, distribution and sourcing activities in the region.

There are a number of Hong Kong companies marketing electronic products under their own brand names but also economies like Latin America, Eastern Europe and various parts of Asia.

Promotion via participation in trade fairs is an effective way for Hong Kong’s electronics companies to explore market opportunities.

On the back of technological advancement and falling prices amidst keen competition,

electronics industry - company and industry Hong Kong’s Total Exports of Electronics HK$bn Domestic Exports Re-exports of Chinese mainland origin Total Exports

2016 Growth %

HK$bn

2017 Growth %

Jan-Jun 2018 HK$bn Growth %

3.3

-8.7

2.8

-14.8

1.4

-29.3

2346.9

+2.5

2564.6

+9.3

748.0

+22.0

1484.7

-0.8

1599.5

+7.7

1108.9

+10.7

2350.2

+2.5

2567.4

+9.2

1829.2

+13.8

Source: Hong Kong Trade Statistics, Census and Statistics Department

Total Exports by Major Markets

2016 Share % Growth %

2017 Share % Growth %

Jan-Jun 2018 Share % Growth %

Chinese Mainland

63.2

+2.4

63.1

+9.0

62.6

+13.6

EU (28)

7.9

+7.4

7.8

+7.9

8.1

+18.3 +18.7

Germany

1.6

+1.0

1.6

+9.9

1.7

Netherlands

1.9

+17.4

2.0

+13.5

2.0

+9.7

US

6.4

-0.8

6.0

+2.9

6.4

+20.1

ASEAN

6.2

+1.3

6.4

+13.9

6.2

+5.0

Singapore

1.5

+8.1

1.5

+7.6

1.5

+10.4

Japan

2.6

-3.0

2.7

+15.0

2.6

+6.0

Total Exports by Categories

2016 Share % Growth %

2017 Share % Growth %

Jan-Jun 2018 Share % Growth %

Finished Products

25.0

-0.5

24.4

+6.3

25.5

+21.7

Part & Components

75.0

+3.5

75.6

+10.2

74.5

+11.4

Total Exports by Products

2016 Share % Growth %

2017 Share % Growth %

Jan-Jun 2018 Share % Growth %

Semiconductors, Electronic Valves & Tubes

36.8

+14.9

38.3

+13.7

40.9

Telecom Equipment & parts

25.0

-0.5

23.2

+1.5

20.4

+0.6

IT Equipment & parts

15.5

-7.3

15.7

+10.7

16.1

+16.9

AV Equipment & parts

6.8

-7.1

6.7

+7.6

6.0

+2.5

conventional IT products like notebook computers have become mass products. Now, the industry is focusing on further technological enhancement to sustain their business. Notably, mobile devices with enhanced smart features are in demand in the globe.

Meanwhile, mobile communication has become part of the daily lives of consumers in most countries.

In particular, sales of highend smartphones are rising rapidly. Many models are now compatible with certain wearable electronics and other smart devices. This has lured demand especially from youngsters and high-income consumers.

Product Trends As regards consumer electronics, one of the developments is digital imaging. In particular, large-screen digital TVs with

+21.9

connectivity for internet surfing with the so-called “smart TV” features and capability to communicate with mobile devices, as well as the ultra high definition TVs (UHDTVs) with display resolution of 4K or higher, are among the industry foci for further development.

In addition, some players are keen to promote their 3D printers in the market in view of the falling printing and other material costs.

Also, the industry is keeping an eye on the development of certain niche items like action camcorders and drones, as well as those related to the Internet of Things (IoT) application, which are taken by some players as means to inspire the market and create new businesses.

Smart homes will be one of the major IoT application areas that would elicit huge demand for related IT systems, hardware and devices.

HONG KONG BUSINESS ANNUAL 2019 27

company and industry - processed food & beverage industry

Hong Kong’s promising processed F&B industry

Key products here include instant noodles, macaroni, spaghetti, biscuits, pastries and cakes.

T

he processed food and beverages industry in Hong Kong is characterised by its active trading activities. Major food importers/ traders in Hong Kong include Dah Chong Hong, Four Seas Food Investment, EDO Trading Co, Kampery and Sun Shun Fuk. Food and beverages production in Hong Kong is a large-scale business, with most of the output going for local consumption.

Key products here include instant noodles, macaroni, spaghetti, biscuits, pastries and cakes. Other related activities include the canning, preserving and processing of seafood (fish, shrimps, prawns and crustaceans); the manufacture of dairy products (fresh milk, yoghurt and icecream); seasonings and spirits. With the growing Western interests in Asian food and

28 HONG KONG BUSINESS ANNUAL 2019

condiments, such as soya sauce, soya milk and oyster sauce, there has been an increase in demand for Hong Kong’s food exports.

A number of Hong Kong brands, such as Lee Kum Kee, Vitasoy and Kampery, have expanded their markets proactively on both the Chinese mainland and in the overseas markets, resulting in high recognition levels.

The industry has also attracted substantial foreign investment. A notable foreign investor is Japan’s Nissin, which now produces instant noodles in its factory in Tai Po Industrial Estate and is the leading player in Hong Kong’s instant noodles market.

Also, the Japanese multinational group Ajinomoto Co acquired Amoy, a Hong Kong-based frozen dim sum and sauces producer.

Large Hong Kong manufacturers have

“Food and beverages production in Hong Kong is a large-scale business, with most of the output going for local consumption.” expanded their global networks and set up offices or factories in several major markets.

For example, Lee Kum Kee has factories and regional offices in China, the US and Malaysia and Vitasoy has factories on the mainland as well as in the US, Australia and Singapore. Besides headquarters located in Hong Kong, Kampery has regional offices in China and Canada; whereas manufacturing plants were set up in Shanghai, Foshan and Guangzhou.

Performance of Hong Kong’s Exports of Processed Food and Beverages [1] Sales Channels Many Hong Kong food and beverages manufacturers deal directly with overseas importers and supermarket chains.

However, Hong Kong’s food and beverages trading companies have played a pivotal role in introducing Western foods to mainland consumers, and in assisting smaller producers based locally and on the Chinese mainland in selling abroad.

Many Hong Kong brands have successfully entered overseas markets.

Garden (biscuits, cakes and sweets), Doll(in¬stant noodles), Vitasoy (soft drinks), Amoy, Lee Kum Kee (cooking sauces), Lam Soon (edible oils) and Kampery(instant milk tea mix) are the leading local brands.

Many of these brands have appointed distributors and/or established overseas offices to promote overseas sales. These Hong Kong brands have expanded vigorously into overseas markets and have received increased international recognition.

Some companies have also set up overseas factories to produce for, and to serve, their local markets. For example, Vitasoy Group has spread far beyond Hong Kong and now sells its products in more than 30 markets throughout the world. Besides Hong Kong, Shenzhen, Foshan and Shanghai, the Vitasoy Group also has production plants in the North America, Australia and Singapore.

In order to establish connections and explore market opportunities, processed food and beverages manufacturers and traders can join trade fairs and missions organised by HKTDC, such as the Food Expo in Hong Kong, the Canton Fair in Guangzhou and the Style HK Show in various mainland cities. HKTDC also organises, on occasion, study or

processed food & beverage industry - company and industry Performance of Hong Kong’s Exports of Giftware and Premiums Manufacturing No. of Establishments Employment

Import-Export trade

1349

Mar 2018

7260 (2017)

28852

Mar 2018

33600 (2017)

Note: Industry statistics cover activities in Hong Kong only

matchmaking missions for Hong Kong manufacturers to visit specific markets to help build new business relations.

Industry Trends Health and wellness offerings are increasingly adapted to meet the expectations of consumers of processed food and beverages. In particular, ageing populations and a rise in health consciousness are creating a receptive environment for products that aid the “maintenance” of health, such as cholesterol-lowering spreads and high calcium milk. Whilst health issues are creating new openings, convenience foods such as microwaveable and packaged foods, also looking promising in growth terms.

As people become more health conscious, organic food is becoming more popular.

Organic foods are foods produced using ‘natural’ farming methods, which do not involve the use of synthetic pesticides and chemical fertilisers. Organic farmers use management systems that promote and enhance biodiversity, biological cycles, and soil biological activity. Organic foods are not processed using irradiation, industrial solvents or chemical food additives. Organic processes maintain a food’s organic status by segregating it from synthetic and other prohibited materials, carefully tracking ingredients, and maintaining detailed record keeping.

Online grocery shopping is becoming increasingly popular in Asia countries. In Taiwan and Japan, many working women buy food, including fresh fruit and vegetables through the Internet. On the mainland, online grocery shopping is popular in big cities such as

Beijing and Shanghai, but shoppers prefer to purchase packaged/processed foods and snacks, rather than fresh food items, online.

Product Trends In developed economies like the US and the EU, there has been a shift in consumer taste in favour of healthy foods, partly as a result of the ageing population who seek easy-to-prepare, high quality nutritional foods to compensate for their lowered taste sensitivity.

There is a rising trend of replacing animal protein with plant protein in the diet. Plant protein is lower in essential amino acids than animal protein, it also contains components that can help protect against chronic disease and promote overall bodily health. Some industry players said that plant protein also positively impacting climate change, conserving natural resources and respecting animal welfare. Products such as plant protein egg and vegan burger

"Hong Kong’s food and beverages trading companies have played a pivotal role in introducing Western foods to mainland consumers."

are getting more popular.

Food manufacturers are introducing low cholesterol/ carbohydrate/added sugar foods. The quest for slimness has given rise to the development

by Danone, Unilever and Kraft of “dietary foods” that contain added fibre to make the food more filling and delay digestion.

This trend requires increased R&D capabilities and advanced production technology on the part of food manufacturers.

Purchase of organic food is a major trend in both developed and developing countries.

Organic food encompasses a wide range of products including cheese, meat, wine, spices, nuts and canned goods. Organic generally means food grown or produced without the use of chemical synthetic fertilisers, pesticides and preservatives and unaffected by genetic engineering. Official definitions vary among countries, but may require a high standard in the growing practices, processing and handling of the produce.

Organic foods are increasingly available in supermarkets.

HONG KONG BUSINESS ANNUAL 2019 29

company and industry - film & entertainment industry

MobileTV shapes entertainment scene

Mobile TV platforms will further add to revenue the industry receives from overseas markets.

M

ost local film companies deal directly with cinema chains for local screening on a revenue-sharing basis. Rights will then be sold to distribution companies for other forms of release, including video rental and sales, and television broadcasting.

There are also companies which specialise in distributing foreign films in Hong Kong.

The film industry is represented by several industry associations, including the Movie Producers and Distributors Association of Hong Kong Ltd (MPDA), the Motion Picture Industry Association (MPIA), the Hong Kong Film Directors’ Guild (HKFDG), and the Hong Kong Screenwriters’ Guild (HKSWG).

Film distribution As 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,

30 HONG KONG BUSINESS ANNUAL 2019

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 2017, 53 locally produced films were released. In 2016, Hong Kong’s audio-visual production-related services exports amounted to HK$658m. Hong Kong’s film industry as a whole is reliant on overseas revenues, given the limited size of the domestic market. 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. According to China’s State Administration of Press, Publication, Radio, Film, and Television (SARFT), China’s Box office income rose by 13% to RMB56b in 2017.

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 co-

"Hong Kong’s films have gained increasing recognition from the international film industry over the years, with young talents on the rise." productions involving mainland and Hong Kong producers. 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). In terms of box office, The Mermaid, directed and produced by Stephen Chow, was the first movie to exceed RMB3b box office in mainland China. 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 RMB355m on its premiere day in January 2017.

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 53rd Golden Horse Awards with his debut feature Mad World. Crime thriller Trivisa 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.

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$1b, headquartered in Hong Kong, to develop and produce films for global distribution.

Whilst major film companies have their

film & entertainment industry - company and industry Motion pictures and other entertainment services 2017 2,692 16,485

Number of establishment

Employment (excluding those in civil service) Source: Quarterly report of employment and vacancies statistics, cencus and statistics department

number of local films released Number of foreign films released Total box office receipts (including foreign film)(HK$ million)

2016 62 287 1947

2017 53 278 1853

Source: Quarterly report of employment and vacancies statistics, cencus and statistics department

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 2017, 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 2017, FILMART attracted more than 8,000 global visitors and 800 exhibitors from 35 countries and regions, in which more than 330 exhibitors were from 15 Belt and Road countries.

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.

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 important distribution channel of TV programmes in Hong Kong. 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. 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.

In January 2018, Hong Kong Asia Television Digital Media Limited (ATV), after going off air in April 2016, launched

"Apart from buying rights for theatrical distribution, Hollywood is also interested in acquiring rights to remake Hong Kong movies."

a mobile app to continue broadcasting through OTT services.

Supports to the film industry In support of the local film industry, the Hong Kong government has established the Film Development Council (HKFDC) and Create Hong Kong within the Commerce and Economic Bureau. To subsidise locally-produced Cantonese firms targeting the Chinese mainland, the government announced at the 2016 Budget an addition fund infusion of HK$20m to the Film Development Fund (FDF, administered by the Secretariat of the HKFDC). In 2017, the Film Production Grant Scheme under the FDF was revised.

The production budget limit of the eligible film project was raised from HK$10m to HK$13m, whilst the pilot period of the Grant Scheme was extended for six months with two more quarters for applications.

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

HONG KONG BUSINESS ANNUAL 2019 31

company and industry - footwear industry

Footwear players goes for retail overseas

Brands such as Le Saunda, Mirabell, Staccato and Joy and Peace have succeeded in their overseas distribution to mass merchandisers.

T

he latest official statistics show that the footwear manufacturing industry had a total employment of 20 workers as of December 2017. The majority of footwear manufacturers have set up offshore production facilities on the Chinese mainland to reduce operating costs and stay competitive, leaving only limited capacity in Hong Kong to meet small and quick orders.

Some manufacturers, after the relocation of production facilities offshore, are classified instead as import-export establishments.

As of December 2017, there were altogether 1,110 import/export establishments hiring 5,440 workers.

Hong Kong produces a wide range of footwear suitable for indoor and outdoor activities. The industry is particularly strong at manufacturing women’s shoes, including dressing shoes and casual shoes of real and synthetic leather such as boots and mules.

Some companies specialise in men’s casual shoes, like boat shoes, moccasins, loafers and canvas shoes, whilst others in sports shoes.

Meanwhile, more companies are paying

attention to children’s shoes, like funky boots with embroidery, shoes with cartoon characters, rubber boots and school shoes.

Hong Kong’s footwear exports decreased further by 4% in the first half of 2018, after a 7% fall last year. Re-exports, accounting for almost all footwear exports, fell on a par with total exports during January-June 2018, whilst domestic exports decreased by 18% against a low base of comparison.

Playing a leading role, the US, sharing 28% of the city’s total footwear exports in the first six months of 2018, saw a decline of 7%.

Trailing the US were the Chinese mainland, the EU and Macau, accounting for 20%, 13% and 6% of the total exports, respectively. In January-June 2018, footwear exports to the Chinese mainland and Macau saw respective growth of 19% and 6%, whilst sales to the EU saw a 3% decline, with Germany and the UK posting slides of 7% and 17%, respectively.

Sales Channels Many footwear companies in Hong Kong engage in OEM arrangements to

“More firms are paying attention to children’s shoes, like funky boots with embroidery, shoes with cartoon characters, rubber boots and school shoes. produce for leading brands and retailers in North America, the EU and Japan. Many companies have their own R&D and QC specialists to strengthen the quality of their products. Some Hong Kong footwear companies, such as Le Saunda, Mirabell, Staccato and Joy and Peace, have also succeeded in building up their own brands with the retail network in Hong Kong, Macau, the Chinese mainland and even Europe. Whilst some footwear exporters prefer selling to overseas importers and distributors, many of them are selling to mass merchandisers, such as Walmart, Target, Costco and Kmart.

A number of Hong Kong companies, some with Taiwanese stakes of interest like Yue Yuen Industrial Holdings Limited, produce world famous brands, including Adidas, Asics, Tiger, Bass, Converse, Le Coq Sportif, New Balance, Nike, Reebokand Timberland. A few have been granted licences to produce and distribute foreign brands for the Chinese mainland or Hong Kong market.

To establish business contacts with overseas buyers, Hong Kong manufacturers and traders have involved themselves actively in international trade shows led or sponsored by the HKTDC, including the ones in Budapest, Dongguan, Dusseldorf, Dubai, Guangzhou, Istanbul and Jakarta.

Industry Trends In pursuit of lower production costs, expanding capacity and product range extension, footwear manufacturers in Hong Kong have shifted a significant part of their production facilities to the Chinese mainland and South-east Asian countries.

As the leather industry is highly specialised and vertically integrated, relocation may also provide the advantage of being more accessible to the raw materials and facilitating retail and distribution. In view of soaring production costs, manufacturers, in addition to relocation, have further invested in advanced automated machinery and operation systems to streamline the whole production process.

Footwear manufacturers nowadays focus more on value-added service. Quick response in sample making, prompt delivery and high quality are widely required. They

32 HONG KONG BUSINESS ANNUAL 2019

footwear industry - company and industry are also tapping the global green trends towards a sustainable economy by producing shoes made with recycled, ecofriendly and vegan materials (i.e., materials containing no animal-derived products or by-products). Popular footwear brands including Reebok, Melissa, Bobux, Terra Plana, Nike and Timberland have adopted environmentally-driven manufacturing processes and increased their assortment of “green” footwear items such as shoes made with natural latex rubber and recycled plastic.

Nike has launched a product line called ‘Considered’ where designers are encouraged to design shoes using less harmful adhesives and more recycled materials, whilst Timberland’s flagship ‘Earthkeepers’ collection promotes ecofriendly production processes by working with tanneries that have good energy, water and waste management. Most of these brands have developed eco-friendly packaging solutions by utilising eco-friendly, biodegradable and sustainable materials such as soy-based ink, recycled cork, nylon and foam.

Furthermore, online shopping has been growing in popularity along with ascending internet usage. Most of the renowned brands such as Nike, Crocs and Adidas have responded by setting up online stores where shoppers can choose from a wide variety of shoes in different sizes, colours and styles at different price points. Nike and Timberland even allow customers to customise and design their own shoes online.

In addition, footwear and clothing e-retailers like Zalora andShoebuy are expanding their offers to include renowned brands. Like clothing and clothing accessories, shoes are one of the most-browsed product categories among online shoppers.

Increasingly, ethical sourcing is a common practice among international footwear

companies. In response to the social demand for protecting human rights in workplaces, many leading companies have introduced measures to monitor the working conditions in their own factories as well as the contracted factories overseas. For example, most, if not all major footwear brands, have established their code of conduct in relation to labour conditions for their contracted factories to abide. To follow suit, Hong Kong companies such as Taizin have introduced their own code of conduct to ensure safe and healthy working conditions.

Product Trends Despite the steady economic recovery, many recessioninduced shopping habits still prevail. Consumers continue to seek greater value for their money. Mass market retailers such as hypermarkets and supermarkets will remain popular shopping destinations among bargain-seeking shoppers, whilst manufacturers are pursuing strategies aiming to enhance their price-toquality ratios. As a result, basic, durable and functional footwear items are expected to be more marketable than fancy and luxurious designs/ brands. Thanks to the changing lifestyles, it has become more fashionable to wear trainers for most occasions, thus leading to increased demand for athleisure and sports footwear.

To cope with the demand for more comfortable, durable and adaptable footwear, manufacturers are working closely with technology and material companies to develop products that can mix modern technology with sustainability and comfort. For example, footwear made of lighter materials and trans-seasonal footwear featuring adaptive designs and durable materials to resist wear and tear under different climate conditions are increasingly popular. Besides,

"As the leather industry is highly specialised, relocation may give accessibility to the raw materials and facilitating retail and distribution."

edgier footwear such as mules, sneakers, slipper shoes, colourful soles, sports shoes with metallic elements and thick-soled rock ‘n’ roll-inspired creepers is also fast fanning demand and becoming the new normal.

To share a slice of the ever-growing market of baby products, especially on the Chinese mainland, footwear giants like Nike and Adidas, and many other Chinese domestic brands such as Li Ning, ANTA Sports and 361 Degrees, have started to dip their toes in the children’s footwear market. To stay competitive and guarantee a healthy profit margin, their products are of higher quality and more value-added elements such as wearable technology functions to improve balance and gait performance.

Given the ever-rising health consciousness, items such as health and comfort footwear products like reflexology massage sandals and foot care products such as pads, toe spreaders and separators are gaining popularity.

For instance, the local brand Dr. Kong is particularly renowned for its healthy footwear products and has been expanding its footwear business in China since 2007.

On the other hand, highlighting the universal norm of green consumption, there is growing demand for earth-friendly footwear.

HONG KONG BUSINESS ANNUAL 2019 33

company and industry - gifts and premium industry

OEM and ODM orders buoy gifts and premium industry

Companies are said to be shifting from OEM to ODM for higher profit.

G

iftware covers a wide spectrum of light consumer products in this profile, ranging from basic to more sophisticated, highervalued goods such as toys, timepieces, jewel, silverware, kitchenware and clothing accessories. This profile also takes in promotional items for corporate or the socalled premiums market.

Hong Kong’s giftware exports are mainly targeted at the middle-to-high-end market, with competitive edges in product design and low production costs. Many Hong Kong companies have their own designers, and are shifting their business focus from original equipment manufacturing (OEM) to original design manufacturing (ODM), in order to acquire competitiveness and so as a higher profit margin. Some firms have even started to create and market their own brand by engaging in own brand manufacturing (OBM).

Hong Kong exporters are capable of delivering a large number of pricecompetitive products for the premium and give-away markets, although a variety of middle-to-high-end gift items are also

34 HONG KONG BUSINESS ANNUAL 2019

available. They are sensitive to changing market needs, and are known for quality, quick response, efficiency and reliability.

Hong Kong’s giftware industry is supported by a strong network of competent ancillary industries. Sectors such as toys and figurine candles are well served by the mould-making industry. Timepiece manufacturing, for its part, is supported by the metal products industry in casings, bands and precision components.

After a 2% decrease in 2017, Hong Kong’s giftware and premiums exports grew by 8% in the first half of 2018. Sales to most major markets expanded, except for the EU. The US, the largest market making up about 26% of the total, saw growth of 9% in January-June 2018, whilst exports to the next major market, the EU, registered a 9% slide.

Exports to the next major markets, Chinese mainland, Japan and ASEAN, which in total accounting for 22%, rose 2%, 5% and 18%, respectively in the first six months of 2018.

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

"Hong Kong exporters are capable of delivering a large number of pricecompetitive products for the premium and give-away markets." bounded for the US and increasingly the EU market.

Sales Channels In general, Hong Kong companies rely heavily on OEM and ODM orders. While premium and give-away items are embossed with the buyers’ company logos and names, most gift products are exported as open items.

To expand business networks and explore market opportunities abroad, Hong Kong manufacturers may participate in some influential international trade fairs.

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 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 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

gifts and premium industry - company and industry Performance of Hong Kong’s Exports of Giftware and premiums 2016 HK$mn Growth % Domestic Exports Re-exports of Chinese mainland origin Total Exports

2017 HK$mn Growth %

Jan-Jun 2018 HK$mn Growth %

6409

-11

7193

+12

3810

+2

148914

-12

144562

-3

73127

+8

92971

-14

89217

-4

39605

-2

155324

-12

151755

-2

76937

+8

Source: Hong Kong Trade Statistics, Census and Statistics Department

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, tarifffree treatment starting from 1 January 2006. According to the stipulated procedures, products which have no existing CEPA rules of origin can enjoy tarifffree treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met. NonHong Kong made giftware products are subject to tariff rates up to 35% when entering the mainland.

General Trade Measures Affecting Giftware Exports Some trade measures such as anti-dumping charges affect giftware products exported by Hong Kong companies. 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.

Safe and ethical working conditions have also increasingly been a concern among overseas buyers. A number of leading buyers such as Hasbro, Mattel, LEGO, and Walmart are all requiring the supplier to meet the standards.

