Hong Kong Business Annual 2017

ANNUAL 2017

Hong Kong's Outstanding Enterprises 19 TOP INDUSTRIES REVIEWED SLUGGISH ECONOMIC GROWTH

TO PERSIST IN HONG KONG

STRONG HK$ TO DRAG RETAIL SECTOR'S GROWTH HONG KONG BUSINESS ANNUAL 2017 1

Contents