For health reasons, the EU has adopted a directive on the control of use of nickel in objects intended to be in contact with the skin, such as watches and jewellery. Separately, the National Candle Association has established a framework for

quality control on candle and its accessories, and published through the American Society for Testing and Materials (ASTM) international standards.

Although the standards are not legally binding to outsiders and is only applicable to the US, candles bearing the quality mark may have a competitive edge.

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

"To expand business networks and explore market opportunities abroad, Hong Kong manufacturers may participate in some influential international trade fairs."

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

Innovative technological items: The prevalence of hightech gifts is a trend seen across the board. Examples include photo-printing phone cases, smart watches, interactive dolls as well as scanner mouses which can accurately converting printed text, tables and pictures into a digital format. Lately, drones are very popular gift items for both kids and adults.

Refocusing on family value and connecting with others to strengthen sales of home products, festive items: A major trend is the popularity of the so-called “home products” and festive items, as the trend of “nesting” continues to evolve; shoppers now tend to spend more time entertaining with families and friends at home.

Consumers also feel increasingly the need to reach out and communicate with others in a traditional way, like sending hand-written greeting cards and scrapbooking.

HONG KONG BUSINESS ANNUAL 2019 35

company and industry - green technology and environmental services

Opportunities from China’s eco-environmental stance

Hong Kong-invested manufacturers can meet national environmental protection standards and enhance their environmental performance.

T

he environmental industry is widely recognised as a new growth sector. According to the latest available figures, the value added of Hong Kong’s environmental industry grew up by 6.7% year on year to HK$8.4b in 2016 (or 0.3% of GDP).

Employment by the industry reached 44,300 persons in the same year, accounting for 1.3% of Hong Kong’s total employment.

The environmental industry in Hong Kong consists of mainly small and medium-sized enterprises, which largely focus on six business areas, including (1) water conservation and pollution control, (2) air and odour pollution control, (3) energy conservation, (4) waste treatment, disposal and recycling, (5) noise control and mitigation, and (6) environmental consulting services. Some companies are also engaged in import/export and wholesale trading of waste and scrap.

Business Area Related Services Water conservation and pollution control Related services rendered by the industry

may involve biological treatment, chemical treatment, physical treatment, sludge treatment, etc., as well as supply and installation of equipment like monitoring/ measurement/analytical apparatus and pumping systems.

Air and odour pollution control This includes services in relation to gas emission controls, odour/organic gases controls, particulate controls, etc., for which chemicals such as activated carbon, 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.

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.

Waste treatment, disposal and recycling This involves design and supply of waste

"Employment by the industry reached 44,300 persons in the same year, accounting for 1.3% of Hong Kong’s total employment." handling, storage, disposal and control systems/equipment, as well as provision of waste reclamation, transportation and recycling services.

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

Environmental consulting services 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.

Mainland China is one of the fast growing and important markets for Hong Kong companies on environmental technologies and related services.

According to the International Energy Agency, Mainland China is now the largest destination of energy investment in the world. In the latest National Five-Year (2016 – 2020) Eco-Environmental Protection Plan, the Chinese government identifies some major tasks in ecological environment protection, including strengthening source control, and executing the air, water and soil pollution prevention and control action plan, which are expected to further boost the development of the environmental industry in Mainland China, bringing opportunities to Hong Kong companies.

Producer Responsibility Scheme on WEEE and WEEE•PARK Hong Kong households and business establishments generate about 70,000 tonnes of waste electrical and electronic equipment (WEEE) every year.

To promote recycling and proper disposal of WEEE generated in Hong Kong, the Government launched the Producer Responsibility Scheme on Waste Electrical and Electronic Equipment (WPRS), covering air-conditioners, refrigerators, washing machines, televisions, computers, printers, scanners and monitors (collectively referred to as regulated electrical equipment, or REE) since 1 August 2018.

Under the WPRS, sellers of REE must provide for consumer a free removal service for disposal of the waste equipment.

36 HONG KONG BUSINESS ANNUAL 2019

green technology and environmental services industry - company and 2010

Value added (HK$ Mn) Employment (Number)

2016

5603

8423

36080

44300

Source: Census & Statistics Department, HKSAR

Located on a 3-hectare site in EcoPark, Tuen Mun, WEEE•PARK provides an essential infrastructure in support of WPRS. As one of the leading facilities of its kind in the world, WEEE•PARK offers 4 processing lines, adopting advanced technologies to turn regulated WEEE into valuable secondary raw materials through a series of detoxification, dismantling and recycling processes.

WEEE•PARK also equips with a refurbishment workshop to divert serviceable electrical appliances received for repair into refurbished items.

The EcoPark, located in Tuen Mun, is one of the waste management facilities set up by the Government, 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.

Development of Green Technology Leveraging Hong Kong’s unique strengths in the global technology revolution, green technology is one of the five core technology clusters of the HKSTP. The HKSTP provides a fullrange of facilities and equipment to support the development of green technology in areas of building energy efficiency, environmental solutions, alternative energy, waste disposal and recycling, electric vehicles, and green electronics for infrastructure projects and carbon audits.

Phase 3 of the Science Park 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 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.

The Government also provides funding supports to environmental technologyrelated R&D projects under the ITF managed by the Innovation and Technology Commission.

Since its establishment, the ITF has approved around 80 projects in developing clean environmental technologies and processes applicable to Hong Kong, with the total funding amount exceeded HK$155m.

Hong Kong-Guangdong Cross-boundary Cooperation In April 2008, the Government launched a Cleaner Production Partnership Programme to encourage Hong Kong-invested 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.

Efforts will include: • Increase energy efficiency • Reduce air pollutants emission • Lower production cost

"Leveraging Hong Kong’s unique strengths in the global technology revolution, green technology is one of the five core technology clusters of the HKSTP."

• Reduce sewage discharge Through cleaner production, Hong Kong-invested 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 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 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 22nd Working Meeting of the Hong Kong/Guangdong Co-operation Joint Conference held in February 2017, 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 reduction measures for the sake of continuously enhancing the living environment in the region.

HONG KONG BUSINESS ANNUAL 2019 37

company and industry - healthcare industry

Pressure heats up between Mainland and local firms A number of manufacturers have moved their production facilities to the Mainland to trim production costs.

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 original equipment manufacturer (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

38 HONG KONG BUSINESS ANNUAL 2019

appliances/massage apparatus. However, 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.

In 2017, Hong Kong’s total exports of medical and healthcare equipment decreased by 2.3%. Exports to the Chinese mainland, the largest market for Hong Kong’s medical and healthcare equipment decreased by 10.1%. Meanwhile, exports to the US and the EU, respectively, decreased by 13.9% and 3%.

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 decreased by 3.2%.

"Hong Kong companies have capacity to act as contract manufacturers or sourcing partners given their edge in quality assurance and intellectual property (IP) protection."

Meanwhile, exports of miscellaneous medical instruments and appliances increased by 2.2%.

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 lowcost competitors. It also reinforces the role of Hong Kong companies as a partner providing high-quality products and services.

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

healthcare industry - company and industry

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 (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$6.5t 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.

Meanwhile, growth of public health expenditure in the more industrialised countries is slowing down which, however, creates opportunities for home medical equipment targeted at patients undergoing recuperation and therapy processes.

As a result of the ageing population, treatments for cardiopulmonary disease, diabetes and neurological disorders will see rapid growth, such as orthopaedic devices and pharmaceuticals that can

"The increasing share of healthcare in household expenditures in some developing countries can be an opportunity for Hong Kong exporters of medical products."

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 medical devices such as a patient-worn pulse oximetry and a portable patient monitor.

Technology has also led to telemedical services and lessinvasive procedures.

HONG KONG BUSINESS ANNUAL 2019 39

company and industry - jewellery industry

Jewellery makers to go into retail and distribution

Overnight visitors spent HK$13.1b on jewellery, accounting for 14% of their total spending on main shopping.

I

n terms of value, 91.1% of Hong Kong’s total exports of jewellery were made of precious material in the first half of 2018. In the first half of 2019, the SAR’s exports of precious jewellery rose by another 18% after a 4% increase in 2017, with the US, the EU and Switzerland being the biggest markets which in sum accounted for nearly 56% of the total.

Hong Kong’s jewellery industry is known for its flexibility in accommodating customer needs, with the most popular product category as gem-set jewellery, particularly diamonds set in 14K or 18K and yellow/ white gold. Hong Kong manufacturers are good at producing small stones jewellery with elements of contemporary fashion, with capabilities that can compete with worldclass European manufacturers.

The overall technology level of the precious jewellery industry is perceived by manufacturers to be above competitors like Thailand but below the world leaders such as Italy and Japan. Most notably, Hong Kong is leading in the production of gold items.

Although high value-added processes are

40 HONG KONG BUSINESS ANNUAL 2019

still retained in Hong Kong, manufacturing processes have shifted to the Chinese mainland, mainly to Shenzhen and Panyu.

Hong Kong has long been recognised as a leading centre for the production of jade jewellery. Major items are bangles, rings and pendants. Hong Kong has also evolved into a leading trading and distribution centre for pearls in recent years, partly due to the fast emerging Chinese and South Sea pearl industry and the recent decline of the Tahitian pearl industry.

Despite a firming recovery, escalating global economic uncertainty is expected to calm sales to developed economies as demand for high-end items will be capped by unabated consumer conservatism. For more accessible items that feature good design, quality and craftsmanship, demand will be increasingly robust as consumers’ purchasing power recovers. A more noticeable improvement is expected for the US market, whilst demand from European countries, albeit strengthening, is likely to be curbed due to the mild pace of the EU’s economic recovery. In emerging markets,

“Whilst the SAR’s jewellery industry relies mainly on handicraft, some larger establishments have made use of sophisticated and automated production equipment.” demand for jewellery is also expected to strengthen. China’s more stable economy, coupled with structural reforms crafted to support consumption, should whet an appetite for jewellery in the medium term, although sales of luxury items will be dampened by the government’s continued anti-corruption drive. In the meantime, the stabilisation of oil and commodity prices should augur well for the economic outlook of resource-rich countries. These developments should not only brighten the prospects of stronger Hong Kong jewellery exports to emerging markets, but also to the developed markets, where retail sales might benefit from a gradual increase in tourism.

In January-June 2018, total exports of imitation jewellery amounted to HK$2.7b, a change of less than 1% from the previous year. Unlike fine jewellery, imitation jewellery is rarely domestic-made but reexported from origins outside Hong Kong.

The Chinese mainland, which accounted for roughly 86% of all imitation jewellery exports from Hong Kong in the first half of 2018, is the largest source of such re-exports.

Sales Channels The jewellery industry of Hong Kong is by and large export-oriented. The trade is characterised by a subcontracting system under which small- and medium-sized factories provide subcontracting services, such as mould making, precision casting, gem-setting, polishing and electroplating, to larger manufacturers or local jewellery retailers.

Some Hong Kong manufacturers are making inroads into retail and distribution in Hong Kong, supported by the influx of tourists in recent years. According to Hong Kong Tourism Board’s survey, in 2017, overnight visitors spent HK$13.1b on jewellery, accounting for 14% of their total spending on main shopping category; as for those from the Chinese mainland, the share was higher at 15%.

A few Hong Kong jewellers, such as TSL, Chow Sang Sang and Chow Tai Fook, have expanded their retail network to the Chinese mainland through franchising and co-operative arrangement. They have successfully earned a recognised brand image there. A recent survey conducted by

jewellery industry - company and industry the HKTDC showed that, when buying low-to-medium and medium-to-high-end brands, Hong Kong brands were the top choice, compared with local and foreign brands, of mainland consumers. The survey also discovered that Hong Kong brands have a premium of 47% over their domestic counterparts.

Industry Trends Innovative designs are important for moving up-market. For instance, silhouette design, renaissance-inspired jewellery and futuristic design are the upcoming jewellery trends.

In doing so, it is necessary for manufacturers to have more metallurgical knowledge and latest technologies, such as 3D printing, laser cuttings, digital printing, engravings and photography.

New technology also allows the development of new or innovative designs. Jewellery, which used to target the highend market, is also following more closely with the fashion trend and targeting at the younger, middle income level market segment, some in the form of brand jewellery.

Recent technological development allows massive production of jewellery products with good quality and competitive prices. Whilst Hong Kong’s jewellery industry remains basically a handicraft industry, a number of larger establishments have made use of sophisticated and automated production equipment. These manufacturers integrate advanced production techniques, such as electroforming, with handicraft skills to enhance their efficiency.

They install computer-aided design and manufacturing (CAD/CAM) systems, computer numerically controlled (CNC) machine tools and even 3D printers in their product design and manufacturing processes.

New technologies also enable Hong Kong manufacturers

to develop new materials for fashionable jewellery items other than fixing defects and to increase the accuracy of the designed output.

Like other industries, the trend of consolidation also happens in the jewellery industry, especially in the US. In the past decades, the numbers of jewellery manufacturers and retailers in the US have declined substantially.

At the same time, the business of the smaller retailers has steadily declined as they struggle to compete against mass merchants such as Walmart, Target and Costco, which have successfully captured a bigger share of consumer spending.

Walmart, for example, has risen to be the leading jewellery retailer in terms of sales turnover in the US. A recent survey by Research and Markets Ltd also reported that 20% of fine jewellery shoppers in the US made their purchases at these outlets. Mass merchants usually have stronger bargaining power than their

"Jewellery which used to target the high-end market, is also following more closely with the fashion trend and targeting at the younger, middle income level market segment."

suppliers; Hong Kong exporters are expected to face downward pressure on their ex-factory prices and provide more valueadded services to win buyers’ orders.

On marketing and distribution, some Hong Kong jewellers have built up their own branded jewellery or licensing agreements.

Whilst this is an effective strategy to enhance longterm competitiveness, it may also require local jewellery manufacturers to move into distribution. Apart from establishing direct retail outlets, the rapid development of online shopping in recent years is also noteworthy. For instance, Chow Sang Sang and Chow Tai Fook are now selling jewellery online.

It is expected that the application of e-commerce in the jewellery sector will continue to proliferate. Over the longer term, the development of internet shopping represents a new direct sales method for Hong Kong jewellers in promoting their products.

HONG KONG BUSINESS ANNUAL 2019 41

company and industry - lighting industry

Hong Kong’s lighting industry revs up systems

Firms boosted their quality assurance and environmental management systems and have garnered international accreditations

H

ong Kong exports a wide range of lighting products, which are usually meant for home improvement and domestic purposes. The largest export categories include battery-operated portable lamps, such as torches, hand lanterns, hand-held incandescent lamps and LED lamps for outdoor, sports and/or diving uses.

Meanwhile, there are a number of companies engaging in the business of electric table, desk, bedside and floorstanding lamps. Other exports include wall and ceiling lighting, chandeliers and lighting fittings, as well as decorative items like Christmas tree lighting sets and lamp shades.

The materials used for casings and shades include plastics, die-cast metals, crystals, glasses, ceramics and polished brasses.

Some companies also produce neon lights, illuminated signs and illuminated nameplates for advertising purposes and interior decoration.

Most Hong Kong lighting product manufacturers have relocated their production facilities to the Chinese

mainland. Their offices in Hong Kong are mainly responsible for product development, marketing and logistic support. They usually undertake product design, plastics injection moulding, vacuum coating, enamel plating and assembly production in-house.

Against the fast changing markets and advancement in technology, Hong Kong companies emphasise quick response to ensure effective services to their customers.

Also, many Hong Kong companies have further strengthened their quality assurance and environmental management systems, and are accredited with ISO 9000 – an internationally recognised standard for quality management system, ISO 14000 – a standard for environmental management system, etc.

Hong Kong’s total exports of lighting products increased by 2.6% in 2017.

The major export markets were the US (accounting for 39.5% of the total exports in 2017), the EU (21.4%), the Chinese mainland (13.5%) and Japan (8%).

Hong Kong’s lighting manufacturers mostly produce for overseas importers and

“The largest export categories include battery-operated portable lamps, such as torches, hand lanterns, hand-held incandescent lamps and LED lamps. distributors, including reputable American and European brands. In view of intensified competition, ODM has outpaced OEM as their major business. A few companies also promote lighting products with their own brand names or trademarks.

Hong Kong companies also sell directly to overseas buyers of hardware and general merchandise, including volume importers and regional distributors. Some companies also deal with buying offices set up by overseas buyers in Hong Kong. Some large Hong Kong companies even sell directly to large-scale retailers like hypermarkets, supermarkets and chain stores, as well as buying groups/co-operatives of smaller retailers in North America and Europe in order to reduce the levels of distribution and associated costs.

In recent years, overseas importers and distributors tend to make smaller-sized orders with higher frequency and shorter delivery lead times in order to minimise inventory. Some Hong Kong companies have therefore re-engineered their procurement and production management systems, in a bid to shorten their manufacturing cycle time and reduce costs in order to meet the market demand.

Major trade fairs such as the International Home and Housewares Show held in Chicago, the Cologne International Hardware Fair, and the Japan DIY Homecentre Show provide promotion opportunities for Hong Kong traders.

The Hong Kong International Lighting Fair organised by the Hong Kong Trade Development Council (HKTDC) is another major event for companies to exhibit their products to overseas buyers.

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 which have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met.

In the main, the CEPA origin criteria

42 HONG KONG BUSINESS ANNUAL 2019

lighting industry - company and industry for Hong Kong items include: (1) change in tariff heading; (2) performance of specific manufacturing process in Hong Kong; and (3) fulfillment of value-added requirement, under which at least 30% of the FOB value of the products, and that the final manufacturing or processing operations should be completed in Hong Kong.

Product development cost incurred in Hong Kong, in addition to material costs and labour costs, can be taken into account in calculating the valueadded percentage. With effect from 1 April 2012, costs of raw materials and component parts originating in the mainland can also be included in calculating the value-added percentage, provided that the value-added content originating in Hong Kong is greater than or equal to 15%.

Compliance with Overseas Requirements Hong Kong companies are capable of meeting the technical requirements of relevant authorities in overseas markets.

These include the safety requirements of UL/ETL listing or equivalent in the US, as well as the relevant safety directives and CE requirements of the EU. Others include the CSA safety standards for exports to Canada, and the safety and quality requirements of the China Compulsory Certification (or CCC) system for products sold in the Chinese mainland.

Meanwhile, Hong Kong companies are also attentive to the growing popularity of green consumerism in the marketplace. Especially in Europe, consumers are generally conscious of environmental protection. Not surprisingly, the EU has adopted a number of directives for environmental protection, which may have an impact on the sales of electronic products. These include the restrictions on batteries and accumulators that contain mercury, the Directive on

Waste Electrical and Electronic Equipment (WEEE) and the Directive on Restriction of Hazardous Substances (RoHS), under which lighting products are among the affected items.

Product Trends One of the significant developments in the lighting industry is the booming of DIY (do-it-yourself) market.

DIY products are increasingly popular, especially in North America and Western Europe. Hence, a wide range of hardware items, including lighting products, are offered for DIY purposes. Meanwhile, decorative items are no longer limited to Christmas lighting sets. They also include a wide range of domestic lighting products, such as track lights, linear lights and spotlights of novelty designs.

Due to environmental concerns, lighting products of higher energy efficiency and longer lifetime are preferred.

Notably, Australia has banned the sale of most incandescent

"Some firms have re-engineered their procurement and production management systems to shorten their manufacturing cycle time and reduce costs."

light bulbs that cannot meet the minimum energy efficiency requirements since 2010.

The EU and the US have completely banned such sales since September 2012 and 2014 respectively. The Chinese mainland has also phased out the imports and sale of most incandescent light bulbs since October 2016.

As a result, energy-efficient items like the integrated electronic compact fluorescent lamps are in demand.

Nevertheless, the industry is focusing on the development of LED lamps and lighting apparatus, which are more energy-efficient with an even longer lifetime than the compact fluorescent lamps.

As regards future development, the industry is keeping an eye on the so-called “smart� lighting system on the advent of the Internet of Things (IoT), which is a technology to connect different devices at home and beyond by a smart platform, including the lighting apparatus, other installed appliances and mobile devices.

HONG KONG BUSINESS ANNUAL 2019 43

company and industry - publishing industry

China market opens new chapter in publishing scene Despite challenges in talent shortage and bookstore operations, Hong Kong’s publishing industry continues to attract booksellers

A

s technology evolves, publishing is no longer limited to print media but also digital media. The range of products provided by the publishing industry can be classified as follows: • Newspapers and magazines: Hong Kong is well served by a great variety of newspapers and magazines, in Chinese, English and other languages; and by both local and international publishers. A large number of international publishers use Hong Kong as the base to perform some or all of the functions of local market adaptations, printing, advertising sales and subscription.

• Books: these include mass market books as well as textbooks, reference books and specialist books by both local and international publishers.

• Non-book publications: this category comprises a wide range of multi-media including software, motion picture, video and television programme activities, sound recording and music publishing.

44 HONG KONG BUSINESS ANNUAL 2019

Newspaper and magazine publishers Many international media organisations have offices in Hong Kong, which is also the base for a number of regional publications.

For example, The Wall Street Journal Asia, The Financial Times, USA Today International, The New York Times and Nikkei Business Publications also have their regional offices in Hong Kong.

Some specialist publishers produce trade publications either for local or international circulation. Many of them are also organisers of trade shows.

Book publishers International book publishers operating in Hong Kong include Oxford University Press, Pearson, Readers’ Digest and Macmillan.

These companies manage the production, marketing, and distribution of books for the Hong Kong market and export to other sister companies around the world.

In recent years, more foreign titles have been translated into Chinese. They include management, personal finance and selfimprovement books as well as cartoons and

“Many international media organisations have offices in Hong Kong, which is also the base for a number of regional publications.” popular novels, especially those which have been adapted to cinematic or TV screens.

Non-book publishers On-line publishing is becoming more popular. An increasing number of major magazines, regional newspapers, local newspapers and wire services are going on-line. There are also many pure Internet publishers. Google, the giant search company with its online Book Store that maintains millions of book titles, has an office based in Hong Kong.

Exports Hong Kong’s printing exports amounted to US$728m in the first half of 2018, up 3.6% from the previous year. The US, the Chinese mainland, the UK and Australia markets together absorbed nearly 70% of Hong Kong’s total printing exports.

Hong Kong is a major centre for Chinese-language publications. Some local Chinese newspapers and magazines are also distributed in Taiwan, the Chinese mainland and overseas communities where there are significant Chinese population.

Industry Development The Chinese mainland’s market opening measures after WTO accession are restricted to the formation of Sino-foreign joint-ventures in the publishing business and distribution of publications. Meanwhile, setting up whollyowned publishing or import companies on the Chinese mainland remains off-limit to foreign companies, including Hong Kong companies.

Hong Kong companies’ participation is now mainly focused on entering the market through copyright trade and establishing ties with mainland publishing companies in the importation and distribution fields.

The huge potential of the Chinese mainland market is the focus of the world. Hong Kong publishers are at an advantageous position to market China studies to the world.

There are growing opportunities for publishers to market trade journals to Western companies which want to establish or expand their presence in the mainland market. However, Hong Kong publishers have been facing challenges such as inadequate talents and difficulty in operating bookstores amidst mounting rents.

publishing industry - company and industry Industry Data Publishing and printing

Mar 2018

Number of establishments

3424

Number of persons engaged

30040

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

Performance of Hong Kong Exports of Printed Products Printed books, newspapers, pictures and other printed products (H$49)

2017

Jan-June 2018

Total exports (US$ mn)

1609

728

-11

3.6

Growth (%) Major export markets (% share)

-

-

US

31.7

32.5

Chinese Mainland

15.9

19.7

UK

11.2

10.7

Australia

5.9

5.5

Germany

3.7

4.2

Japan

3.7

2.3

Sources: Census Statistics Department, Hong Kong

The annual Hong Kong Book Fair is a major event of Hong Kong’s publishing industry, attracting publishers, booksellers, distributors, writers and readers from Hong Kong, Taiwan, the Chinese mainland and the rest of the world.

Alongside Hong Kong Book Fair 2018, there was a monthlong festival “Cultural July, Joyful Summer Reading”, featuring over 330 seminars and other cultural activities throughout Hong Kong. In 2018, there were a high of 680 exhibitors from 39 countries and regions, attracting more than one million visitors to the fair.

Hong Kong’s publishing industry is adapting to the digitalisation trend, whilst the electronic book frenzy is sweeping the globe.

In 2013, Chinese publishers in Hong Kong including Sino United Electronic Publishing, Commercial Press, Joint Publishing and Chung Hwa Book joined hands to launch an e-book distribution platform “Super Book City”, allowing readers to buy e-books and printed books online through mobile applications and web for personal computer.

Responding to the growing popularity of electronic reading,

“Hong Kong’s printing exports amounted to US$728m in the first half of 2018, up 3.6% from the previous year.”

the Hong Kong Book Fair 2018 continued to feature a theme zone on e-Books and e-Learning Resources with 12 exhibitors.

Underpinning Hong Kong’s publishing businesses is a highly developed printing industry.

Meanwhile, many Hong Kong printing companies have relocated their factories to the PRD. Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA) The Agreement on Trade in Services under the CEPA framework allows Hong Kong printing service providers to enter the whole Chinese mainland market.

As part of the liberalisation measures under cultural services, Hong Kong printing service providers can set up joint ventures on the Chinese mainland to engage in printing of publications and other printed matters.

Enterprises wholly-owned by Hong Kong service providers (HKSS) are also allowed to provide printing and binding services for packaging materials, and pre-press services such as proof-reading, design and typesetting for books. A Green Passage is also established to simplify procedures for importing Hong Kong books.

HONG KONG BUSINESS ANNUAL 2019 45

company and industry - spectacles industry

Fashion trends push spectacles industry growth Fashion and designer labels and the vintage fashion trend are among the trends that affects the industry.

H

ong Kong’s spectacles makers specialise in making medium to high-end frames. They are able to cope with small orders and offer an extensive range of frame designs.

Hong Kong companies are traditionally strong in making plastic spectacles frames, which include hand-made cellulose acetate frames, rimless nylon frames, and injectionmoulded frames. They also produce metal frames made of rolled gold, aluminium alloy, brass, stainless steel, silver, titanium and mixtures of metals.

Hong Kong’s spectacles companies are facing keen competition from their counterparts in nearby regions, particularly from Wenzhou and Danyang of the Chinese mainland.

Nonetheless, competition is confined to the lower-end sector. The leading Italian companies still prefer to engage with Hong Kong sub-contractors because of their quality, business integrity and long established relationship.

In order to reduce operation costs and stay competitive, many spectacles makers

have relocated their factories to the Chinese mainland, particularly in Shenzhen and Dongguan, where labour and land costs are lower than that in Hong Kong.

On the other hand, high value-added activities, including marketing, management, finance and accounts, are still carried out in Hong Kong.

Technological investments such as advanced machinery and information technology are substantial for largescale manufacturers in improving their production efficiency and product design.

They are equipped with 3D CAD/CAM technologies and computer numerically controlled (CNC) production lines to enhance their design and streamline the production process.

Hong Kong was the world’s third largest exporter of spectacles and frames after the Chinese mainland and Italy in 2016, according to the latest available data.

In the first half of 2018, Hong Kong’s total exports of spectacles, lens and frames decreased 2% year-on-year to HK$10.4 billion. During the period, exports to the

“Hong Kong’s spectacles makers are able to cope with small orders and offer an extensive range of frame designs.

EU and the US, the two largest markets with a combined share of more than 60%, whilst the former fell by 1% and the latter rose by 3% year-on-year, respectively.

However, exports to the Chinese mainland and Australia, the next two major markets, showed a slide of 26% and a surge of 43%, respectively, in January-June 2018.

By major category, spectacles and goggles, and frames and mountings, took up the largest share to account for a total of 84% in the first six months of 2018.

On the other hand, the next two major categories, lenses and parts for frames and mountings, saw a 16% slide and a 14% growth, respectively, in January-June 2018.

Sales Channels On the retail side, most of the sales are done by chain stores and mass merchants worldwide. Many manufacturers deal with overseas buyers directly, including large retail chains.

There are a growing number of Hong Kong exporters that produce house or international designer brands under licensing agreement. Some Hong Kong exporters have formed strategic alliance with overseas companies and brand license to consolidate long-term relationship and explore overseas market opportunities.

Hong Kong manufacturers are also engaged in OBM, developing their house brands for other markets, particularly in Southeast Asia and the Chinese mainland.

Industry Trends Offshore outsourcing: Facing stiff price competition from Hong Kong and Chinese suppliers, spectacles manufacturers overseas have been shifting their focus from production to design and brand management.

Downstream expansion: Growth is boosted worldwide by continuous investment in distribution business.

The strategy involves isolating and exploring opportunities to invest further downstream. With this direction, Hong Kong companies gain important opportunities to control the entire supply chain network and deliver products directly to its end-users.

Online retailing: Internet has increasingly become a preferred option for buying spectacles, thanks partly to the prevalence

46 HONG KONG BUSINESS ANNUAL 2019

spectacles industry - company and industry Performance of Hong Kong Spectacles Exports 2016 HK$mn Growth % Domestic Exports Re-exports of Chinese mainland origin Total Exports

2017 HK$mn Growth %

Jan-Jun 2018 HK$mn Growth %

32

-92

40

+25

14

20432

+48

20249

-1

10391

-20 -2

16454

+40

16608

+1

8402

-3

20464

+44

20286

-1

10405

-2

Source: Hong Kong Trade Statistics, Census and Statistics Department

2016 Share % Growth %

2017 Share % Growth %

Jan-Jun 2018 Share % Growth %

Spectacles, goggles & the like

45.0

+72

43.8

-3

45.1

Frames & mountings

41.4

+38

39.7

-5

38.9

-1 *

Lenses, incl. contact lenses

8.8

-13

12.1

+36

10.9

-16

parts for frames & mountings

4.8

+66

4.4

-8

5.1

+14

*insignificant

of wearing sunglasses as fashion accessories and online shopping.

Emphasis on design, innovation and quality: Apart from cost-controlling measures, Hong Kong companies are putting increasing emphasis on design, technological innovations and quality management to stay competitive.

Business opportunities on the Chinese mainland: The optical market is promising, considering a repurchase cycle of three years with an average annual demand of 300 million pairs. Some foreign companies seek for partnership opportunities with Chinese chain stores notwithstanding the fact that existing ones are confined to big cities and are much smaller in scale as compared to their foreign counterparts.

Environmental trends: Ecofriendliness and sustainability are becoming progressively important issues in the spectacles industry due to more stringent environmental laws and regulations.

Product Trends Lightweight materials and new mixes: Customers prefer lightweight and durable frames.

Popular frame materials include laminated zyl that has layered colours, blended nylon which is especially good for sports and performance frames, as well as monel (a mixture

of a broad range of metals) which is increasingly used as it is malleable and corrosion resistant.

Fashion and designer labels: Apart from being a medical device or a vision necessity, eyewear has also become a fashion accessory, a fashion statement, to go with clothes.

Many fashion and designer labels promote their collection of spectacles and frames as fashion-forward accessories.

Indeed, many fashion brands have granted licenses to spectacles manufacturers.

The increasing emphasis on design, not only for women but for men as well, has also successfully changed the previous perception towards glasses relating to aging.

Frame styles: Frames featuring floating big logos at temples and even the hinges are common among the brand named eyewear.

The temples are getting lower to give a trendy look. Spring hinges allowing temples to flex backward and forward are widely used.

Role of lenses: Nowadays with technology advancements, lenses provide more special functions beyond eyesight correction and protection, such as anti-reflective, anti-scratch and anti-glare. There is a considerable amount of research and development being done in these areas, with results such as an in-the-lens telescope to

“Spectacles and goggles and frames and mountings, occupy the largest share of 84% in the first six months of 2018.�

help people with more severe visual impairments to drive and adjustable strength lenses for the presbyopic market.

Rise of demand for presbyopic glasses: In 2017, there are 962 million people worldwide aged 60 and older, making up 13% of the global population, according to the United Nations. This ratio is higher in developed countries.

Riding on the aging population, a rising demand for presbyopic glasses is expected.

Rising popularity of sports eyewear: Polycarbonate and acrylic material technology have been boosting the sports eyewear sector.

With the help of continued advancement in technology, new super light-weight and strong materials appear and support the sports eyewear sector.

Growing health consciousness and increased popularity of sports will lead to a greater demand for sports eyewear.

Increased demand for sunglasses: Sunglasses production shows the fastest growth among all sectors in spectacle industry. The purchase of sunglasses from women can be lasting throughout the whole year as they concern fashion and style more. For men, it is usually more seasonal.

Rise of vintage trend: Thanks to the success of Korean fashion in recent years, vintage glasses such as round and wirerimmed glasses are fast gaining popularity.

HONG KONG BUSINESS ANNUAL 2019 47

company and industry - sporting goods industry

Sporting good industry enters casual wear market People have been incorporating athletic apparel and footwear for casual or leisure purposes.

H

ong Kong companies export a diverse range of sporting goods on a global basis. The major categories include sports equipment and accessories (66.9% of the total), sports apparel (23.6%) and sports footwear (9.4%).

Although they have largely relocated their production bases to the Chinese mainland, Hong Kong’s sports apparel manufacturers still receive strong support from a number of ancillary industries. Sportswear production benefits greatly from the strong presence of the clothing industry in Hong Kong. Indeed, the production of sports gear is well served through a widely-available variety of quality threads, fabrics, zippers, labels and other components, all at reasonable prices. This easy sourcing of materials and components adds a truly competitive edge to Hong Kong’s sports goods sector.

The majority of Hong Kong sporting goods are exported under OEM/ODM arrangements with overseas manufacturers and brand owners, notably Reebok, Puma,

Fila, Nike, Adidas, Umbro, Timberland and Quiksilver. Only a few Hong Kong manufacturers have looked to develop their own brands, a move backed up with R&D undertakings. Notable examples, though, include Neil Pryde (windsurfing sails), Super-X (sportswear), Re:echo (outdoor gear and clothing) and Nikko(camping gear and accessories).

Sales Channel A few large local manufacturers, as mentioned earlier, export products under their own brand names. “Nikko” knapsacks and “Neil Pryde” sails, for example, are well-known in overseas markets. Meanwhile, more young designers have started their own businesses by creating own brands such as “Miss Runner” to sell fashionable yet highperformance sportswear at affordable prices around the world. It is a common practice for these manufacturers to appoint overseas distributors in order to help promote sales.

A good distributor is a valuable source of market information and can be helpful

“Young designers have created brands such as “Miss Runner” to sell fashionable yet high-performance sportswear at affordable prices.“ in advising Hong Kong companies on appropriate pricing strategies. However, Hong Kong companies should ensure that any potential partner is well-established in the market, supported by warehousing and product-handling facilities, and possesses a good knowledge of the dynamics of the local market. On the mainland, sporting goods are channelled through shopping centres in first-tier cities and specialised retail stores in the second- and third-tier cities.

Other distribution methods include selling to discount stores, speciality stores and traders. For instance, large discount chain stores in the US, such as Walmart and Target, buy from Hong Kong exporters. The large speciality chain stores selling sporting goods in the US include Sports Authority, whilst the big players in Europe include Decathlon, Intersport and Go Sport.

The International Sportsmen Exposition (ISE) in the US and ISPO MUNICH in Germany are the leading trade fairs for sporting goods. As well as staging trade fairs like Hong Kong Sports and Leisure Expo, the HKTDC also organises study or match-making missions for Hong Kong manufacturers, many of which are OEM firms, to visit specific markets in order to help building new business connections.

Retail consolidation is one of the biggest issues facing the sporting goods industry.

Retailers are transforming into super-sized stores with a “shoppertainment” format.

Manufacturers are dealing with fewer but more powerful retailers such as Walmart, or large specialty chains, such as Sport Chek and Foot Locker. These sporting goods retailers, in turn, put increasing pressure on manufacturers to offer better deals.

Industry Trends The rising number of sporting events is expected to encourage more people to participate in various sports. It is expected that Asia Pacific and other emerging markets, such as India and China, will be the growth regions because of the rise in disposable income and improving living standards.

Generic sporting goods tend not to be influenced by changes in the popularity of particular sports, though they are still highly vulnerable to changing fads and

48 HONG KONG BUSINESS ANNUAL 2019

sporting goods industry - company and industry fashions. Luxury brands such as Moncler Grenoble and Gucci have entered into the sporting goods business by introducing their own sneakers and sporting accessories.

With regard to marketing, endorsement agreements with sports stars and sponsorship and licencing agreements with sports events are important factors in making products/brands a success.

In line with this, sporting goods companies have often become the sponsor of sports stars, teams and tournaments, launching limited-edition and/ or customised products such as T-shirts and accessories. Close connections with sports stars and coaches prove a resource that provides a competitive advantage.

Product Trends Hong Kong’s sporting goods industry is expanding steadily as people more readily appreciate the health and leisure benefits of physical activity, whilst sportswear is also increasingly being embraced by the casual wear market. The best-selling sports outfits combine sports activities with leisurewear, as sports lovers want to look smart and fashionable whilst exercising, whilst people also wear athletic apparel and footwear for casual or leisure purposes.

Modern technology is now playing a distinct role in the industry, with designers seeking new fabrics and applications.

Examples here include sunprotecting and reflective fibres with synthetics blended into wool and cotton and cooling materials made by high-density polyester fibres and xylitol.

Manufacturers of sports balls and golf equipment have also upgraded the materials used in basketballs, volleyballs and footballs, shifting from rubber and PVC to high-end PU. The use of nanotechnology in sports apparel is also expected to become more widespread,

with dry-fit, coolmax and UV protection materials becoming more popular.

Recently, the research team of MIT has created a new form of performance fabric that combines biomaterials research with textile design to improve fabric breathability and speed up sweat evaporation.

The ability to create new product technology and other performance-improving features is a key driver in the sporting goods market. In particular for those sports with fairly stable participation rates, innovative products are the motivations for consumers to replace their old products.

Rock climbing, yoga, Pilates, kick boxing, aqua fitness and Latin dance are all gaining popularity, especially amongst female consumers. As a result, many sporting goods companies have introduced a series of products (outfits and accessories) to cater this segment. A case in point is the Hong Kong-based activewear label ‘Miss Runner’, which has been embracing wearable art into performance sportswear to target female consumers.

Other newly introduced indoor

"Modern technology is playing a distinct role in the industry, with designers seeking new fabrics and applications. "

sports equipment includes foam rollers, balance discs, rubber bands/tubes and fitballs. As a result, women are increasingly becoming an important part of the industry’s customer base, with companies devoting resources to introducing women’s sporting goods.

The popularity of outdoor activities also reflects the environment-related trend and more people want to experience nature. In the US, several outdoor pursuits, notably hiking, camping, backpacking, rock climbing, kayaking and fishing, have also grown in popularity.

Nordic fitness, such as Nordic walking, which involves walking with the use of poles to optimise fitness, is also expected to show substantial growth in future years.

Upcycling is becoming increasingly a buzzword in the sporting goods industry, with some manufacturers signing up to voluntary certification labels such as Bluesign® and the Global Organic Textile Standard (GOTS) and promoting their commitments to ecological and social practices such as the utilisation of recycled materials and non-plastic ingredients.

HONG KONG BUSINESS ANNUAL 2019 49

company and industry - textile industry

Textile industry revs up for upmarket products

Demand for high-end household textile products is growing rapidly on the Chinese mainland.

T

he textiles industry – comprising spinning, weaving, knitting and finishing of fabrics – had a total of 416 manufacturing establishments as of March 2018, employing 2,322 workers or 2.6% of the local manufacturing workforce. The textiles industry is one of Hong Kong’s major export earners, accounting for 1.5% of the total exports in 2017. In recent years, traditional markets, such as the US, the EU and Japan, have rendered textiles exporters from developing countries, including ASEAN and Bangladesh, more preferential market access, which has in turn impaired the competitiveness of Hong Kong manufacturers. Along with rising labour costs and more rigorous environmental regulations on the Chinese mainland, an increasing number of Hong Kong textiles manufacturers have relocated their production of lower-end and mass products to Southeast Asian countries like Bangladesh, Cambodia and Vietnam. Their manufacturing operations in Hong Kong are focused on sophisticated and high value-

50 HONG KONG BUSINESS ANNUAL 2019

added items, including quality ring-spun, open-end yarn, fine gauge knitted fabrics as well as complicated dyed and printed fabrics.

Hong Kong’s textile exports grew by less than 1% in the first half of 2018, after a 3% fall in 2017. Re-exports, accounting for nearly 99% of total textiles exports, rose on par with total exports, whilst domestic exports saw a 14% jump. With 76% of the textile re-exports originating from the Chinese mainland, Hong Kong’s re-exports of textiles of China origin registered an increase of 2% in January-June 2018.

Asia was the leading market for textiles exported from Hong Kong, accounting for 92% of Hong Kong’s textile exports in the first half of 2018. Of the top 10 export destinations, nine of them were in Asia. The Chinese mainland remained to be the city’s predominant export market, accounting for 48% of Hong Kong’s textile exports in January-June 2018. Other major export markets of Hong Kong textiles include Vietnam, Bangladesh, Cambodia, Indonesia, Sri Lanka, Thailand, the US, India and the Philippines.

"Hong Kong’s exports of woven fabrics, finishing accessories and knitted or crocheted fabrics showed increases of 1-4% in the first half of 2018" Whilst many Hong Kong textile manufacturers and traders supply their products to the clothing manufacturers in Asia, particularly on the mainland, international textile companies are using Hong Kong as a gateway to promote their products to other Asian economies. For instance, an increasing number of fashion brands and designers from Latin American and Central and Eastern Europe are attempting to leverage Hong Kong’s trade platform to promote their textiles and apparel on the Chinese mainland.

Industry Trends In line with the global manufacturing landscape and fierce competition across the board, Hong Kong’s textiles industry has been moving up the value chain to cater to the demand for upmarket textile products with original designs or brands.

To stay tuned to the advancements of manufacturing technology and product requirements, the textiles industry, as a capital-intensive business, has invested heavily in keeping up with the latest technological trends.

Advanced production technologies are sourced mostly from vendors from Germany, Italy, Spain, Switzerland, Japan and South Korea. Modern technologies like automatic web spreading, nano biofunctional materials finishing and Texparts® Zero Underwinding are no strangers to local manufacturers.

In the meantime, the Hong Kong Research Institute of Textiles and Apparel (HKRITA), which was established in 2006, also helps enhance the competitiveness of the industry by developing and transferring fashion and textile technologies.

At the 46th International Exhibition of Inventions of Geneva in 2018, HKRITA won one gold medal with National Research Council of Thailand’s commendation, four gold medals and one silver medal for all six participating entries, including technologies ranging from AI-based production order prediction algorithms to textile recycling technologies and washable hygienic facemasks.

To comply with the global trend of green manufacturing, more textile corporations

textile industry - company and industry Performance of Hong Kong’s Exports of Lighting Products ^ HK$ Billion

Value

Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

by Markets

2016 Growth %

Value

2017 Growth %

Jan-Jun 2018 Value Growth %

0.565

-6

0.606

+7

0.316

60.767

-13

58.689

-3

29.382

*

45.351

-13

44.123

-3

22.491

+2

61.332

-13

59.295

-3

29.698

*

2016 Share % Growth %

2017 Share % Growth %

+14

Jan-Jun 2018 Share % Growth %

China

52.7

-18

49.3

-9

48.3

-4

Vietnam

12.5

-4

15.2

+18

15.1

+1

Bangladesh

6.5

-3

6.5

-3

6.9

+12

Cambodia

6.2

-12

6.6

+3

6.8

+7

Indonesia

4.4

-7

4.7

+3

4.8

*

Sri Lanka

3.0

-5

2.7

-13

2.7

+3 +23

Thailand

1.6

-7

1.6

-4

1.8

US

1.9

-12

1.9

-6

1.7

-11

India

1.7

*

1.6

-6

1.4

-16

Philippines

1.2

-13

1.1

-15

1.1

-5

Sources: Hong kong Trade Statistics, Census and Statistics Department

have adopted the bluesign standard – one of the industry’s major voluntary standards for environmental sustainability.

To be qualified, a corporation must reveal its chemical processes, dye compositions and relevant green workplace initiatives for scrutiny. Apart from the bluesign® standard, Global Organic Textile Standard (GOTS), the OekoTex® Standard 100, Oeko-Tex® Standard 1000, Global Green Tag® and NSF Sustainability are other popular product labels that textile manufacturers used to show their environmental awareness.

China’s Ministry of Industry and Information Technology (MIIT) has released a development plan for the textile industry, envisioning a stable increase in global market with a more quality-oriented growth mode.

Other than setting a 1% research and development (R&D) expenditure target for large- and medium-sized textile companies, the plan also sets forth requirements of quality improvement, brand formation and patent authorisation.

It also stresses on five key sectors, including enhancing innovation of chemical fiber

sector, expanding application of industrial textiles, improving natural fiber utilisation, accelerating clothing and home textiles innovation, as well as uplifting quality of high-end textile machinery.

Among various kinds of fibres, cotton remains the most preferred material for consumers in the apparel market. Cotton-rich apparel continues to attract European consumers, whilst consumers in China, India and Japan agree that cotton and cotton blend are the most comfortable, authentic and sustainable, compared to other man-made fibres.

From the perspective of product innovation, microfibres are drawing greater attention from textiles manufacturers.

The major benefits of textile products made of microfibres are its light in weight and superior performance in keeping warm.

Aside from microfibres, many innovative new fibres and fabrics have brought demand in many different areas. To answer the needs, more and more breathable, flexible, anti-bacterial, anti-ultraviolet, wrinkle-free, water-resistant and environmentally friendly materials are invented and

"Apart from rising green consciousness, product safety remains a major concern for consumers."

marketed. Technology and innovation will continue to be the buzzwords in the coming seasons. Fancy weaves and prints will give more flexibility in the choice of manufacturing processes, whilst digital prints, as well as artisanal decoration, will make textiles more malleable.

As wearable technologies are becoming more accessible, technical textiles are widely applied over a wide range of industries such as automobile, aerospace, architecture, healthcare and sports.

Luminescent and heated garments, smart knee bandages, insect-repellent apparel and tuneable noise-reducing carpets are cases in point.

For instance, a number of disqualified apparel fibres consisting of unsatisfactory levels of pH value, formaldehyde content and banned azo dyes have been reported on the Chinese mainland in recent years. In fact, Chinese consumers are increasingly in favour of foreign apparel brands, which usually guarantee product safety. With economic stability, rapid urbanisation and the marriage and baby boom, the demand for high-end household textile products is growing rapidly in China.

HONG KONG BUSINESS ANNUAL 2019 51

company and industry - wine industry

Asian demand boosts wine market in Hong Kong

The region is also said to be recognized as Asia’s most cost-effective and convenient distribution hub.

H

ong Kong has a significant pool of experienced fine wine merchants with good wine knowledge and international wine trade experience. Amidst the growing demand for wine in Asia, the Hong Kong government removed all duty-related customs and administrative controls for wine in February 2008 to facilitate the development of Hong Kong as a wine trading and distribution centre for the region, particularly the Chinese mainland.

Hong Kong has entered into an agreement with the mainland Chinese Government, allowing wine imports to go into China under CEPA and enhanced customs facilitation measures. This makes the city an unrivalled gateway to China, attracting industry players from around the world to launch or expand their business in Hong Kong. Hong Kong, being a duty-free port with good air connectivity and storage facilities, is regarded by Asian investors as the most cost-effective and convenient distribution hub to store their investmentgrade wines for delivery to their markets

52 HONG KONG BUSINESS ANNUAL 2019

on-demand.

Since the weather in Hong Kong is not suitable for growing grapes, there is only very little wine production in Hong Kong, and therefore insignificant domestic exports.

Virtually all exports are re-exports of imported wines with Asia being the major market. In January-June 2018, total exports of wine dropped by 12.0%, after a decline of 14.9% in last year.

On the other hand, Hong Kong’s wine imports have expanded fast since the elimination of import duties in February 2008. In January-June 2018, imports of wine amounted to HK$6.2 billion, more than three times of the value of HK$1.6 billion in 2007. Most of the imported wines originated from European countries such as France and the United Kingdom, but there has also been a significant share coming from Australia in recent years.

In volume terms, Hong Kong imported 28.8 million litres of wine in the first half of 2018, with about 33% of these imported wines being re-exported. The rest – about 67% – of wine imports were brought away

"Since the weather in Hong Kong is not suitable for growing grapes, there is only very little wine production in Hong Kong, and therefore insignificant domestic exports." from Hong Kong by individuals or retained in Hong Kong, for storage or immediate consumption.

Sales Channels To facilitate Hong Kong as a trading and distribution hub for the region, the Hong Kong government has signed co-operation agreements with Australia, Chile, France (and its Bordeaux and Burgundy regions), Germany, Hungary, Italy, New Zealand, Portugal, Romania, Spain and the United States to strengthen promotional activities in areas including wine-related trade, investment and tourism. Thanks to the surge in demand from Asian investors, Hong Kong has maintained one of the largest wine auction centres in the world since 2009, with auction sales amounting to US$98 million in 2017, according to Wine Spectator.

Domestically, wines are sold through off-trade channels such as supermarkets, specialty stores and convenience stores, and on-trade channels such as bars, restaurants and club houses.

Industry Trends Whilst wine consumption is flat or sinking across much of Europe, the global attention has shifted to Asia. Consumers in Asia are increasingly wine savvy and their demand for wine remains strong.

According to Euromonitor International, wine sales in Asia amounted to US$103.0 billion or 6.4 billion litres in 2017, down 1.0% (in terms of value) and up 1.6% (in terms of volume), respectively, per annum in the past five years. For 2017 to 2022, it is forecast to grow 6.7% per annum in value terms and 3.1% per annum in volume terms.

Sales in China are more spectacular, with an amount of US$71.2 billion or 4.8 billion litres in 2017, up 4.0% and 4.7%, respectively, per annum in the past five years. For 2017 to 2022, it is forecast to grow 10.4% per annum in value terms and 5.0% per annum in volume terms.

Due to the growing demand for wine in Asia and the deregulation of wine imports, wine business has boomed in Hong Kong. Besides new entries, increasingly, international wine companies and their specialists have moved to Hong Kong. On

wine industry - company and industry Performance of Hong Kong’s Wine Trade Wine (HS 2204-5) Trade in value terms Total Exports Domestic Exports Re-Exports Imports

2016 HK$mn Growth %

2017 HK$mn Growth %

Jan-Jun 2018 HK$mn Growth %

5198

+9.2

4422

-14.9

2070

Nil

Nil

Nil

Nil

Nil

-12.0 Nil

5198

+902

4422

-14.9

2070

-12.0

12044

+11.9

11951

-0.8

6205

+9.0

Source: Hong Kong Trade Statistics, Census and Statistics Department

Wine Exports by Market

2016 Share % Growth %

2017 Share % Growth %

Jan-Jun 2018 Share % Growth %

Asia

98.5

+11.0

98.4

-15.0

97.4

Chinese Mainland

85.9

+11.7

83.1

-17.7

87.3

-12.8 -4.3

Macau

9.2

+27.6

10.4

-3.8

6.5

-48.7 +73.6

Taiwan

0.4

+12.1

0.6

+23.0

1.1

Vietnam

1.7

-48.3

2.2

+8.0

0.9

-80.0

Japan

0.4

+130.1

1.0

+99.7

0.7

-50.9

Singapore

0.4

+19.5

0.6

+23.6

0.6

22.0

Denmark

*

-55.1

Nil

-100.0

0.8

=

0.8

-49.5

0.5

-41.8

0.5

-23.9

U.S.A.

Source: Hong Kong Trade Statistics, Census and Statistics Department *Insignificant; = Infinitive

the other hand, whilst Hong Kong is well recognised as the culinary centre in the region, wine matching with Asian cuisine becomes a trend in the form of food and wine appreciation sessions held by restaurants and hotels.

Responding to rising demand and driven by market forces, public as well as private training institutions are enriching or expanding their wine appreciation courses and developing enhanced manpower training programmes.

General Trade Measures Affecting Wine Exports The Chinese mainland is the biggest export market for Hong Kong. It imposes the following taxes on wine: import tariff (14% for bottled wine and 20% of bulk wine), value added tax (17%) and consumption tax (10%), which results in an effective tax rate as high as about 48-56%.

The two most critical pieces of legislation concerning wine imports are the wine standards and the wine labelling law, both of which are administered by the General Administration of Customs since March 2018.

To facilitate the movement of wine imports into the Chinese mainland through

Hong Kong, the Customs and Excise Department (C&ED) of Hong Kong and the General Administration of Customs of the Chinese mainland signed on 9 February 2010 the “Cooperation Arrangement on Customs Facilitation Measures for Wine Entering the Mainland through Hong Kong�. The agreement applies to wine which is imported through designated ports into the Chinese mainland, exported by Hong Kong registered wine exporters and imported by mainland registered wine importers.

New world wines are gaining market share Old World wines, which refer to those produced in continental Western Europe including France, Italy, Portugal and Germany, dominate the Asian market. However, New World wines producing in the US, Latin America, Australia, New Zealand, South Africa, etc are gaining popularity. In addition, wines coming from countries such as Australia are nearer to Asian countries, and thus incur lower transportation costs.

AR wine label Amidst the rise of off-trade channels, wine packaging, in

"Whilst wine consumption is flat or sinking across much of Europe, the global attention has shifted to Asia. Consumers in Asia are increasingly wine savvy and their demand for wine remains strong."

terms of label design, becomes more important. Now, wine labels show more information such as the vintage, the variety and the country of origin. Label designs are increasingly eyecatching and easy to recognise as brands can play a big part in wine selection.

Entry-level tasters According to Euromonitor International, there are more products which target entrylevel tasters and people new to wine consumption launched in recent years.

Smaller bottles Some wine retailers packaged the same wines in large and small bottles. The idea is to allow consumers to replicate a winery tasting room in the comfort of their own homes, trying a taste of top-notch wines before committing to buying full-sized 750 ml bottles.

An increasing number of consumers have started to develop a more sophisticated palette, and are hence consuming more wine.

According to Euromonitor International, regional companies have started to launch their products in a bid to appeal to the local palette.

HONG KONG BUSINESS ANNUAL 2019 53

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.

54 HONG KONG BUSINESS ANNUAL 2019

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 2019 55

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

56 HONG KONG BUSINESS ANNUAL 2019

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 2019 57

8

High-Flyers 2018 Profiles of Hong Kong’s Outstanding Enterprises and Business Leaders

Athena Best Financial Group 60 | AV Consultant Int’l Ltd 63 | Dorsett Hospitality International 64 Dorsett Wanchai, Hong Kong 66 | Elite Concepts Ltd 68 | FTLife Insurance Company Limited 70 | Hang Seng Bank Limited 72 Hang Seng Insurance Company Limited 74 | Lan Kwai Fong Hotel @ Kau U Fong 78 | Lifestyle insurance 80 | LINDT 82 MassMutual Asia Ltd 84 | Mayfare Group 86 | Memorigin Watch Co, Ltd 88 | PrimeCredit Limited 90 Shama Serviced Apartments 92 | Standard Chartered Bank 94 | Standard Chartered Bank 96 | TMA 98 Vastcom Technology Limited 100 | WTT HK Limited 102 | Zchron Design 104| Zung Fu Company Ltd 106

CONTRIBUTING WRITERS: Andrew Ng, Angel Tang, Marianne Estioco

8

Athena Best FINancial Group

the legacy of intrinsic values for the future

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ntrinsic value, a term used when describing companies, products, financials and currency. Intrinsic value can be calculated, but it is also a value that is often proven out in the long term. Athena Best Financial Group not only knows this but is inspired by intrinsic value when it comes to being a leader in Wealth Management and Financial Advisory.

As a diversified financial services corporation founded in late 2007, Athena Best Financial Group, is dedicated to seeking out new and innovative ways to better serve clients and business partners in Asia.

Danny Tse, Managing Director of Athena Best Financial Group (ABFG), a passionate financial services professional and a founding partner in ABFG, says “The driving philosophy of ABFG at inception was to build an Asian financial B2B FinTech platform to bring the ultimate comprehensive solutions to clients throughout Asia who seek long term global wealth planning.”

A decade of growth ABFG has grown rapidly over the last decade and when asked what has made ABFG stand out in the market, Mr. Tse replies: “Our reputation, integrity, and compliance. To many of our partners, we may not always be the best but we will always the safest and this assures them that there will be no big problems.

We were not involved in financial issues with problem products in

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2008 crisis, where some products defaulted. In fact, we don’t get involved in products we don’t truly understand. We truly believe we have exceeded the role of being just a broker.”

Further enhancing ABFG’s reputation is its comprehensive IT platform that streamlines client wealth planning decisions and asset management through unifying and consolidating important financial and compliance information and procedures on their wide range of global investment products available. “Our IT platform also helps our regional business partners to handle the more and more troublesome operational process as well as allowing them to provide better services to their clients,” Tse shares. “Clients want solutions rather than a specific product or service. we can create the best solution by utilizing our comprehensive platform, and this is the meaning behind why we try to create such a comprehensive platform.”

Paving the path for the future Mr. Tse continues “Our group services cover a wide array of retail and B2B Brokerage Services, Financial Platform Services, Financial Planning Consultancy Services, Private Wealth Management Services, Trust Services and Asset Management Services. An intrinsic ABFG value is in the knowledge base that we have in advising and assisting our clients in the proper structure of their solutions so as to best manage their global wealth while allowing easy

Wealth Management and Financial Advisory PHILOSOPHY

FAST FACTS

Athena Best Financial Group committed in “Partner for SUCCESS”.

Not only putting clients and business partners as the top priority, but also invest into staff development and engage in social responsibility.

• Our services cover a wide array of retail and B2B Brokerage Services, Financial Platform Services, Private Wealth Management Services, Trust Services, Financial Planning Consultancy Services and Asset Management Services.

• We offer one of the most sophisticated Portfolio Management Services that aims to suit different investment expectations and levels of risktaking.

• Our business expands into other areas including Fund Management, Information Technology and Education Development.

This page: Athena Best Financial Group, Partner for SUCCESS Opposite page: Danny Tse, Managing Director of Athena Best Financial Group time saving access to information through one location. Too much information and too many access points can overwhelm a client.

Anyone can source financial products on the internet, but we add value through our “know how” on a regional or global basis when it comes to structuring, compliance, and other advisory services. No one can mimic exactly what we are doing.”

“Evolution.” Mr. Tse replies, when asked what new and exciting things happened in 2018 for ABFG and what the path for the future is: “In financial services, products and geographic compliance are constantly evolving. Our clients are becoming more sophisticated. ABFG is going with that flow through Fintech platform enhancements to allow service offerings to evolve on pace.“ New strategies “We are very sensitive to market demand as it is the source where we create value. We are targeting to evolve beyond the brokerage concept to include information advisory on the tax side, legal, as well as the expertise of connections so our clients get the ultimate solution from ‘one stop’. The market is relying more and more on technology but clients want things easier. Our technology is evolving to make things easier. This is our long term B2B and B2C platform strategy,” he added. In terms of staying ahead in the

market, the ABFG notes the importance of foresight. “We do not only offer what the market wants now, but also get prepared for what it wants next,”says Tse. With the external headwinds in the market, Mr. Tse summarized what would be the challenges for ABFG in 2019. “Externally, the biggest near term challenge will the impending trade war. How it will affect people’s wealth and will there be regulatory changes and tougher control on capital flow. There are a lot of possibilities from this issue. Internally, we look at where and how we can add value.

In the coming year, ABFG sets its sights on capturing a more diversified set of products and services.“We will be unveiling our B2B and B2C platform enhancements that we hope will assist clients in planning for impacts of the unknown, staying informed and agile. This could be the time for product diversification geographically or asset class expansion. Regulatory changes are also a challenge. As long as we can create our own value and provide the best comprehensive platform for the right client we will always be successful,” said Tse, a true testament to their commitment to adding value, an intrinsic characteristic of ABFG. The company wins the 2018 High Flyer Award for Wealth Management and Financial Advisory.

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AV COnsultant (INT’l) LIMITED

Transforming homes through smart technology

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ong before automated home technologies were in vogue, AV Consultant (Int’l) Ltd. has been at the forefront of providing high-end home entertainment and smart home systems. With over two decades of expertise under its belt, the company has handled various projects ranging from residential to commercial to semi-professional settings.

“We are the first generation of people doing the smart home. We have a much longer experience than the other companies in the business. Most of the players in this business have been around for only a few years, but we have been in the business since 1995,” says Alan Lee, director of AV Consultant. “We aim to provide the best smart home and entertainment solution (equipment and service, not only HiFi) from middle to high end residential sectors. In addition, we also provide high quality solutions to commercial sector in the same area,” he adds.

In 1995, AV Consultant became the first company in Hong Kong and Mainland China to be certified by Lucas Film THX and ISF from US. Since then, the company has been committed to providing the best home entertainment systems and to simplify the operations of various home systems through Smart Home Technology.

Beauty, efficiency and simplicity Contrary to popular belief, a smart home is far more than a conventional control system. “Right now, a lot of people do not

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really understand what a smart home is. The idea of a smart home is how to simplify the in-house operations of a client. Its purpose is to make their lives simpler and easier. They are not just controls. This technology controls a house in a smart way and simplifies the dayto-day operations of our clients. A well-designed smart home system with clever user interface design should be simple to use with little or no training to the client,” Lee explains.

He notes that there are two growing trends in the smart home space, namely, the need for invisibility and the integration of mobile devices. Lee explains that most clients want their audio-visual equipment to be hidden, requiring a combination of special hardware and high quality craftsmanship. Homeowners also want their mobile devices to be integrated into the smart home system, as these devices are the most common source of audio and video content.

“Clients do not want to see the equipment. They do not want the equipment interfere with the interior design. But at the same time, the equipment needs to have a good performance,” he notes.

“It is very convenient to use mobile devices to send a signal to one TV. However, it would be a challenge to design a system can cater several family members, since every one of them has several mobile devices which are used in different rooms. To make it convenient to the client requires expertise and thorough planning,” he says.

To ensure client satisfaction, AV Consultant banks on the reliability of its technology and the quality of its equipment. It selects the best

Best Smart Home & Home Theatre in Asia PHILOSOPHY

FAST FACTS

Provide lives enhancing experience to client before they start to request

• 1995 – Alan Lee, Certified by THX of LucasFilm, first in Hong Kong, Taiwan and China • 2002 –First “Pure Digital Video” Home Theater Demo in Hong Kong • 2004 – Design and Lectured AV Seminars for Sony Customer, First Time in Asia including Japan • 2004 – Organised the First Projector Showcase Featuring 16 Brands in Hong Kong • 2005 – Organised the First Projector Showcase in Shanghai, China • 2007 – Founding Member of the Asia HD Association • 2009 – Chairman of the Asia HD Association • 2010 – Guest Speaker and Calibrator for the AVATAR Blu-ray Launch in China • 2011 – Committee Member and Certified Instructor of CEDIA China • 2013 – CEDIA Best Home Theater Award (Advanced Level), First Asian Winner • 2013 – GDC (Largest Cinema Server Provider in Asia) Home Cinema Demo Room (Design and Installation) • 2017 – Centaline Property Club House in Causeway Bay and T.S.T (Design and Installation) • 2017 – Dolby ATMOS Demo Facility in Hong Kong Stadium (Design and Installation)

This page: 1) Crestron Touch Panel with Chinese Layout; 2) Lutron Homeworks QS Dimming System; 3) Home Cinema with Professional Equipment and Performance Opposite page: Alan Lee, director of AV Consultant. equipment—not necessarily the most expensive one—which is suited for each of its clients’ requirements. AV Consultant also emphasizes a good system design with reasonable fallback to increase system reliability.

Putting clients first “We do a lot of testing and comparison before proposing any product to client, even for accessories and cables. Moreover, we always have the client in mind when we do the design. What is their taste and what is their priority? We anticipate how the client will respond to the system. We take into account the level of their operation skill, and whether they can understand the system,” Lee says.

“We ensure a high standard in craftsmanship for long term system reliability. We focus on robust infrastructure, always with future

expansion in mind,” he adds.

AV Consultant does not only provide its clients with high-quality hardware; it also provides good user experience. “There are consistent demands from the middle to high-end sector requiring high performance audio visual system (not necessarily HiFi) and easy operation of their house systems. This is why we are a unique service provider that integrates both AV and a smart home system,” Lee notes.

In addition to be the leading home theater and home entertainment company, AV Consultant also acts as a distributor for niche AV products such as D-Box motion system.

AV Consultant (Int’l) Ltd is a recipient of the 2018 Hong Kong Business High Flyers Award under the category of Best Smart Home & Home Theatre in Asia.

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Dorsett Hospitality

Live in the lap of luxury with Dorsett YOUR Rewards

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ravelling has become infinitely more rewarding with Dorsett Hospitality’s exciting new loyalty programme. The ‘Dorsett – Your Rewards’ programme features a range of thoughtfully tailored rewards which will allow guests to enjoy the ultimate travel experience in participating hotels across Asia, Europe and Oceania.“The ‘Dorsett – Your Rewards’ loyalty programme is our appreciation to our guests. Ultimately this is not just another loyalty programme, but a programme to reward our supportive guests,” says Anita Chan, the hotel group’s Senior Vice President of Brand Marketing.

Dorsett Hospitality International (DHI) is one of Asia’s fastestgrowing international hotel management groups. It first opened its doors in Hong Kong in January 2007, and has since unveiled a quality portfolio of over 57 hotels including three distinct brands: Dorsett Hotels, Silka, and d.Collection. The Dorsett – Your Rewards programme will pilot in 15 hotels across Asia, Europe and Oceania under its Dorsett and d.Collection brands.

Amazing perks Guests enrolled in the programme will enjoy one-of-a-kind rewards including free room upgrades to suites, complimentary breakfast, and guaranteed late check-out times of up to 4 hours. A defining feature of the ‘Dorsett – Your Rewards’ loyalty programme is its unique ‘part-cash, part-points’ model which allows members to

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redeem rewards any time they wish, no matter how many points they’ve amassed. Guests can also celebrate special occasions in style with special birthday offers.

“As a Hong Kong homegrown brand, we’re proud to share the vibrant hospitality and forward-thinking service culture that embodies the Hong Kong spirit with the world,” Chan notes.

There are four tiers of membership – Classic, Silver, Gold and Platinum – under the loyalty programme and members will be automatically upgraded as they accrue more room nights stayed per year. With the flexible and friendly redemption system of the Loyalty Program, members can enjoy exclusive offers and benefits better and faster, from points to free nights, or even air tickets and more. Earning points is a breeze with the Dorsett Loyalty Programme. Every USD100 spent on a hotel room is worth three points if the booking is made directly with hotels. Guests will earn 1.5 points for every USD100 spent on a hotel room if the booking is made through Online Travel Agents (OTAs), who have direct contract with hotels. Every point is equivalent to USD 1.

Providing a first-rate experience “We work closely with world-class travel partners to offer you travel-related services that will greatly enrich your travel experience. Our partners range from reputable independent airport lounge operators to renowned airlines and limousine companies,

Leading Hospitality and Hotel Management FAST FACTS • Dorsett Hospitality International (DHI) is one of Asia’s fastestgrowing hospitality brands. As a Hong Kong grown hospitality brand, we are proud to have an international footprint in 29 major cities in the world with a total of 57 properties, including DHI’s three core brands: Dorsett Hotels & Resorts, Silka and d.Collection. DHI is also the sister company to Trans World Hotels and an affiliate partner of AGORA Hospitalities.

This page: Dorsett Shanghai, Dorsett Singapore, Executive Suite of Dorsett Kwun Tong, Hong Kong ,Executive Room of Dorsett Grand Subang Opposite page: Dorsett Shepherds Bush, London and to internationally recognised beauty brands etc,” Chan notes.

Dorsett Hospitality’s new loyalty programme has caused a lot of excitement amongst jet set influencers, who are constantly travelling between these major cities. Singer-actor-host Harris Alif (@harrisalif) from Malaysia and Australian-based Kevin Truong (@ kev_truong) have already signed up to be the first to enjoy the brand’s new vibrant travel experience and benefits.

All members enjoy exclusive rates and offers, as well as an extra 10% member discount on all promotional rates. All members will also be treated with welcome drinks and enjoy up to 30% off on food and beverage consumption in participating restaurants. On a member’s birthday month, he or she can enjoy a personalised celebration and exclusive room discounts courtesy of Dorsett Hospitality. Gold and Platinum members can also avail of free cancellation up to 24 hours before arrival as well as extra beds free of charge. Platinum members will also receive special invitations to exclusive events.

Each of Dorsett Hospitality’s three brands serves a particular market segment. While it remains true to its Hong Kong heritage, the company has been careful to craft a unique identity for each brand.

For instance, Silka has been designed for the smart, value-savvy

traveller. Silka Hotels gives guests cost-effective essentials with a no-frills no-fuss approach, providing hassle-free hospitality that doesn’t compromise on comfort. Silka is geared towards guests who seek efficiency and economy above all else, while always maintaining our trademark Dorsett Hospitality’s quality, cleanliness, and practicality.

Meanwhile, d.Collection is the upscale, fashionable brand of Dorsett Hospitality, and represents the most unique that the group has to offer. From the bohemian to the boutique, its charismatic range of hotels have been placed in inspiring locales chosen for their proximity to the pulse of the city. Guests choose d.Collection for the allure of the alternative, and with exciting dining, shopping and entertainment all within easy reach of its prime locations.

Charming, sophisticated, and located in captivating creative communities, d.Collection is a carefully curated brand that always exceeds expectations.

Through these brands, Dorsett Hospitality has branched out to China, Malaysia, Singapore, Japan, Australia and the United Kingdom. “ In all that we do at DHI, including our comprehensive CSR programme, we take a consistent and considered approach based around our four core values of Integrity, Inspiration, Innovation, and Initiative,” Chan notes.

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Dorsett WANCHAI, HONG KONG

New, vibrant offerings from Hong Kong’s best family hotel

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he 4.5-star Dorsett Wanchai has proven yet again why it is the go-to hotel for families looking for comfort in style. The hotel is the winner for this year’s Hong Kong Flyers Award for Best Family Hotel.

Dorsett Wanchai General Manager Anita Chan says the recognition challenges them to come up with new, innovative ways to serve their guests. “We felt honoured to be named the best family hotel in Hong Kong. We will stay innovative and constantly create new experience for our family guests when they stay in Dorsett Wanchai. Above all, we will consistently deliver the highest levels of service to all our guests,” says Chan.

Dorsett Wanchai is conveniently located between Wan Chai and Causeway Bay, making it easy for hotel guests to access Hong Kong’s top business, shopping, and sightseeing destinations. The award-winning hotel offers eight types of rooms and suites. Its signature Grand Deluxe Course View Rooms offer a picturesque view of the racecourse in front of the hotel. Guests have access to 200 Mbps high-speed Internet connection,and a smart phone that allows connectivity throughout the length of stay in the hotel.

But perhaps what sets Dorsett Wanchai apart as a premier family hotel are its renowned themed rooms and its three newly launched initiatives this year: the Dorsett Little Artist programme, Dorsett Wanchai 3 Wishes, and the 26-hour full stay offer.

Dorsett Wanchai has recently opened its new range of themed

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suites, including the Ocean Suite, the Sony 4K 3D Experience Suite, the OSIM Massage Suite, the Jokey Suite, and the Glycel Supreme Beauty Suite.

Each of the suites was designed to make the accommodation a unique experience for hotel guests. The 48-square-meter Ocean Suite, in particular, will give guests the chance to live as if they were under the sea, submerging them in a marine park-like vibe that the whole family love. The Ocean Suite features a pantry, a living area with a sofa bed, a dining area, a bedroom with a kingsized bed, and a spacious bathroom with a bathtub and standing shower. Business lovers, meanwhile, will surely love the OSIM Massage Suite, where they can get to relax their tired muscles.

Those who love racing, meanwhile, are a perfect fit for the Jockey Suite. A personalised beauty experience also awaits moms through the Glycel Supreme Beauty Suite. In collaboration with the Swiss Skincare Brand GLYCEL, Dorsett Wanchai now gives clients the chance to enjoy a complete set of ladies’ beauty treatment valued over HK$3,500 and a host of GLYCEL signature skincare products during their vacation.

“All of these new initiatives are launched in line with the introduction of Dorsett’s brand promise ‘Stay Vibrant’, of which under the brand promise there are five brand attributes – vibrant engagement, social connectivity, city convenience, priceless delight, and active wellness,” says Chan.

Best Family Hotel in Hong Kong PHILOSOPHY

FAST FACTS

Dorsett Wanchai, Hong Kong is a family-friendly 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 family-quad rooms and triple rooms, and 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 in-room premium Wi-Fi (up to 200 mbps & 10 devices at a time) • Offers little touches in the room to enhance one’s stay - Water Bar, and Snack Box with Teddy Bear

This page: Kid toiletries, Family Quad Room, and Ocean Suite Opposite page: Anita Chan, General Manager at the Dorsett Wanchai As a way to give back to the community, Dorsett Wanchai also launched The Dorsett Little Artist, a programme combining art and charity where hotel guests aged between 3 to 13 years old who are young art lovers will get to pick one of their favourite colouring pages hand-drawn by local artists and a chance to join the colouring contest. “It will be a wonderful feeling, especially for the little ones, knowing that they can actually make a difference to those in need while having a great time in the city. Joining likeminded partners means we can do more for the community as well as to our guests,” says Chan.

“Since art and charity are something we are very passionate about, it means something more when we finally get to announce a new family package that combines all these elements to offer a vibrant and fun stay; we are stepping forward to an exciting new era,” says Chan.

Then there is the Dorsett Wanchai 3 Wishes, one of the hotel’s best-selling packages. It offers guests a 25% discount on a Room Executive, with three self-picked offers that guest can pick according to his or her travel needs. This may include the buy one, get one free Ocean Park tickets, free access to the airport lounge, buy one, get one free arrival seat-in coach transfer from airport to hotel, and other benefits. Travellers get to pick three wishes from a list of 12 that best suits their needs without the extra cost, allowing the guests to enjoy their custom-made hotel service selections. “The idea came from a simple understanding of every traveler’s needs are different from one and another or that the same traveler’s needs are the same from one occasion to another.

Simply put, a business traveler’s needs is different than that of a family traveler. Even the same business traveler might have a different traveling needs from time to time,” says Chan.

Dorsett Wanchai, meanwhile, considers their 26-hour full stay offer as a “service breakthrough” in the hotel industry not just in Hong Kong but the rest of the world. Guests love it, and Chan says the offer reflects their “Stay Vibrant” brand promise.

“This feature is well received by most of the guests and this truly reflects our brand promise ‘Stay Vibrant’ as we literally enable a person to enjoy a vibrant stay in a vibrant city like HK with the extra time given. With this, they get to pick their preferred checkin time and check-out 26 hours later. We’ve also designed a few itineraries based one different interests to let our guests fully utilise their time in the city,” says Chan.

Dorsett Wanchai also has a global loyalty programme, the Dorsett – Your Rewards. Member privileges include a room upgrade to a suite, 50% off when booking during their birthdays, free breakfast, and extra discounts.

“One of the uniqueness of this programme is that the redemption model is flexible, you can use ‘part-cash, part-points’ to redeem the offer. Meaning if you have 20 points in your account, you can use it as USD 20 to redeem anything on our reward catalogue including room bookings.” says Chan.

Undeniably, Dorsett Hotel offers only the best to families looking for a little adventure, giving them a home away from home, but with that unforgettable twist that will make guests come back.

For more information, visit www.wanchai.dorsetthotels.com

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Elite Concepts

CELEBRATING 20 YEARS OF SUCCESS, PAST AND FUTURE

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ow many restaurants are still going from strength to strength after 20 eventful and sometimes financially turbulent years? This year yè shanghai in Pacific Place is commemorating two decades of serving up exquisite Shanghainese cuisine to discerning Hong Kong diners with its ‘20/20’ anniversary theme.

When the now popular eatery first opened its doors, Hong Kong was still getting used to its first ever Chief Executive, Chek Lap Kok airport was welcoming visitors still with that smell of being new, and electric cars were something you found in toyshops. Fast forward 20 years and you can now enjoy the traditional delights of yè shanghai in Hong Kong, Kowloon, Shanghai and Taipei. Yet the trappings of success and an expanded customer base have not dampened the passion and dedication to quality which has built this particular corner of the Elite Concepts empire.

Recipe for success Seated in the plush yet warm ambience of the newly renovated interior, Damien Chang, General Manager of yè shanghai Group, ponders the ingredients which form its recipe for success that has resulted in no less than 12 Michelin stars in the past 7 years.

“Our vision was to take Shanghainese cuisine to a new level. yè shanghai was the very first Shanghai restaurant in Hong Kong

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to serve traditional Shanghainese flavor in an elegant and grand environment, and food quality has always been the the major factor, and we have maintained a high standard for the past 20 years.” An example of this would be Damien’s personal favorite dish which is stir-fried river shrimps. On one hand, it is a very simple, delicious dish and quite difficult to make. However, unlike many other restaurants which might compromise, yè shanghai insists on using river shrimps. Although it takes more time to prepare, Damien confidently declares ”You can tell the difference when if you try it.”

From strength to strength Thanks to this uncompromising approach to sourcing the finest ingredients, yè shanghai has enjoyed a high return and revisit rate of customers from all around the world, and it’s this exceptional degree of customer loyalty that has helped the restaurant tackle the challenges and ups and downs of the past 20 years.

But as Damien explains, in the early years this could not be taken for granted. “When yè shanghai first opened, many Shanghainese people criticized it for being not authentic and traditional. They didn’t trust that our food could be to such a high standard and true to the real Shanghainese taste. But after sampling for themselves, we usually won over the most critical of potential customers.”

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.

• yè shanghai gained the 12th Michelin star in 2018 since Year 2010.

This page: yè shanghai’s enduring flame Opposite page: Mr. Damien Chang, General Manager of yè shanghai Group Elegant surroundings and a reputation for quality are only two of the factors for the restaurants continued success in one of the most competitive F&B markets anywhere in the world, as Damien explained that his management style was also an important factor in ensuring continuity.

“I believe that management should be more flexible teaching staff, and also assigning their work according to their own capabilities.” Damien believes that a human-oriented philosophy is the only way to gain trust from both the customers and staff alike.

And he must be doing something right, as several current staff members have worked with Damien since the day yè shanghai opened its door.

Looking 20 years ahead Resting on its laurels has never been the style at yè shanghai however, and it is with one eye on the future that the group has launched its 20/20 anniversary theme, which entails a membership for regular customers to engage and enjoy some privileged offerings and an evening celebration event which featured dishes

and wines being offered at their original 1998 prices!

Damien believes that the subtle changes will only increase the loyalty base of yè shanghai’s regular patrons, many of whom he has enjoyed lasting friendships with over the years, which he genuinely treasures.

“Some of them brought their families to yè shanghai, and I have witnessed their children graduating, seen them fall in love, get married, and have their own children. They now bring their parents back to us with their own children.”

Some well-known celebrity names were also mentioned during the interview, and you could feel the happiness from Damien’s smile when talking about the customers. As yè shanghai looks forward to the next 20 years, who knows what changes will sweep across our ever-vibrant and hungry city? But one thing we know will never change, and that’s the yè shanghai recipe for success.

“We are always looking for new ways to innovate” Damien explains. “We are constantly evolving.”Elite Concepts, the group behind yè shanghai is a recipient of this year’s Hong Kong High Flyers Award for Innovative F&B Concepts category.

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FTLife

FTLife soars in Hong Kong’s insurance industry

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hen FTLife opened a sprawling 14,000 square feet customer service centre in the heart of Tsim Sha Tsui, the Hong Kong insurance industry marked a milestone of having established the first such facility in the city. FTLife is known for expanding borders in the local insurance sector, and the digital age is bringing the company even farther.

Despite slowing growth of the insurance industry, FTLife’s still recorded growth in the first three quarters, with sales on APE growing 65%. From product innovation to marketing, FTLife continues to strategise based on opportunities brought about by the economy and trends within the insurance sector. Clients of FTLife operate on trust built through years of well-established distribution channels, innovative products, and strong teams as well as commitment to providing the best solutions for clients to achieve their financial dreams.

Innovation FTLife’s commitment to providing first-class insurance products and customer services was also established through the opening of the FTLife Tower in October 2018, when it was also announced that the Tower was designed around the concepts of harmony, openness, and sharing.

The new office space is furnished with advanced facilities for better work and service, sending the message that FTLife is people-oriented. The company’s over 3,000-strong team of

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financial consultants and staff are one of the most committed in the industry, as FTLife in turn trains and supports them with utmost care and dedication.

The move of the FTLife Academy to the new FTLife Tower will provide its agents with a better learning environment through bigger rooms and state-of-the-art facilities, while recruiting highcalibre professionals to their team.

The presence of the company’s agents in the FTLife Tower will also enhance greater collaboration and enable them to practice the company’s core values better.

Meanwhile, the FTL Prestige Customer Service Centre in Tsim Sha Tsui will continue to signify the highest standards of innovation in customer service. The centre features wealth and health management with hi-tech facilities designed to meet any client at his or her point of need.

Upon visiting, clients are met with complimentary beverages as they choose whether to enjoy the services of a concierge, business centre, meetings rooms, or multi-function rooms, all with free WiFi. In terms of insurance products, the FTL Prestige Customer Service Centre provides attestation and underwriting processes that can be arranged in advance for customers coming from the mainland.

Professional service counters are also available to help customers settle payments and address inquiries about insurance plans and policies.

Life Insurance PHILOSOPHY

FAST FACTS

FTLife seeks to become a leading insurance group in Asia. It serves individual and institutional clients from a diverse portfolio of financial protection and wealth management products. FTLife aims to excel by cultivating lasting relationships, and dedicates itself to providing clients with best-of-breed financial services to help them lead fulfilling lives.

• 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 Prestige Customer Centre Opposite Page: FTLife Tower Reliability Reliable insurance products require reliable investment teams. The company prides itself in having high-calibre members from diverse backgrounds and with significant investment expertise in major markets such as Europe, America, Hong Kong, and China, with most of them graduates of master degrees in investment management from world-famous universities. On top of their education, FTLife’s senior investment management team has over 10 years of industry experience managing investment portfolios of large Hong Kong life insurance companies and asset management companies.

An asset allocation strategy has been put in place to consider several factors before making an investment decision. FTLife’s investment team will look into considerations such as industrial prospects, enterprise’s industrial position, sustainability of core competitiveness, potential growth, balance of assets and liabilities, and corporate management, among others. They also conduct indepth analysis of the invested companies, and forecast according to these companies’ paying abilities and cash flow.

Recognition This year, the company reaped several awards for its innovative insurance products, such as Healthcare 168 (Critical Illness Protector) and Regent Insurance Series. The FTLife company culture could be the reason for FTLife’s consistent success. With agility and an entrepreneurial spirit, FTLife has been able to further enhance its talent development, product innovation, distribution

management, finance and actuarial, and investment portfolio.

FTlife meets the needs of customers by offering products that allow customers to inherit their wealth and legacy. Customers will adjust their focus on financial matters according to stages of life and market dynamics. Drawing on a diversity of high quality products, FTlife’s financial planners develop optimum solutions for a customer’s specific needs, thereby providing peace of mind and opportunities to accumulate wealth. Flagship products include the Regent Insurance Plan 2, “HealthCare 168” Critical Illness Protector 2, “MediCare” Medical Insurance Plan,“IncomePro” Annuity Plan and MediGold Plus Insurance Plan.

Regent Insurance Series topped the product ranking1 and achieved a dividend fulfillment ratio of 103%2, a proof of the company’s commitment in developing innovative products that are much sought after by customers. All in all, the company is keeping their promise to help customers realise their dreams in life.

1. Source of information: 10Life, an insurance information and comparison platform. As of 2018 Q4, Regent Insurance Plan 2 (Prestige Version) ranks No.1 of the “Top 10 Whole Life Savings Insurance with Highest Projected Returns” (9 to 12 years and 15 years or above payment term), assuming the insured is male, age 35, non-smoker. For details, please visit www.10Life.com.

2. The annual dividend fulfillment ratio of the first policy year of Regent Insurance Plan (Prestige Version) reaches 103% (referring to policies issued from May 2017 to March 2018).

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8

HANG SENG BANK

entering a new era in commercial banking minimum logo size : 8mm

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ith new apps and other digital initiatives, Hong Kong’s leading domestic bank is keen on providing a seamless experience for SMEs and other commercial clients.

Hang Seng Bank Limited is proactively introducing financial technologies to its commercial banking services to ensure greater convenience, speed and choice for SMEs and other commercial customers. Amongst its newest digital initiatives is the Hang Seng Faster Payment Bank Services (“FPS”), an AI chatbot for business banking services, an online business account opening platform, and completed a pilot trade transaction for customers through a trade finance blockchain platform.

All these initiatives are geared at providing a seamless digital service experience for SMEs and commercial customers. “Hang Seng is committed to providing SMEs and commercial customers with comprehensive and convenient solutions through continuous development of fintech and service channels to meet the changing business needs of our customers in a dynamic operating environment,” says Donald Lam, Head of Commercial Banking, Hang Seng Bank. “In addition to proactively introducing financial technologies to commercial banking services, Hang Seng Bank optimised its digital services constantly, including the upgrade of our Business e-Banking platform, expansion of the Business Banking mobile app, aiming to provide customers with greater convenience, speed and choice as to when and how they manage

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their financial needs,” he adds.

In line with its digital strategy, Hang Seng Bank has completed a pilot trade transaction for two corporate customers through eTradeConnect, a trade finance blockchain platform in Hong Kong. eTradeConnect facilitates the processing and financing of trade transactions for corporate customers using Distributed Ledger Technology. The platform further enhances trade efficiency, reduces risk and improves financing accessibility through the digitisation of trade documents and the greater automation of the trade finance process.

Enhanced payments and forex functionality Amongst the Bank’s latest initiatives is the FPS, which enables commercial customers collect payments and pay operating expenses at a minimal cost. Using a business account, a customer can pay or receive funds almost instantly, yielding higher efficiency and flexibility in funds allocation. Through the FPS, each customer receives instant notifications of all payments by way of e-Advice or SMS. This allows customers to perform account reconciliation more easily, streamlining funds collection and other backend operations.

Hang Seng has also upgraded Hang Seng Foreign Exchange Service with new features, which uses real-time rates to allow clients to make the best trading decisions. When customers buy or sell foreign currencies at Hang Seng Business e-Banking or Hang

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 270 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.

Opposite page: Donald Lam, Head of Commercial Banking, Hang Seng Bank This page: Hang Seng Bank, O2O Business Account Opening Platform, WeChat launch Seng HSBCnet, they can obtain real time exchange rates at the transaction page and lock the quote to capture the best trading opportunities.

Online assistance anytime, anywhere The Bank has also rolled out a new virtual assistant known as ‘BERI’ in June 2018. BERI uses artificial intelligence technologies, such as machine learning and natural language processing, to handle general enquiries about the Bank’s Business Banking services, including the features of deposits and integrated accounts, cash management services, and all service channels – including ATMs, Phone Banking, Business e-Banking and service outlets.

BERI can also provide customers who are interested in opening an account with relevant information on the account opening process and requirements. It is able to simulate human-like contextual conversations and interact with customers. It can communicate in Chinese and English, and can also understand Cantonese as well as the mixing of English and Chinese.

To further provide seamless assistance for clients, Hang Seng has also launched Live Chat, an online messaging service on hangseng.com/business that enables customers to contact customer service officers at any time and from any location with internet access. The Bank has also rolled out a commercial banking WeChat official account in July 2018, providing SME

and commercial customers with a new and convenient channel for receiving updates from the Bank. “This will enable customers to receive mobile reminders from the Bank without relying on SMS, which should prove particularly useful for customers whose business frequently takes them outside Hong Kong,” Lam notes.

The Bank has also launched the O2O Business Account Opening Platform in April 2018. This will enhance the efficiency of the account-opening process by allowing customers to prefill information and upload related documents before visiting a Business Banking Centre to complete the account-opening procedure, resulting in greater efficiency and faster transactions.

Promoting sustainability and stewardship Hang Seng also promotes environmentally friendly practices as one of Hong Kong’s largest listed companies. In November 2018, Hang Seng Commercial Banking launched the Hang Seng Green Financing Promotion Scheme. It encourages corporate customers to acquire environment-friendly equipment that would enhance resource efficiency and reduce pollution, protect global environment and support the sustainable development of corporate customers. This is applicable to various lending products, including General Banking Facility, SME Financing Guarantee Scheme and Business Loan. Hang Seng Bank won Best Commercial Bank at the 2018 Hong Kong Business High Flyers Awards.

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Wilson Tang, Head of Insurance of Hang Seng Bank Limited and Chief Executive of Hang Seng Insurance Company Limited

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Hang Seng Insurance Company Limited

Pioneering innovative insurance solutions

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or over half a century, Hang Seng Insurance has been a professional insurance provider offering dependable and affordable insurance coverage for the people of Hong Kong.

Leveraging on Hang Seng Bank’s extensive retail and commercial banking network, Hang Seng Insurance is a trusted ally of both individuals and businesses alike, thanks to its comprehensive range of insurance products for both individual and business.

In 2018, Hang Seng Insurance is proud to unveil its first flagship online life insurance product, which provide a completely digital and hassle-free application process for customers. “Hang Seng strives to provide customers with tailor-made health and wealth solutions through comprehensive product offerings and convenient service channels,” says Wilson Tang, Head of Insurance at Hang Seng Bank and Chief Executive at Hang Seng Insurance.

“Our dedicated team of professionals in place to provide underwriting and claim services to take care of every need of its customers with an optimized service experience. Providing comprehensive retirement solutions has been our focus, with population ageing, increase of life expectancy and inflation, in order to have a hassle free retirement life, a prudent financial plan with both wealth accumulation and protection features are necessary,” Tang adds.

The company’s first life insurance plan available for purchase online is eCancerPro, which is one of the few life insurance plans

in the market that offers cancer coverage without the need for a waiting period.

This means that customers will be covered immediately after their applications are approved. By following a few simple steps, customers can obtain an online quotation, and apply and pay for the plan online – no medical examination or additional documentation is required.

Embracing online solutions Insured individuals can share all the benefits of their plan with one child below the age of 18 without additional underwriting or premium payments. Premiums are fixed for 10-year terms and the plan is renewable up to an insurance age of 80 regardless of the insured’s health status. eCancerPro also provides three insurance coverage levels to suit the different needs of customers, providing both cancer and life protection. More importantly, if the insured is diagnosed with early-stage cancer or carcinoma-in-situ, an advancement of 20% of the Sum Insured will be paid as a lumpsum, up to two claims can be made under the plan, giving the insured immediate flexibility.

“The launch of eCancerPro – our first online life insurance product – reflects our ongoing efforts to enhance our digital offerings and provide more convenient services that meet the wealth management and lifestyle needs of our customers,” Tang

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Hang Seng Insurance Company Limited

eCancerPro Life Insurance Plan is the first online life insurance product of Hang Seng Insurance

says. “The product concept is simple and straightforward for customers to understand: protecting the most common critical illness – cancer. It also provides the special free Child Benefit (without requirement for additional underwriting & premiums) feature that allows customer to enjoy extended protection coverage for him/herself and their loving child with just paying single policy premium,” he adds.

Another online insurance product which the company has launched in 2018 is eFamilyPro, a life insurance plan designed to provide beneficiaries with a lump-sum death benefit should misfortune strike. In the event of the insured’s passing, family members can receive a lump-sum benefit ranging from HKD500,000 to HKD3,000,000, depending on each family’s budget and personal needs.

Applying for eFamilyPro is easy – customers simply need to submit their application online. The policy covers up to age 80 of the Life Insured and no additional health check-up is required.

Further, the monthly premium is fixed for the first 10 years and will be adjusted every 10 years.

“While there can be many digital offerings in the market, Hang Seng Insurance always put customer need as the top priority and offer the quality online products to our clients,” says Tang. “eCancerPro and eFamilyPro are simple, straightforward, customeroriented, and provide a wide coverage. eCancerPro offers three choices of Sum Insured while eFamilyPro provides four choices of Sum Insured. These are deliberately provided so that customers can consider their individual insurance needs and make a quick and easy decision.”

“This marks a milestone for Hang Seng Insurance to offer online protection for our clients. In designing these two online products, we aim for the best-possible coverage for our customers and their important family members,” he adds.

Retirement planning made easy Hang Seng Insurance also helps clients reach their retirement

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goals, delivering comprehensive insurance solutions to address their financial and family protection needs.

“Generally speaking, retirees have a greater demand for quality medical services, but are no longer covered by company’s medical plan. So, there is a need to get another backup,” Tang says.

“Besides, before retiring to enjoy your golden days, you may want to secure your family with comprehensive protection and be well prepared for your legacy planning,” he adds.

Amidst continuous social, economic and technological changes, planning a carefree retirement can be challenging. Many risk factors that would undermine retirement planning should be accounted for including growing average life expectancy, inflation, market volatility, as well as property liability risks.

To address these risk factors, Hang Seng Insurance believes that a well-funded retirement reserve captures four key areas: stable income, wealth accumulation, medical protection and life protection.

In order to maintain a quality of life upon retirement, clients should have a steady stream of income to support their needs.

Meanwhile, insurers also need to cushion the impact of market volatility, and beat inflation in the long run. At Hang Seng Insurance, wealth accumulation is also a top priority in order to address clients’ financial protection needs.

Further, one of the biggest concerns for most retirees is the availbility of funds to support unforeseeable medical expenses.

As the population grapples with ageing and the inevitable health risks that come with it, comprehensive retirement plans should also relieve clients of the burden of having to worry about medical expenses. This is why Hang Seng Insurance also puts a premium on medical protection as one of its key areas covered in its comprehensive retirement plan.

Hang Seng Bank is the parent company of Hang Seng Insurance

Outstanding Insurance Company INSIGHT

FAST FACTS

The future is filled with uncertainty but Hang Seng Insurance helps customers to deal with it by providing comprehensive insurance solutions.

• In early 2018, Hang Seng Insurance launched a new online insurance product, which provides coverage to life insured against cancer in terms of medical treatment cost.

• Hang Seng Insurance ranked number 2 in Hong Kong’s RMB life insurance market and number 4 in Hong Kong’s bancassurance market in the Q1 - Q3 2018 (source from Insurance Authority, Quarterly Release of Provisional Statistics for Long Term Business January September 2018).

Hang Seng Insurance is committed to delivering comprehensive insurance solutions to address different customer needs

Lastly, one of the key areas that Hang Seng Insurance also wants to focus on is Life Protection. Upon unexpected changes in life, family members will continue to benefit from steady financial support with sufficient protection for their livelihood.

Backed by the best Hang Seng Insurance is a wholly-owned subsidiary of Hang Seng Bank. Sharing the heritage of service excellence of its parent company, Hang Seng Insurance is committed to serving its customers with a solid combination of decades-long expertise, proven experience and unmatched business strength.

Hang Seng Bank has also formed strong partnerships with its peers, and has entered into a distribution agreement with QBE General Insurance (Hong Kong) Limited to address customers’ needs regarding general insurance products. Hang Seng Bank has also teamed up with Bupa (Asia) Limited to provide medical insurance for its customers.

After launching eCancerPro and eFamilyPro, Hang Seng Insurance is on track to release more digital insurance solutions in coming years. “Digital insurance is of growing trend in the industry and Hang Seng Insurance has been making breakthrough to tap this new market segment. Our two online insurance products were received with positive market response. It is foreseeable to have more online products coming future to cater customer needs and changing customer behavior,” Tang notes.

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.

“Our goal is to continuously strive for innovation and to transform from traditional to online service provider. Through Hang

Seng Bank’s network, our brand name enjoys strong credibility and allows us to serve our customers by providing a comprehensive range of products,” Tang notes.

At the end of the day, Hang Seng Insurance aims to be a total solutions provider — providing an integrated insurance package that serves its customers. Through its products and services, Hang Seng Insurance hopes to help customers arrive at the right products to suit their needs, with the goal of achieving peace of mind and better living.

• The relevant general insurance plan (“Plan”) is underwritten by QBE General Insurance (Hong Kong) Limited which is authorised and regulated in Hong Kong by the Insurance Authority. Hang Seng Bank Limited (“Hang Seng Bank”) is an insurance agent authorised by QBE General Insurance (Hong Kong) Limited for the distribution of this Plan.

• The medical insurance schemes are underwritten by Bupa (Asia) Limited (“Bupa”) which is authorized and regulated by the Insurance Authority in Hong Kong. Hang Seng Bank Limited (“Hang Seng Bank”) is an insurance agent authorised by Bupa for the exclusive distribution of these schemes.

• eCancerPro Insurance Plan is underwritten by Hang Seng Insurance Company Limited. Hang Seng Insurance Company Limited is authorized and regulated by the Insurance Authority of the HKSAR. Hang Seng Bank is an insurance agent authorized by Hang Seng Insurance Company Limited and the insurance products are products of Hang Seng Insurance Company Limited but not Hang Seng Bank.

• eFamilyPro Life Insurance Plan is underwritten by Hang Seng Insurance Company Limited. Hang Seng Insurance Company Limited is authorized and regulated by the Insurance Authority of the HKSAR. Hang Seng Bank is an insurance agent authorized by Hang Seng Insurance Company Limited and the insurance products are products of Hang Seng Insurance Company Limited but not Hang Seng Bank.

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8

Lan Kwai Fong @ Kau U Fong

Relaxation and comfort at the heart of Hong Kong

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hen people think about Hong Kong and the territory’s famous tourist places, a few things come to mind: Victoria Harbour, The Peak, Tsim Sha Tsui, and the famous night life of Lan Kwai Fong. And at the heart of the busy pulsing streets where finance executives, travellers, and locals who want to unwind and have a good time is Lan Kwai Fong Hotel @ Kau U Fong, which won the award for the best Lifestyle Boutique Hotel at the recently concluded Hong Kong Business Flyers Awards 2018 held at the Tamarind & Terrace in Wan Chai, Hong Kong. For the establishment’s General Manager Rebecca Kwan, the secret to the hotel’s award-winning success is a combination of good location, excellent services, and impeccable flexibility catering to the various needs of all potential customers.

“Our boutique hotel is right next to the vibrant hotspots of Lan Kwai Fong and SoHo, areas with trendy dining and artistic flair,” she said. “Alongside the bars and restaurants, fashionable design studios, independent galleries, and antique shops make shopping full of unexpected discoveries.”

Rebeca also noted that guests, who come from all walks of life and cultural background, can find comfort and a wide array of choices when it comes to whatever tingles their fancy. “We have a broad choice appealing to various segments of the market share— families, couples, and the single traveller can all be comfortable.

We have suites with balcony overlooking the harbour [and]

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stunning Hong Kong view, interconnecting rooms perfect for group of friends & family,” she said.

Part of the charm of the establishment apart from its convenient location and superb offerings of services and amenities is the trendy and cool networking and coworking areas located in the hotel’s BreeZe Lounge. The coworking space allows business travellers and those travelling for leisure the kind of environment that would enable them to still be productive while on the go.

Some of the amenities of the lounge include complimentary coffee, tea, and snacks for the whole day, while providing free red and white wine during Happy Hour for those looking to unwind after a day’s work or travel.

Catering to every market Lan Kwai Fong Hotel @ Kau U Fong’s success have largely been aided by the surge in travel habits, lower air fares, and mobility of international and local tourists in Hong Kong. Travellers from China, Australia, Europe, the United States, and the rest of Asia have been the most dominant market availing of the hotel’s services and amenities so far, while the emergence of millennial travellers—or those belonging to the youth and young professionals segment of the population—have also been a boom.

“Millennial travel trends take over the market with a significant hype. They want to be close to the local culture and

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 Rebecca.

• 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 57 hotels in key destinations such as Hong Kong, Malaysia, Singapore, China, Japan, London, Australia, Germany, Australia, Czech.

This page: Deluxe City View Room; The Breeze Lounge

cuisines, explore the cultural and authentic local experience,” Rebecca said. “Our hotel blended with the art and culture in the neighbourhood.”

Incorporating innovation The senior official also noted millennials’ savviness in tech, which have been redefining various sectors in the economy in Hong Kong, particularly in the hospitality industry—something that Lan Kwai Fong Hotel @ Kau U Fong have been integrating. Some of these technological tools and innovations including a live chat bot function to aid customers in their reservation process, online and digital payment options through Alipay and WeChat, provision of fast and reliable internet connections, and furnishing of smartphones equipped with 4G data and international calls to eight countries, improving their connectivity.

There will also the option of online check-in or self check-in kiosks for ease and convenience of travellers, which has been implemented in the end of 2018. There is also a loyalty program, on the back of the hotel’s membership under Dorsett Hospitality

Opposite page: Rebecca Kwan, General Manager, Lan Kwai Fong Hotel @ Kau U Fong International, which gives clients more opportunities to enjoy promos and other prizes.

Rebecca shares that above all innovations and technological tools that the establishment boasts to be a leading hospitality institution, the charming difference remains on the impeccable service that the staff of the establishment provides. “’Passion of the employees’ is one of the differentiating factors.

We are not purely offering the room for our guests, but we try to understand their need and provide memorable experience,” Rebeccasaid. “Rather than solely promoting the modern hotel amenities, we also promote local happenings. We offer a taste of the local setting and culture. Offer local snacks as in-room amenities such as egg tart, panda cookies, mango mochi, etc.”

“Our management team always [try] be there for our guests, on duty during off-work hours, [and] take the time talking to them and understand guest’s need,” the hotel senior official explained. “Our team are required to keep up-to-date with the latest events taking place throughout the city, enabling us to accurately advise guests on the local culture and monthly going happenings.”

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8

Lifestyle Insurance

Professional Indemnity: No Individual or Company are Safe

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n today’s business world, where others are eager to gain advantage, litigation is increasing. Any claims against you, be they legitimate or unfounded, will require significant funds to investigate, defend and settle. The damage to reputation can also take a huge toll on your balance sheet.

A Professional Indemnity (PI) or Professional Liability Insurance policy 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, as well as associated legal costs in defending such claims. 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.

Professional indemnity insurance provides protection for businesses, sole traders or freelancers who offer advice or services to third parties, including both the general public and other businesses. As a result of the professional services 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 (PI) cover. A PI policy can offer coverage for compensation you may need to pay to correct a mistake you made, or cover any legal costs due to negligence, such as giving incorrect advice.

Traditionally, the coverage was closely connected with high-risk

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professions such as lawyers, doctors, engineers, accountants and financial advisors. Nowadays, the term “professional” is applied broadly and as such many different professions should carry Professional Indemnity Insurance.

Companies that perform professional services for others can make mistakes, overlook a critical piece of information, misstate a fact, or be misunderstood. They can 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.

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 are 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.

Case Study Let’s take an example of the Interior Designer who accepted a contract for the design and fit-out of a boutique hotel. The configuration of the lift and lobby area did not meet the original project specifications in that there was not sufficient room within the concierge and reception area. This resulted in additional costs,

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 Lifestyle Insurance

materials and time delays to the project, all of which the Interior Designer was held liable for.

What isn’t covered by a Professional Indemnity policy?

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.

Why take the chance with a lawsuit that could financially cripple your company?

We now live in a World with ever increasing demands being placed upon the services that we offer, and mistakes are not easily forgiven. Place this against a backdrop of a tightening regulatory and contractual framework that we 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. Can you afford not to be covered?

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8

LINDT

Lindt: everyday chocolate luxury for 175 years

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hen it comes to chocolate, nobody does it better than Lindt. Lindt is a global leader in the premium chocolate industry, having almost 175 years of history in delighting chocolate lovers around the world with its masterful chocolate creations. Lindt originated from Zurich, Switzerland, which is home to most of the iconic chocolate brands and companies in the world.

Swiss heritage Lindt’s Swiss heritage remains strong throughout the centuries, particularly when it comes to perfecting its conching techniques. It was Rudolph Lindt who invented the conche machine back in 1879 in Switzerland, which produced the first melting, velvety smooth chocolate piece in the world.

Currently, Lindt has 26 subsidiaries around the world, and 12 production plants based in Switzerland, Europe and the United States. It boasts more than 400 branded stores worldwide, which give chocolate lovers access to what the company describes as “everyday chocolate luxury.” As a multinational company, Lindt generates half of its overall sales in Europe, and about 40 per cent of its overall sales in the United States.

In Asia-Pacific, the Hong Kong office looks after the company’s sales in 12 markets across the region. The presence of Lindt has been growing robustly in the region, thanks to the successful collaboration with local distributors, and the appeal of Lindt as a

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global brand especially during festive seasons.

“The success of Lindt is founded on the combination of tradition and innovation. With a continuous flow of innovative chocolate recipes being invented by Master Chocolatiers based in Switzerland, Europe, and the United States, Lindt is able to delight the people of Hong Kong with a few new flavours every year,” said David Leuenberger, Regional Director, Asia-Pacific, at Lindt.

From Bean to Bar “The combination of tradition and innovation is what set us apart from our competitors. Lindt is committed to producing and delivering high quality chocolate that is exclusively manufactured in Switzerland, Europe and the US,” said Leuenberger. “We are also committed to creating a consistent taste profile that is immediately recognisable by our customers.”

Another advantage that Lindt has over its competitors, he said, is the company’s control over the production and distribution process. This ensures the highest quality in every single step from harvesting, manufacturing, to delivering Lindt chocolates to every customer around the world. “Lindt has the full control over the entire process of chocolate-making, from cocoa beans selection, cocoa mass production, and all the way to crafting the chocolate into perfect shapes. This is what we call ‘the Lindt difference’.”

In 2018, the company was able to bring the first Asia-inspired

PREMIUM CHOCOLATIER FAST FACTS • 12 own production sites in Switzerland, Europe and the USA. • 26 subsidiary companies, 410 own stores, more than 100 independent distributors around the globe.

• 14,000 employees.

• Global sales: CHF 4.1 billion in 2017.

• Website: www.chocolate.lindt. com

This page: Lindt’s Outdoor Ad (top), Lindt’s Excellence Collection (bottom) Opposite page: Lindor gift box Lindor recipe, Lindor Matcha, to the Hong Kong market. The Lindor Matcha is made of a delicate white chocolate shell, which contains an aromatic, irresistibly smooth matcha filling made with real matcha powder. It is a fine example of how Lindt takes culture, local ingredients, and domestic market preferences into its innovation process. There is little wonder why Lindt is so fondly loved by so many in each of the markets it serves.

A taste for Hong Kong Besides its ability to innovate, the long-standing presence of Lindt’s “hero products”, such as the iconically shaped Lindor Cornets or the thinly shaped dark Excellence tablets, also contribute to its success. These products are highly distinguishable in the market, having been recognised by customers year after year. They have subsequently become iconic chocolate products for festive seasons.

The Lindor gift boxes, for example, could reach hundreds of thousands of sales during Chinese New Year.

As for Hong Kong, the city’s strategic location at the heart of the Asia-Pacific region, the openness and receptiveness of its market

to Lindt’s products, and the opportunities it provides make it an ideal base for Lindt’s operations in the region. “Hong Kong is the most established market for Lindt within the Asia-Pacific region, where we have been present for over 60 years. We have achieved a widespread distribution in supermarkets and department stores, where we have a whole range of Lindt products distributed all year round. We also have an increasingly prominent in-store visibility during festive seasons, thanks to our globally famous Lindor pralines range,” said Leuenberger.

Giulia Muzzin Scevola, Marketing Director, Asia-Pacific at Lindt, said the company had made significant investments in advertising, including TV, digital, and outdoor displays. ‘We aim to paint the city in red with Lindor from Christmas to Chinese New Year,” said Muzzin Scevola. “We invite everyone to enjoy a moment of sweet indulgence with our signature smooth melting chocolate offered

by Lindor pralines. Lindt Excellence, on the other hand, offers an amazing journey of dark chocolate sensations through various degrees of cocoa content from 47% to 99%, all crafted in Lindt’s iconic thin shape to bring you the perfect chocolate experience.”

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8

MassMutual Asia

Taking the Lead through Sustainable Innovation

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ith a growth-oriented vision combined with a culture of continuous innovation, MassMutual Asia has expanded steadily over the past two decades with double-digit average annual growth, and has pioneered a number of visionary financial planning solutions. For instance, it introduced universal life insurance to the Hong Kong market, a product that provides the utmost flexibility in catering to people’s ever-changing needs for wealth accumulation and protection at different life stages. The company also pioneered the guaranteed acceptance insurance that accepts customers unconditionally, even with sub-standard health status. Above all, MassMutual Asia is on a mission to make the road to retirement free of worry. It specializes in helping clients map out their retirement with an annuity plan that comes with a guaranteed lifetime annuity payout, ensuring that they have a sustainable source of retirement funds.

Pragmatic solutions inspired by insights With its dedication to constantly breaking new ground in product and service innovations, together with its unique market positioning and distinct branding strategy, MassMutual has been honored with the “Innovative Insurance Company” accolade in the “Hong Kong Business High Flyers Awards” for five years in a row. Its commitment to continuous innovation is extremely important in helping the company meet the competitive challenges of, and differentiating itself

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in, the highly competitive market environment.

“We always put customers at the center of everything we do and approach their needs pragmatically. We innovate for real and practical reasons,” says Jeanne Sau, MassMutual Asia’s chief marketing officer.

Retirement is a stage of life that we will all have to face. “Without sufficient retirement funds in place, financing an unexpectedly long retirement will become a great challenge for people during their golden years. We regularly carry out analysis of Hong Kong population trends and customer research. Based on these customer insights, we pioneered the first-ever annuity plan in the market that offers a guaranteed lifetime annuity as the solution because it can effectively cope with the expenses incurred due to an unexpectedly long lifespan,” says Sau. Pioneering the lifetime annuity As a pioneer in introducing the lifetime annuity to the Hong Kong market back in 2002, MassMutual Asia has maintained its leadership position in this product segment ever since. Currently the company occupies a 40%-plus market share in the annuity segment in terms of policy count. And over the last twelve months, one of the key product developments from MassMutual Asia has been its brand-new “MY Lifetime Annuity”, a deferred annuity plan that aims to help Hong Kong people map out their ideal retirement plan by means of steady wealth accumulation, guaranteed annuity income for life, and

Innovative Insurance Company PHILOSOPHY

FAST FACTS

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. The company has pioneered the “Jr. Space Camp Program”, the first-ever program providing simulated astronaut training to children from Hong Kong and Macau, to encourage their interest in space exploration and advanced technology and to promote the spirit of “It is Possible!”

• Headquartered in Hong Kong and operating a branch office in Macau, MassMutual Asia offers one-stop risk- and wealthmanagement consulting services, as well as MPF services.

• Offering a wide spectrum of some 80 flexible and innovative financial planning solutions to meet customers’ protection, investment and retirement needs.

• The company has pioneered an array of insurance solutions in Hong Kong and Macau, including universal life insurance, lifetime annuity plans, and guaranteed acceptance policies, to name but a few.

This page: MassMutual Asia launches the MY Lifetime Annuity, with Rex Tso as the first policy owner; The launch was supported by large-scale advertising campaign in MTR stations Opposite page: Jeanne Sau, Chief Marketing Officer, MassMutual Asia Ltd. the most comprehensive range of annuity options. “Unlike savings plans, which provide cash over fixed terms only, the MY Lifetime Annuity offers the advantage of guaranteed lifetime annuity payouts, which are instrumental in securing sustainable retirement funds for customers, as well as being highly effective in hedging against the financial risk of longevity,” Sau said.

Retirement planning is a highly personalized matter. With this in mind, the MY Lifetime Annuity has been specially designed with a comprehensive range of annuity options. All the annuity options offer guaranteed annuity income for life, including an option which guarantees a refund of 125% of the cash value. And if the insured person passes away during the annuity period, his or her beneficiary will continue to receive the annuity income until the balance has been fully paid. Thus, the total annuity income received will be not less than 125% of cash value. Then the “critical illness double annuity option” will offer double annuity income for up to 60 months if the insured is diagnosed with a critical illness, including later-stage cancer, heart attack, kidney failure, stroke, or undergoing coronary artery bypass surgery during the annuity period. MY Lifetime Annuity also offers an option wherein the annuity income will increase by 5% every two years to counteract inflation. Customers may also opt for the jointannuitant package so they can share their annuity income with their

spouse.

Sau added that some customers might face the dilemma of whether to exercise an annuity option with the entire cash value or pass on the accumulated cash value to their descendants. With this plan, the insured can enjoy total flexibility as he or she may exercise an annuity option with the entire cash value, or simply use part of it for the annuity and leave the remaining cash value to accumulate and grow in the policy.

On top of these benefits, MassMutual takes the annuity plan to the next level. The MY Lifetime Annuity allows unlimited changes of insured. The policy owner may pass on the accumulated wealth in the policy to his or her descendants, so that they will be able to enjoy annuity income from the same policy. Thus, the MY Lifetime Annuity can create a valuable inheritance to spread the legacy of wealth across generations.

“In facing the competitive business environment, we have to maintain keen foresight and anticipate customers’ needs. Going forward, we will proactively leverage the latest in technology to raise the level of our services. We are committed to delivering an engaging customer experience and value-added services by offering our suite of innovative and flexible products, the support of our professional financial consultants and advanced service platforms,” says Sau.

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Mayfare Group

gastronomic excellence with gaylord and namo

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ayfare Group’s mantra of running three of its specialty restaurants has always been simple—and probably the most important secret in the group’s gastronomic success in Hong Kong—the Guest is God. And two restaurants under the group has been consistently recognised as some of the most high-flying, boundary-pushing, and Michelin-recommended gastronomical ground zeroes in Hong Kong: Namo, which serves “Avant Thai” dishes to local and international diners since 2013, and Gaylord Indian Restaurant, considered the oldest Indian restaurant in the territory serving authentic and traditional Indian dishes since 1972.

Rajeev Bhasin, Mayfare Group’s founder and managing director, noted that the restaurants under the group are consistently striving for gastronomic excellence the only way they know how—serving up dishes and experiences fit for the divine.

For Gaylord, considered a culinary institution not only in the famous Tsim Sha Tsui district but in the entire territory of Hong Kong with its rich history and legacy, Bhasin noted that guests can not only expect a gastronomic delight, but an authentic Indian atmosphere with the music and decoration of the restaurant.

“Guests should look forward to a veritable classic Indian feast that combines the country’s exotic spices and intense herbs into a rich, flavour-packed dining experience,” he elaborated.

For Namo, meanwhile, Bhasin noted that diners can expect

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to savour an extensive menu on contemporary Thai delicacies that push as well as integrate traditional and modern cooking techniques, serving up a unique dining experience for customers.

“Guests can enjoy a selection of vibrant Thai-inspired cocktails and mocktails … at our al fresco lounge overlooking the stunning Victoria Harbour views,” he said.

Gaylord’s long-standing excellence Celebrating 46 years of operations and gastronomic excellence in Hong Kong, sandwiched between years of recognition and recommendation from the world-renowned Michelin Guide, the pioneering and highly sought-after Gaylord Indian Restaurant remains on a quest to serve the best traditional Indian dishes to its diners.

Gaylord currently has an extensive menu offering authentic North Indian food in a traditional ambience with classical and Bollywood live music to add to the genuine ambience of the restaurant. The place also serves other specials that reflects cuisines of other regions in India as well as seasonal offerings. The restaurant, likewise, offers a sumptuous weekday lunch buffet and Sunday brunch for diners to try a spread of signature Indian dishes.

Bhasin noted Gaylord’s very tranquil yet dynamic atmosphere even in its design with the main dining area providing guests with comfortable alcove seating and tables. Interiors are also

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 3 restaurants and a premier Catering Company in Hong Kong.

• 3 speciality restaurants with different concepts, Tamarind – Pan Asian, Namo – Avant Thai, 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; Contemporary Indian art works in Gaylord; Chargrilled Octopus with a Light Lemongrass and Coconut Foam from Namo.

Opposite page: Main dining area provides guests with comfortable alcove seating and tables in tranquil yet dynamic atmosphere. in rosewood and gold leaf with contemporary art works. “The design and cuisine capture both the hearts and the taste buds of diners from all backgrounds, making Gaylord stand out in such a competitive F&B scene in Hong Kong,” he said.

Asked about the secret of Gaylord’s long-term success and legacy in the highly competitive food and beverage industry in Hong Kong, Bhasin noted the restaurant’s hunger for innovation and desire to introduce a wide variety of gastronomic delights, whilst not throwing away its quest to remain authentic.

“This allowed Chinese diners the chance to savour various choices from the Indian cuisine. Soon, it helped dispel the misconception that Indian cuisine is extremely spicy. Gaylord was also the first to build an open kitchen and host live music featuring Indian performers [in Hong Kong].”

Namo, where tradition meets modern At Namo, Bhasin shared that the goal is to provide familiar Thai cuisine and tastes but flared up with modern cooking techniques to serve up a truly unique experience to the dining public. Launched in 2013 and already a recommended restaurant by the Michelin Guide in 2016, Namo has been able to find the perfect balance, harmony, and symphony of the traditions of Thai cuisine whilst integrating modernism in culinary mastery, décor, and ambience.

“Namo was the first to provide modern and contemporary Thai cuisine. We incorporate traditional, tried and trusted recipes of this most delicate of cuisines and infuse them with modern cooking

methods and preparation style such as sous-vide and espuma from siphon bottles, all whilst using the premium ingredients available to our expert chefs today,” he said.

“Within two years of this culinary integration, we were recommended by the Michelin Guide in 2016, which proves that our innovative approach is well-received by diners in the competitive F&B environment of Hong Kong,” the Mayfare Group managing director said.

In terms of the restaurant’s atmosphere and ambience, customers have been in awe of what the restaurant has to offer with its prime location overlooking the Victoria Harbour—perhaps Hong Kong’s most famous landmark.

Examples of the “Avant Thai” menu the restaurant has to offer include crispy chicken fingers with a Thai-inspired curry dip; prawn fritters tossed in fragrant garlic, lemongrass, and chili; as well as tuna tartare with avocado, along with spicy-creamy lime dressing.

For cocktails and mocktails (for those who don’t drink alcohol), the restaurant offers drinks named Sticky Rice Martini and Dragonfly.

“The atmosphere is inviting and cosy, the inventive menu with a selection of authentic Thai delicacies with contemporary presentation allow diners to experience an exotic journey through Southeast Asia and beyond,” Bhasin said. “Whether it’s our Iberico’s Pork Rib Chiang Mai Curry or the Chargrilled Octopus with a generous serving of Lemongrass and Coconut Foam, Namo brings the daring and inventive approach to the market.” Mayfare Group won the 2018 High Flyers Award for F&B Management.

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Memorigin

Memorigin: Time Passes But Memories Are Forever

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hen every moment is precious and irretrievable, the greatness of any person can be observed by how they spend their time. No matter how much time they have a great person is always at their best. Perpetually in motion managing time, marking time, sharing time and making the most out of the now. This is the essence of great memories.

Nowhere is this truer than Hong Kong, where East and West converge, conmingle and evolve to a uniqueness that is Hong Kong’s signature. These are the people to watch. Mr William Shum, CEO and Founder of MemOrigin is one of those whose dream is being implemented with achievement.

“Life influences life. One should pursue their dream. If it benefits you, if it benefits others, and if it benefits society-it should be pursued passionately no matter what the dream.” says Mr. Shum.

MemOrigin Hong Kong Limited best exemplifies this through the blending of East and West influences to evolve a uniqueness combined with precision time keeping and master craftsmanship.

Mr William Shum, CEO and Founder, and winner of the 2015 Hong Kong Young Industrialists Award sets the tempo of MemOrigin Hong Kong Limited with the many achievements since its founding in 2011 that include certifications for precision and accuracy by a Japanese certifying body in 2014 and the distinction of being the sole Hong Kong representative at the Geneva Watch Awards in 2016 and 2017.

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The company’s name, MemOrigin, is a convergence of the words memory and original which attributes the meaning of the marking of time and commemoration of events and special moments with originality in designs that combine East and West influences to place that memory in a unique time piece.

The legacy of the tourbillon It is “ne plus ultra” of a master watchmaker’s skills, powering all creations from MemOrigin. Just as the tourbillon differentiates the master watchmaker from the rest, MemOrigin is as the only watchmaker in Hong Kong to be able to produce a certified tourbillon driven time piece with its own in-house movements.

The inspiration of commemorating memories and events was given to Mr. William Shum by his father and grandfather who passed to him their passion for Asian culture and mechanical precision through their collection of oriental art and rare vintage mechanical music boxes. MemOrigin carries this inspiration forward in its use of materials and designs from East and West influences in unique prestige pieces, having a strong Hong Kong character that is appreciated by connoisseurs and collectors, not just in Hong Kong but from around the globe.

MemOrigin collaborated with Disney to bring the first Avengers 2 series tourbillon to market in 2015 joining their Lucas’ Star Wars

INNOVATIVE TOURBILLION WATCHES PHILOSOPHY

FAST FACTS

“MEMORIGIN” - “MEM” stands for “Memorial” and “ORIGIN” stands for “Original”.

Memorigin’s Tourbillon watch is a unique timepiece that shares the good memories of the past and carries hope of the future.

• MEMORIGIN is the first Hong Kong brand specializing in tourbillons.

• We bring together Oriental craftsmanship and world class Western watchmaking skills to present state-of-art tourbillons.

• Our tourbillon watches are designed by reowned Hong Kong designers and passionate collectors with innovative concepts which promise to cater for every unique customer.

This page: Memorigin brings together Oriental craftsmanship and world class Western watchmaking techniques to create “The harmony of Dragon and Phoenix” series Tourbillon watch; The flaming pearl at 8 o’clock position, “Long Tu Zhu”, rotates at a speed of 60 seconds per cycle; A Chinese ancient planetarium featured decoration was located at 12 o’clock position of “Stellar Series - Imperial” Tourbillon watch Opposite page: William Shum, CEO and Founder of MemOrigin tourbillon. One of the highlights in Memorigin’s portfolio was this collaboration and under the partnership, Ironman and Captain America were carved on the dial to present a real and 3D sensation.

The tourbillon’s polishing, assembly and quality control were overseen by master watchmakers and their teams to ensure the “perfection of art.”

Celebrity’s choice Besides cooperating with Disney, Memorigin also does different crossovers with celebrities in Hong Kong. “We use the design inspiration from my dad’s antique wood collection to embed inside the watch design to fulfill the merger of east and west as a Hong Kong brand,” says Shum. There is also a unique Bruce Lee Tourbillon and traditional Chinese Horoscope series to name a few.

“Our original and unique time pieces are very popular with connoisseurs and collectors in Japan and there is growing interest from European collectors.”

Mr. Shum proudly states “As a Hong Kong brand we are showing the world Hong Kong’s diversity and spirit in having the courage and skills to design a tourbillon powered watch that would complete a connoisseur’s collection while offering the ideal quality to price ratio. As a result we find growing interest from younger collectors

worldwide.”

Memorigin timepieces have graced the wrists of not just Hong Kong celebrities. Jermaine Jackson, Cecilia Cheung Jacky Chan, Tian Hai Rong, Simon and Qi Qi Yam, Donnie Yen, Ronald Cheng, Michelle X and Arnold Schwarzenegger are amongst the illustrious wearers their own designs commemorating those special moments in their lives. Bespoke customisation allows everyone to create unique time pieces commemorating those special moments and achievements within in the timepiece itself.

“If it benefits society.”

MemOrigin Hong Kong has a strong sense of Corporate Social Responsibility actively, as evident in their active support in a broad base of charities throughout Hong Kong. Mr. Shum is also a guest lecturer at Hong Kong University where he shares his experience, struggles and success to students who are aspiring to embark on business and pursue their passion. With MemOrigin, time passes with precision, and your memories are forever.

Memorigin is the 2018 High Flyer Award Winner for their Innovative Tourbillon Watches.

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primecredit

A trusted partner through thick and thin

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ith over four decades of experience under its belt, PrimeCredit is at the forefront of responsible and responsive lending. At PrimeCredit, caring for customers always comes first. PrimeCredit is widely known for its personalized value-adding personal loans and credit cards services designed with customers’ needs in mind. “ We positioned ourselves as a Responsible Lender by making financing Affordable, Available, and Accessible to mass credit-worthy consumers in Hong Kong,” says PrimceCredit’s Chief Executive Officer, Susanna Liew. “We do understand the difficulties that consumers today are facing. Our passion can be expressed via our slogan – We’ve got you covered, during good times and bad times,” Susanna Liew explains.

The spirit of Responsible Lending Customers are always PrimeCredit’s greatest asset. As a responsible lender, PrimeCredit encourages people to manage their finances wisely while enjoying the lifestyle they desire. PrimeCredit assists its customers on their needs instead of encouraging overspending. “Consumers may not exactly know what they are looking for in a financial institution when it comes to finding the right financial solution partner. As a responsible lender, we understand their difficulties and thus able to provide the right solution for their needs, “ Liew says.

PrimeCredit chose to differentiate itself by providing caring and tailored products and services. By Affordable, Liew says, “Repaying

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a debt should not be a burden at all. That’s why we make sure every repayment solution should make our customers’ life more comfortable. When customers need help, whether it’s for short or long term, we are always here to support them. That’s what we mean by Available. We also dedicate our channels to ensure that we are Accessible to our mass customers, via the innovative and interactive mobile and digital platform, especially for those young and active consumers. “ More than just “Credit” The company enables instant approval for personal loans that offers the benefit to immediate cash withdrawal via branches or transfer to their bank accounts anytime. “It’s fast and hassle-free, designed for customers who are facing unexpected financial needs that requires instant cash withdrawal. Meanwhile, through the balance transfer service, PrimeCredit provides customers with the most suitable repayment plan that can help them repay the debt within a definite period of time while saving interest payout at the same time. We also provide Revolving Credit facility via our mobile application which allows customers to check the available credit anytime, and withdraw funds that can be transferred to designated bank accounts in no time.”

“We grow with our customers in the past 40 years. We always ensure our customers are well taken care of. As an industry leader, we stay in the forefront of innovation, leveraging on latest Fintech to delight our customers, such facial recognition / e-KYC hassle-

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: (Top) PrimeCredit Brothers; (Bottom) WeWa Card Opposite page: Susanna Liew, PrimeCredit’s Chief Executive Officer free application, straight-through instant approval on mobile app, 24 x 7 disbursement of funds, as well as an interactive mobile experience that is fun and rewarding…”Liew says.

“It’s in our DNA to continuously raise our service standards,” Liew continued. “ We created a unique customer experience of instant fun when we launched our WEWA credit card in 2016. A “We Shake, We Win” lucky draw offered rewards that could range from a free coffee or a scoop of ice cream, to as much as 100% cash rebate on the bill. It’s a simple “shake” on the mobile app after each spend of HK$400 or more – It’s fun and exciting with guaranteed reward with every shake. The WEWA card was a great hit and successfully gathered a viral crowd of young fans which now becomes a community today.”

Banking on Technology PrimeCredit believes fintech is the way to go, where the company has dedicated key investment in its fintech development for its continuous success in the future. “We are committed to lead the consumer finance industry by offering innovative, interactive and personalized service for our customers,” she says. Leading its way, PrimeCredit has developed two secured mobile applications, for both the personal loans and credit cards, to cater to its customer specific needs. The Balance Transfer calculator which simulates ways to shorten the tenor and save interest over the period. The company has also launched its OmyCard mobile App which enables customers to instantly split the purchase transaction into instalments at one touch. This OMC App also

offers the convenience of instant cash advance that draws funds to customers’ bank account anytime day and night.

A proud legacy of excellence PrimeCredit has a long serving history in Hong Kong. First established in 1977, it has consistently proven itself as the Lender of Choice. “With our passion in customer service, professional consultation and offering tailored solutions to consumers, we come through the economic good times and bad times and standing proud as a financial solution provider. PrimeCredit has been awarded the Finance Company of the Year – Hong Kong award in the Asian Banking and Finance Retail Awards since 2011 – eight years in a row! This is definitely a key recognition of our strong commitment to consumers in Hong Kong throughout all these years, and gives us confidence in continuously driving for excellence in the future,” Liew says.

“In the PrimeCredit’s brotherhood spirit – ‘We’ve got you covered’, we care for our patrons and will continuously listen to our customers’ needs and wants, so that we can provide the most suitable solutions and support to them when in need,” She concludes.

Warning: You have to repay your loans.

Don’t pay any intermediaries.

Complaint Hotline: 2111 2999 Money Lender’s Licence Number: 748/2018

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Shama Serviced Apartments

Shama Serviced Apartments to expand its global footprint

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owadays, the line between travelling for business and travelling for leisure is increasingly being blurred as more people—and lately companies—continue to prefer having the comforts of house-like amenities but in the impeccable standard of a conventional hotel when it comes to the places they stay in. This is something that Shama Serviced Apartments, has been focusing on and leveraging in, providing this growing market segment the kind of hybrid model for fully equipped accommodations necessary for either long or short stays, whether for business or leisure.

For Gina Wo, Senior Vice President & Head of Greater China of ONYX Hospitality Group (Shama’s parent company), serviced apartments fill the “sweet spot” between home comfort and the traditional luxuries of a hotel.“In Asia, more and more companies are sending their employees on short-term assignments to fill skills gaps or facilitate the transfer of cross-cultural knowledge.

Serviced apartments fill the sweet spot between leased residences and conventional hotels by offering enhanced space, flexibility, and value-added services,” said Wo. “Increasingly, serviced apartments are also attracting leisure and business travellers who appreciate enhanced space and home-like comforts, even if they may be in town only for a few days.”

“For investors and property developers, owning a serviced apartment project comes with the upside of being able to gain

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from a diversity of business sources—from longer-term corporate tenancy agreements to dynamic short-stay retail sales through branded channels and online travel agents—from one single property and address,” she said.

Shama value Established in 1996, it has been a prominent brand concentrated solely in the serviced apartment market with a strong presence in its roots in Hong Kong, with six fully serviced apartments in the territory. Currently, Shama is able to provide more than 400 keys to fully equipped apartments within the special administrative region.

The acquisition of Shama by ONYX Hospitality Group in 2010 is a way to diversify its accommodation offerings to serviced apartments along with other names such as Amari and OZO. ONYX runs some of Thailand’s most successful hotels for over 50 years.

Shama is now looking to increase its global footprint, particularly in Greater China. With the world’s second largest economy continuing its stellar growth trend, attracting more global businesses to set up shop there and spur increased knowledge sharing activities, corporate travellers and placements will likely keep the serviced apartments sector busy for the next years to come.

“From its beginnings as a China and Hong Kong-centric brand, Shama has since expanded under ONYX Hospitality Group’s leadership and counts Australia and Malaysia amongst its pipeline

best Serviced apartment Operator 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 acquired Shama in 2010 • Shama currently manages 22 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

Opposite page:Gina Wo, SVP and Head of Greater China, ONYX Hospitality Group This page: Shama Chill at Shama Tsim Sha Tsui Hong Kong, Living room of the One Bedroom Apartment at Shama Midlevels Hong Kong, Studio Apartment of Shama Island North Hong Kong destinations,” Wo said. “There are ongoing discussions for additional Shama-branded properties in various countries across the Asia-Pacific region.”

“What makes Shama stand out is that we offer the best of both the comforts of home and the services of a hotel, and we clearly target residents and guests who are keen to make the most of their new city and live like a local, and also to feel truly at home,” Wo said. “We understand that our residents do not want to feel like a stranger, and this is why, apart from simply being a serviced apartment operator, Shama offers its exclusive ‘no boundaries’ lifestyle programme to our guests.”

This lifestyle programme that Shama offers include all aspects of a lifestyle any guest would likely look for, granting their clients a more immersive local experience including a taste of the local culture, the neighbourhood, lifestyle venue and amenities, as well as tenant activities held in the community and insider information on great finds on food and shopping.

Expanding footprint In 2018, Shama through the ONYX Hospitality Group signed a total of six new development deals with five different partners, while also ushering the development and launch of five new properties in mainland China, Hong Kong, and Thailand. According to Wo, ONYX Hospitality Group currently have 13 Shama properties opened across Asia, and a further nine Shama properties under development.“The opening of Shama Hongqiao Shanghai as ONYX Hospitality Group’s 50th operating property in the Asia-

Pacific region marks a key milestone for the group,” the senior official said. “Following the setup of ours Greater China regional headquarters in Shanghai earlier this year, ONYX Hospitality Group has made significant progress in China and received positive recognition within the market.”

Another newly launched Shama serviced apartments in mainland China is also in Shanghai, which include the 362-key Shama Changfeng Shanghai, located within the Changfeng Ecology Commercial District. Other recent openings by the hospitality group in the Asia-Pacific include the 429-key Shama Lakeview Asoke Bangkok, following JR Kyushu’s recent acquisition of the Somerset Lake Point Bangkok and its appointment of ONYX Hospitality Group as the management service provider of the property.

It is considered the largest Shama property by number of keys to date as well as the largest property in JR Kyushu’s 16-hotel portfolio and also its first property investment outside Japan.

Apart from the HKB High Flyers Award 2018 recognition, Shama continued to claim its award-winning reputation by bagging the Best Serviced Apartment Operator of Asia award for the sixth year at the recent 2018 AHF Asia Hotel Awards.

“These awards and accolades serve as an affirmation of the efforts ONYX Hospitality Group has made in Hong Kong and within the Greater China market, and provide strong motivation for its brands to drive towards even greater achievements as the portfolio continues to expand,” Wo said.

Shama Serviced Apartments won the 2018 Hong Kong Business High Flyer Award as Best Serviced Apartments Operator.

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Standard chartered

STANDARD CHARTERED HONG KONG Ushers a new era of reTAIL BANKING

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he retail banking landscape is rapidly changing as clients grow increasingly tech-savvy. This is why Standard Chartered Bank (Hong Kong) Limited is at the forefront of rolling out innovative digital solutions to cater to their clients’ changing needs, ranging from faster automatic teller machines to a host of payment solutions geared at providing a smoother client experience.

“In 2018, we have many new launches of digital capabilities in answering the rising needs and aspiration of customers,” says Vicky Kong, Managing Director and Head of Retail Banking, Hong Kong.

“Just to name a few, these include mobile account opening service, SC Pay, SC Mobile with enhanced features, and our new chatbot, Stacy.

Ultimately, the innovation is about delivering a superior service. All capabilities are built upon understanding the clients’ need for a simpler and more convenient banking services,” she notes.

Unmatched client service Standard Chartered is the first amongst big banks to introduce the remote account opening on mobile. This initiative makes the account opening process a breeze - clients no longer need to visit a branch for deposit account opening, since now all the steps could be done on mobile. Further in January 2019, through the QR Cash, customers can get cash at its ATMs by simply scanning a QR code generated thru SC Mobile.

“We are committed to serving our clients more effectively and

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efficiently, and give them more convenience, choice and security,” Kong says. “Our AI service agent “Stacy” made her debut this year and she is trained to serve our clients around-the-clock with general enquiries.

More functions will be introduced in phases,” she adds.

The bank has also replaced 200 ATMs with the latest technology in the Jetco network. All new ATMs are equipped with voice navigation for visually impaired customers, and are one of the fastest among Jetco network. “Providing top notch product services through understanding client needs, we are committed to design differentiated client proposition and products. We are the first to introduce fixed-rate mortgage plan in 2018. Riding on the success of Asia Miles exclusive partnership, we launched Asia Miles saving account which allows customers to earn miles from their deposits,” Kong says.

The bank cares not only for its clients but also for its employees. To this end, it has recently launched a human service programme which is designed to take care of the needs of both internal staff and its clients.

“For instance, an internal platform was setup to provide transparency on service request follow-up, inspiring talks with colleagues ensuring service on top of agenda and small customer delights for relationship deepening,” Kong notes.

Forging ahead with virtual banking With over a hundred licensed banks operating in a city of seven million people, the Hong Kong banking sector is among the most

​Retail Banking PHILOSOPHY

FAST FACTS

Our purpose is to drive commerce and prosperity through our unique diversity. Our heritage and values are expressed in our brand promise, Here for good.

competitive in the world. “The reality is that our clients are becoming more and more digitally savvy, so there is a real shift in customer behaviour towards digital. It is very important for us to provide services that truly meet the clients’ needs to stay competitive in the market.” explains Kong. “This is why we have been doing a lot in this area. We have applied for a virtual banking licence in Hong Kong as part of our strong commitment to advancing financial inclusion, fintech innovation and client experience. Technology is at the heart of our bank’s strategy,” she says. With more and more retail clients adopting a digital lifestyle, the Hong Kong Monetary Authority announced the 7 “Smart Banking initiatives” last year aiming at transforming the financial ecosystem in Hong Kong. The new policy initiatives make converging banking and technologies easier and create new business opportunities for banks.

“We believe the launch of a virtual bank will give clients the choice of going completely digital for their everyday banking needs. We will continue to invest in technology that focuses on distinguished full digital experiences,” Kong notes.

Payments is a big focus for the bank and it has rolled out a host of capabilities in recent years. For instance, in 2017, it launched the Alipay and Oe!Pay top up services, followed by soft token, SC Mobile with enhanced features, SC Pay for P2P transfer in 2018. “Fintech comes with both opportunities and challenges. The opportunity is that it can enable financial inclusion, advance innovation and help banks deliver superior client experience. The challenge is how to utilise data and new technology to bring new ideas to the business model; and continuously re-evaluate and improve operations and risk management.”

“We are the first bank introducing the Alipay top-up service in Hong

• Standard Chartered is a leading international banking group, with a presence in more than 60 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: QR Cash enables cardless cash withdrawal at Standard Chartered ATM machines using the SC Mobile app; The recent launch of mobile account opening service enables clients to open a banking account via SC Mobile app Opposite page: Vicky Kong, Managing Director and Head of Retail Banking, Hong Kong Kong and an exclusive partner with Octopus for Oe!Pay top up service in 2017. We continue to stay at the forefront to deliver the digital initiatives that customers need and strive to serve customer better thru building digital capabilities with a human touch,” she adds.

A tradition of innovation Standard Chartered has also opened its Hong Kong innovation lab, the eXellerator, to promote innovation within the Bank and to tap emerging financial technologies and data science in the region, to bring better products and services to its customers in Hong Kong.

The eXellerator in Hong Kong will be part of the Bank’s global network of innovation labs and activities responsible for exploring new technologies and ways of working to improve client and user experience. Standard Chartered has long been a part of the social fabric in Hong Kong. “To secure the foundations for sustainable future growth, we deliver the highest levels of ‘service and experience’ to our clients, ensure stable and secure ‘systems and platforms’ while continually raising the bar on ‘conduct’. We will continue to invest in ‘people’ and optimise our balance sheet to use our capital more efficiently for better returns,” Kong says.

For eight years running, Standard Chartered Hong Kong has been the recipient of the High Flyers Award for Retail Banking, a testament to the strength of its business and the quality of its service. “We have global presence, long history in Hong Kong and our brand promise: Here for good underpins everything we do. We are committed to stay at the forefront to deliver exceptional banking services and strive to serve customer better with human touch,” Kong says.

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Standard chartered

THRIVING THROUGH CONNECTIVITY AND INNOVATION

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hen it comes to doing business in Greater China and beyond, having a bank with an outstanding track record, and an extensive local and international network is crucial for success. This is why individuals and businesses alike turn to Standard Chartered Bank (Hong Kong) Limited (SCBHK) which is named as the Bank of the Year for 2018.

“We are witnessing the emergence of complex supply chains and new frameworks for cross-border cooperation, such as the Greater Bay Area (GBA) and the Belt and Road Initiative (BRI), which creates the need for increasing regional connectivity. With our extensive network across these markets, as well as our ongoing digitisation, we are uniquely positioned to help clients capture the benefits that they bring,” says Mary Huen, Chief Executive Officer of SCBHK. Committed to connectivity Since China made the development of the GBA one of its key strategic priorities, SCBHK has been actively helping its clients capitalise on the opportunities arising from the region, particularly as a number of major infrastructure developments, such as the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macao Bridge, were completed last year. For example, the bank set up a new Express Banking Centre in the Express Rail Link’s West Kowloon Station to provide services for retail clients as the Express Rail Link commenced services in September. It has also stepped up its focus on corporate clients’ cross-border banking and financing needs in the GBA.

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“GBA is a strategic priority for us. We expect that a wide range of industries will benefit from the GBA development and we are targeting the seven sectors that are likely to benefit the most from the GBA. These sectors are telecom equipment, advanced manufacturing, electronics, e-commerce, logistics, pharmaceutical and medical equipment sectors. With our wide range of products and services, we are well-positioned to help our clients seize the opportunity and grow their businesses,” Huen says.

Beyond GBA, SCBHK also eyes the huge potential of the BRI as part of the Standard Chartered Group’s global strategy. With a presence in 45 of the 65 BRI markets, the Group aims to be the go-to bank for the BRI projects. It has announced a commitment to support the BRI by facilitating at least US$20 billion in financing by 2020 and has signed a Memorandum of Understanding with the China Development Bank to formalise a strategic partnership for facilitating trade and investment relating to the BRI. In particular, Huen points out that, as an international financial centre with a sound legal framework and business-friendly tax environment, Hong Kong can play a significant role as the Chinese government continues to promote the BRI and the internationalisation of the renminbi.

“Hong Kong can act as a ‘super-connector’ that connects China and the rest of the world. For example, the Hong Kong government has introduced new corporate treasury centre (CTC) rules with preferential tax treatments to qualifying CTCs set up in Hong Kong. We can help

bank of the Year PHILOSOPHY Standard Chartered banks 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.

This page: eXellerator Lab; West Kowloon Railway Station Branch Opposite page: Mary Huen, CEO Hong Kong clients involved in BRI projects to set up CTCs here for better liquidity and FX management across the region and globally,” Huen says.

“With the Group’s unique footprint in the BRI markets and our exceptional renminbi capabilities, we are able to provide a full suite of financial products and services to help our clients explore the opportunities arising from the BRI, especially as the Chinese corporates go abroad to invest and do business in these emerging markets.”

Driving Innovation in the Digital Revolution Meanwhile, as Hong Kong is moving into a “New Era of Smart Banking”, SCBHK is investing to stay ahead in the digital revolution. Last year, it launched a number of market-leading digital initiatives that significantly enhanced the customer experience.

For example, it launched mobile account opening service, which allows people to open a bank account in as short as just eight minutes from their mobile phone. It has launched new instant payment services to allow customers to make P2P payments anytime, anywhere in both Hong Kong dollar and renminbi via the Faster Payment System. It introduced the Stacy chatbot to help address customers’ online enquiries, and also partnered with Ant Financial to provide an innovative blockchain crossborder remittance solution between Hong Kong and the Philippines.

Furthermore, last year SCBHK submitted an application for a virtual banking licence to the Hong Kong Monetary Authority (HKMA) and set up a new entity in preparation for the new virtual bank. It was the first major bank in Hong Kong to announce an intention to set up a virtual bank. It is expected that the HKMA will approve the first batch of virtual banking licences in the first quarter of 2019.“We are looking forward to bringing a completely brand-new banking experience to the people in Hong Kong. We expect to set up a virtual bank that helps promote financial inclusion and foster dynamic partnerships to create a

comprehensive digital ecosystem,” Huen says.

In 2018, SCBHK also opened its eXellerator innovation lab to promote innovation within the bank as well as to tap emerging financial technologies and data science opportunities in the region, so as to bring better products and services to its customers in Hong Kong.

The eXellerator, with an area of over 10,000 square feet, is a collaboration space for business units, clients, technology companies and industry partners to come together to solve business problems and explore opportunities.

“The word ‘eXellarator’ stems from two words: acceleration in change and excellence in client service. The opening of the innovation lab in Hong Kong demonstrates our commitment to develop Hong Kong as a smart banking city,” Mary explains.

Clients at the heart for everything As SCBHK prepares to celebrate the 160th anniversary of its presence in Hong Kong in 2019, Mary highlights that despite all the market changes throughout the years, SCBHK has remained unchanged in fulfilling its brand commitment: “Here for good.”

“While the market keeps evolving, we continue to gear up ourselves and enhance our offering to make sure we can meet our clients’ personal financial and business needs, especially against the backdrop of digital developments and China’s opening. We are proud to be a leading bank in Hong Kong with a long history and deep understanding of the city,” Huen concludes.

“As one of the note-issuing banks in Hong Kong, we have unveiled the new design of our 2018 Hong Kong Banknotes Series which pays tribute to the ‘Hong Kong Spirit’. By channelling the ‘can-do’ Hong Kong Spirit, we will continue to help people and businesses to succeed, create wealth and drive growth across the markets.”

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TMA

THE LARGEST FRENCH LAW FIRM IN ASIA

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homas, Mayer & Associés (TMA) is the largest French law firm in Asia by the number of French lawyers in its Hong Kong practice.

Eric-Jean Thomas and Eric Mayer founded the firm in Hong Kong to take advantage of the city’s strategic location. TMA has since then prospered, making use of the legal platform that the territory offers between China and the rest of the world. Its French lawyers provide legal advice in relation mainly to cross border transactions between French speaking countries and Asia in general with a special emphasize on China.

In the legal field, the strategic importance of Hong Kong has been understood by all major international law firms mainly based in the UK and in the USA: Indeed, all major law firms which were still not present in the territory at the time of the handover, made a move to open an office in the Hong Kong in the past decade, and a great number of them employ mainland Chinese lawyers.

Hong Kong-based Thomas, Mayer & Associés (TMA) has been able to develop its expertise in relation to investments between the two worlds and is now a seasoned deal-maker owing to its more than 20 years of experience in the region.

Intimate knowledge TMA provides in-depth understanding of Hong Kong legal and tax environment to companies looking to set up investment projects

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not only in the city but also in other parts of China. Established in 1995, the international law firm specializes in the economic migration of companies from Europe to Southeast Asia and China, and from China and Southeast Asia to Europe, specifically France.

TMA’s knowledge of these cultural, economic and legal environments makes it the go-to law firm for companies seeking to do business in China. Amongst its practice areas are international business law, mergers, acquisitions, joint ventures, corporate and commercial law, international tax law, international arbitration and litigation, as well as private international law and immigration law.

In China, specific legal requirements, such as the incorporation of 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 and deal implementation.

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

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.

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The practice was established in Hong Kong 24 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.

All lawyers of TMA’s Paris office are members of the Paris Bar, and as one of the top AsiaEurope deal-makers, it has also attracted lawyers specialized in international mergers and acquisitions.

This page: TMA office reception; TMA meeting room with the partners set up their business and hire employees. TMA’s clients range from mid-sized companies to major conglomerates, including tech companies, food and beverage, construction, fashion and cosmetics, pharmaceuticals, medical, as well as fintech, biotech firms and retail. The law firm also aims to optimize 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 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. As a consequence, it becomes necessary to rationalise structures, flows, and decisionmaking processes to keep up with the rapidly changing economic, legal and tax landscape. This is where TMA’s cadre of topnotch corporate lawyers comes in.

Its more than 23 years of experience on taxation, contracts, and company restructuring enables TMA to implement efficient solutions.

Whereas maybe companies wish to choose between Shanghai, Singapore or Hong Kong, it is obvious that 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 investments have not deterred European investors. Instead, they have realized that the benefits of their investment far outweigh the drawbacks.

Amongst the benefits of setting up a platform in Hong Kong are more than 40 double taxation agreements currently in force, coupled with more than 60 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. Such advantages do not exist from anywhere else and give Hong Kong a competitive edge with regard to China.

Apart from having a Grade A logistic hub, Hong Kong is worth choosing because it has the leading airport for commercial freight in the world, it enjoys a dynamic commercial legislation and benefits from an easily readable tax system.

Certainly, the best indicator of the territory’s competitivity is the fact that 75.5% of Foreign Direct Investment (FDI) in China in 2017 came from Hong Kong.

TMA is also advising mainland Chinese investors investing overseas. TMA established a subsidiary in Paris, France in 2010 with Emma Bensoussan-Cremieux as its local managing partner.

All lawyers of TMA’s Paris office are members of the Paris Bar, and being one of the top Asia-Europe deal-makers, it has been able to attract lawyers specialized in international mergers and acquisitions.

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Vastcom technology limited

Vastcom Technology Limited’s growth story

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stablished in 2010, Vastcom Technology Limited is engaged in providing a wide range of products and services including hardware and software system solutions and maintenance, IT security, and consulting service and network solution. Leveraging its solid IT knowledge and experience, the Macau-based IT company is committed to provide high quality service to its valued customers.

The IT firm’s investment in its younger employees has led to innovative solutions that benefitted not just the company, but the multitude of its clients as well. Vastcom Tech not only offers market products and services, but also provides many types of reliable and secure solutions and project management.

Endless opportunities Victor Ieong, General Manager of Vastcom Tech, says the boom of Macau’s casino and gaming industry opened up an opportunity for the company. Ieong explains that global gaming investors required local companies that can support their IT needs. “Flexible, rapid, and professional response was a key requirement,” he says.

The firm’s long-term relationships with customers, vendors, and employees have been an integral component to its growth. Moreover, Vastcom Tech’s flexible and rapid operations and logistical process have made it a stand-out in the market. It also continues to tap new technology and find new partners in order to address customers’ needs. The IT firm has also established mutually beneficial partnerships

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with clients and vendors that support Vastcom Tech’s objectives.

“We believe sustainable and enjoyable long-term relationships with customers, vendors and employees will move our customer and us towards a successful future,” says Ieong.

Success stories Among its recent success stories is helping a luxury casino resort in Macau in protecting its more than 10,000 employees and millions of customers’ personal and credit card information. Vastcom Tech did this by complying with Payment Card Industry Data Security Standard (PCI DSS) and Privacy and Personally Identifiable Information (PII) legislation. Vastcom Tech adjusted the client’s manual security mechanisms to adhere with PCI DSS and PII. The comprehensive sensitive data discovery product allowed the client to discover, monitor and remediate sensitive data across the network. The product enabled them to replace the inconsistent manual searching methods they had used previously with a professional stateof-the-art, automated data discovery solution.

Challenges But Vastcom Tech had to face a lack of manpower in the Macau’s IT industry early on. To address this issue, Ieong says the firm does not shy away from hiring fresh graduates and instead assists them in developing their careers. He also says Vastcom Tech has hired foreign

IT solutions company PHILOSOPHY

FAST FACTS

Skills help us deliver, add-value, and drive the company’s success.

• Vastcom Tech is an IT company committed to providing high quality service to their valued customer with the advantages of solid and professional IT knowledge and experience, immediate response to customer enquiries, flexible and rapid operation and logistic process and strong business relationships with various IT vendors.

• In year 2018, Vastcom Tech archive more than HKD 100M dollars revenue and successfully redirected company from product sales business to service and solution oriented business.

The company began with the gaming and hospitality segment.

With expansion of sales team, Vastcom Tech is expanding into development business in banking, government, and utility segment.

This page: Award and certification (Left top corner); Demo environment for engineer and customers’ technical enablement (Right top corner); Continually training is the key to success (Bottom) Opposite page: Victor Ieong, General Manager of Vastcom Tech workers to augment the company’s IT expertise. “We have staff who are Filipino, raised in Macau with Macau ID. However, because they can only speak English, not many companies hire them,” says Ieong. “We will hire them, train them, and put them into some international casino as project manager role or engineer.”

Banking on the right people In order to continuously improve its services, Vastcom Tech invests in its younger employees. To better arm them with the necessary skills in the workplace, the firm sends its employees to key vendors for training for free. Ieong says that skilled workers result in good service to clients.

The Vastcom Tech general manager says winning the Hong Kong High Flyers Award for IT Solutions Company is an honour for the company.

“This award will encourage us to continue to evolve and transform

our capability to make us the leading IT solutions provider not only in Macau, but also in Hong Kong and Greater Bay Area,” says Ieong.

Vastcom is a company committed to providing high quality services to valued customers with the advantages of solid and professional IT knowledge and experience, immediate response to customer inquiries, flexible, rapid operation and logistic process, maintaining strong business relationships with various IT vendors.

“We strive to consistently devote resources in developing and maintaining our technology support team to provide professional and best-in-class service support to our customer. We believe sustainable and enjoyable long-term relationships with customers, vendors and employees will move our customer and us towards a successful future,” said Ieong. Vastcom Technology Limited won the 2018 High Flyers Award for IT Solutions.

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WTT HK limited

Going beyond the cloud with WTT

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or over two decades, WTT HK Limited (WTT) has established itself as a top telecommunication and ICT services provider in Hong Kong. The company’s best-of-breed solutions has earned the trust of various clients across a range of industries, becoming the trusted business partner of all listed financial institutes in the Hang Sang Finance Index, the Top 10 Global Investment banks, and over 90% of all HKSAR government departments.

WTT has invested a whopping HKD 7 billion to create the ultrahigh speed Fibre-to-the Desk network infrastructure, serving 90% business customers in Hong Kong. WTT’s quest to be a bellwether in ICT services began in 2006, when the company started assisting corporations as well as small and medium enterprises as they reinvent themselves for the 21st century.

It is no wonder, then, that WTT has since 2010 become known for being an effective cloud enabler and information security enhancer for businesses in Hong Kong. In 2017, WTT enables businesses to take advantages of AWS cloud to build sophisticated applications with increased flexibility, scalability and reliability with the launch of AWS Cloud Enablement Services.

The flagship service is now serving hundreds of thousands of customers who are on a mission to innovate their businesses.

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WTT helps its customers to build, migrate, and design the cloud architecture of their choice – all while providing a reliable fibre broadband network with direct connection to the AWS Cloud.

Cloud Strengths Further Enhanced At AWS re:Invent 2018 in Las Vegas, WTT became the pioneer top achiever from Hong Kong to attain the AWS Well-Architected Partner recognition for its competence in helping enterprises to build secure, reliable and cost-optimized cloud platforms.

Only less than 1% of global AWS Partner Network (APN) partners, to be exact, 34 out of over 10,000 worldwide partners had achieved this in the debut partner program. Included in WTT’s list of laurels is the APN Advanced Consulting Partner status attained in a record-breaking 9-month elapse, followed by the AWS 50 Certified recognition, indicating the number of AWS certifications WTT talents have secured.

But cloud services, however, is not the only strength of WTT. The company has also made a name for itself in the realm of data security. WTT understands that cybersecurity has become one of the top priorities for businesses today. Most corporations give executives access to critical company data through the smart devices, which may not have the necessary firewalls to keep the

Best Network, Broadband, Cloud & ICT Services Provider 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 • Serving over 56,000 business customers ranging from large enterprises to SMEs • WTT is the only Hong Kong-based company among the less than 1% global AWS Partner Network (APN) Partners to attain the AWS Well-Architected Partner recognition • An AWS Managed Service Provider (MSP) Partner

This page: (upper) A strong team that makes the difference, (lower) A one-month one-stop-shop Alipay Payment Service promotional campaign to enable merchants keep abreast of the mobile payment trend Opposite Page: A demonstration of WTT’s AWS Cloud Enablement Services in an ICT summit company secrets safe. The threat of cyber attacks are real, with businesses vulnerable to ransomware, distributed denial-of-service, phishing, and malware.

This is where WTT’s expertise lies: It provides professional cybersecurity experts so companies can combat professional hackers. WTT’s high customisable, easy-to-start- and all-inclusive Asure Security was created to give companies the power to design the best form of cybersecurity that their businesses deserve. Asure Security brings together a diverse set of technologies and domain expertise from different sectors, all with the goal of building highly secure environments for enterprises.

With WTT’s latest ePayment partnership, its clients are able to use Alipay for a wide range of retail industry needs, including a 24/7 after sales support that allows them to focus on building their profits while leaving all the technical work to WTT.

Over the years, WTT has showcased its cross-sector knowledge on ICT and cloud solutions, enabling the comapny to design and create customised ICT services for its customers. Customer services topnotch, with WTT constantly striving to uphold its “Winning Together” motto in every transaction. It is this mindset that has led WTT to grow its loyal customer base, which now includes over 56,000 clients across small, medium, and largescale enterprises.

WTT, however, remains relentless in its drive to be at the top of the game. The company envisions a future with a rising popularity of managed and one-stop-shop ICT services. Businesses will focus more on their operations and leave ICT service management to professional service providers. How will WTT stand out? By carrying on itsdiversified strength from business broadband to various business-centric ICT offerings such as cloud and security, WTT is in a strong position to welcome a new and exciting chapter in its business operations.

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Zchron

Making a striking statement in luxury interior

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or more than two decades, Zchron has been the creative spirit behind many of Hong Kong’s most enchanting and modern places, its exquisite craftsmanship and well through-out details that never lose sight of a client’s character exemplified in a handful of stunning luxury residential and commercial projects for the likes of Escada, Carlsberg, Max Mara, DKNY, Fortress and the Hong Kong Institute of Bankers. The achievement even holds more significance considering that this was the 13 consecutive year in which Zchron managed to retain its throne by getting the Interior Design award.

Helmed by interior veteran Miss Wing Chan, the accomplished interior firm focuses on bringing professionalism to luxury interior design, specialising mainly in high-end residences, office premises and retail shops. Miss Wing Chan’s glamourous and prestigious design, together with extensive experiences in the interior field, contribute to an unerring and thoughtful sense of art and unique interpretation of space that feels open and timeless.

This year, the firm has more than 20 houses, as well as some 35 deluxe condominiums, luxury duplex apartments and adjacent units on hand. “Design firms that can manage this amount of big scale interior projects are rare in Hong Kong,” notes Miss Wing Chan. She believes a top level of design service and professionalism bolstered by refined and sustainable materials, are elements that have distinguished the firm as a leader in the

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industry.

“An interior project usually involve several parties, including design firm and contractor, but we offer a two-in-one integrated supply team that includes designers, architects and contractors to deliver a streamlined process. From design brief to completion and handover, we offer a ‘one-stop shopping experience’. The team have a shared desire to embrace projects and to redefine the design-build concept along the way,”she says.

Refining standards Clients in Hong Kong are increasingly looking for quality craftsmanship, subtle luxury, design innovation and modern elegance, and Miss Wing Chan says it takes a lot of coordination and attention to details to achieve the perfect work. She further notes that the growing concern on sustainable drive the firm to focus on high-end materials to suit both the psyche and wellness of clients. For example, they make use of materials that contains no added formaldehyde. “As consumers become more environmentally aware about the choices they make, we are responding in our work by putting together the latest material and interior trends from all over the world,” as she continues.

“But that is not enough. We believe that our professional knowledge and experience are here to combine with what the clients’ needs. Our dedication to satisfy our clients and our endless

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.

Opposite page: Miss Wing Chan, Zchron creativity enable us to deliver designs that are exclusive in their own way. Our previous designs show how we deliver the ultimate in style and luxury, and in the exact way that the clients desire.”

Professionalism at its best Hong Kong’s interior designers are enjoying a growing market particularly as China market has been expanding at a fast pace in the past decade. Yet more opportunities also mean that more competitors are joining to share a cup of the burgeoning sector. To stay ahead in the interior design market, Miss Wing Chan reiterates that the company will maintain its firm stand on quality and integrity to deliver works that not only fit clients’ needs, but also to express the uniqueness of each clients. “We deliver works with striking statement that aim to impress,” she says.

To honour the spirit of professional integrity, Miss Wing

Chan puts efforts in training and equipping staff with the latest knowledge and skills. On a regular basis, the staff visits construction suppliers to learn how they can make use of the most up-to-date, high quality materials and finishes to transform standards in interior designs. She believes that the visits allow staff to integrate both the essence of luxury with a harmony between aesthetic and functionality.

Now on its 13th to maintain the High Flyers Award, Miss Wing Chan says she is pleased that the firm is recognised for its high standards of professionalism. “To stay ahead in the competitive interior design market, the Zchron team will continue its journey of development to be an international firm, slated to offer high-end amenities at the highest level of service. We will approach each project with insightful and deep observations on the latest trends around the world and with our professionalism,” she concludes.

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ZUNg FU

exceptional after-sales service with zung fu

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30-year-old resident in the old Hung Hom district, Zung Fu’s Mercedes- Benz Kowloon Brand Centre is not set to traditions and conventions. By introducing a new retail concept combined with a reinvented interior and improved processes, the luxurious automobile brand and its exclusive dealer in the city goes full throttle for dynamic growth. Mercedes-Benz and Zung Fu take car purchasing and after sales process to a whole new level of experience.

Nestled within the bustling neighbourhood in Kowloon, Mercedes-Benz’s Kowloon Brand Centre combines the showroom and after-sales service customer greeting area with a comfortable lounge. Luring coffee smell, comfortable couches, car configurators and racing simulators, visiting a car dealership is becoming ever more enjoyable.

From Sales to Friends The centre also displays a comprehensive range of 16 MercedesBenz vehicles, whereas supersized television walls throughout the store extend close-up views of the latest vehicles. Aaron Lee, Managing Director for Hong Kong and Macau at Zung Fu Company Limited, the marquee’s exclusive dealer in Hong Kong for over 60 years, said the centre was one of the very first in the world to introduce the new Mercedes-Benz “MAR 2020” retail concept.

“Customer needs have evolved and changed over time, and

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we have to ensure that the forward-looking brand presentation arrives in the here and now with the next-generation facilities and services, as well as fully-integrated after-sales facilities, to match customers’ expectations.”

Showroom and service centres used to be heavily sales-focused, the customer journey ending as soon as customers stepped out of the centre. Aaron said the new strategy transform the luxury brand’s relationship with customers; the space no longer for a single purpose of purchasing, it also provides a guest experience that is relaxed and enjoyable. “Visitors have no pressure to buy from anyone, they are ever welcomed to come in and visit us. Our Product Experts are here to introduce our amazing range of cars”, he explained.

A Close Community There are now regular events for the Mercedes-Benz owning community, with themes ranging from Mother’s Day, Father’s Day, Kids’ Day, Macau Grand Prix Festival, as well as the most recent Christmas Fest, making a stance that the brand centre has been specifically designed for the whole family to enjoy. When they rolled out the events, the feedbacks, he said, have been overwhelmingly positive.

“We got messages asking if they could join if they were owners of other automotives, and the answer is they are more than

OUTSTANDING CAR DEALER FAST FACTS

FAST FACTS

• Zung Fu is the exclusive retailer of Mercedes-Benz passenger cars and commercial vehicles in Hong Kong and Macau, and expanding into the Southern and Western China market. Zung Fu is one of the very first retailers to introduce the new MAR2020 retail concept to its dealerships.

• Mercedes-Benz’s share of the automotive market in Hong Kong is one of the highest for Mercedes-Benz worldwide. In 2018, Mercedes-Benz is the bestselling luxury motor brand in Hong Kong.

• Zung Fu is committed to deliver a noticeably more enjoyable showroom experience, while also making ownership ever more easy and convenient. The new Kowloon brand centres with facilities for customers’ enjoyment have been operating since 2017. With the success of Kowloon centre, our Hong Kong Island brand centre will be launching in the first half of 2019. An array of services have been lined up to better serve our customers: • Real-time online service booking • Same-day maintenance service • 80-minute weekend express maintenance service • Drop & Go, Drop & Fly service locations at Causeway Bay, Kwai Chung, Shatin and HK International Airport • Courtesy Car on demand • Car beauty services and accessories, and many more …

This page: Kowloon Brand Centre Opposite page: Aaron Lee, Managing Director for Hong Kong and Macau at Zung Fu Company Limited welcomed,” said Aaron with a grin.

“The Kowloon Brand Centre has an advantageously convenient location and is no better place to establish a community.”

An Extensive Network To further maximise convenience, Zung Fu provides online service booking, courtesy car on demand, as well as same-day maintenance service at its service centres. Customers can opt for “Drop & Go” service by simply dropping off their cars in Causeway Bay in the morning, continue with routines and pick up the already serviced vehicle in the evening. There is also a “Drop & Fly” service at the Hong Kong International Airport. In December 2018, the brand launched a new drop off service location in Shatin upon customer feedbacks.

Leveraging on the Kowloon Brand Centre’s success, MercedesBenz will be launching the nine-storey Hong Kong Brand Centre in

first half of 2019.

The premises expands the marque’s focus on the enjoyment of car ownership with new leisure facilities for families, including a dedicated children’s playroom, a clubhouse-style bistro by the harbour, and a spectacular, third-floor terrace overlooking the harbour for hosting exclusive events for the Mercedes-Benz owning community.

Redefining car purchasing “We will continue to deliver a noticeably more enjoyable, transparent and convenient car ownership experience by launching more services and activities.”

A winner of the High Flyers Award this year, Aaron added that the team feels honored, and that the award further reinforces its commitment.“You may expect us to continue with the re-definition of car-purchasing and after sales process in the future,” he said.

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Index COMPANIES AND INDUSTRIES Banking on close economic ties for sustained growth

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Online shopping drives clothing industry

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Re-export growth boost electronics industry

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Hong Kong’s promising processed F&B industry

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MobileTV shapes entertainment scene

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Footwear players goes for retail overseas

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OEM and ODM orders buoy gifts and premium industry

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Opportunities from China’s eco-environmental stance

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Pressure heats up between Mainland and local firms

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Jewellery makers to go into retail and distribution

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Hong Kong’s lighting industry revs up systems

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China market opens new chapter in publishing scene

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Fashion trends push spectacles industry growth

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Sporting good industry enters casual wear market

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Textile industry revs up for upmarket products

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Asian demand boosts wine market in Hong Kong

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Sea transport industry is riding on wave of success

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HONG KONG’S HIGH FLYERS Outstanding Enterprises 2018 60 Athena Best Financial Group

86 Mayfare Group

62 AV Consultant Int’l Ltd

88 Memorigin Watch Co, Ltd

64 Dorsett Hospitality International

90 PrimeCredit Limited

66 Dorsett Wanchai, Hong Kong

92 Shama Serviced Apartments

68 Elite Concepts Ltd

94 Standard Chartered Bank

70 FTLife Insurance Company Limited

96 Standard Chartered Bank

72 Hang Seng Bank Limited

98 TMA

74 Hang Seng Insurance Company Limited

100 Vastcom Technology Limited

78 Lan Kwai Fong Hotel @ Kau U Fong

102 WTT HK Limited

80 Lifestyle Insurance

104 Zchron Design

82 LINDT

106 Zung Fu Company Ltd

84 MassMutual Asia Ltd

108 HONG KONG BUSINESS ANNUAL 2019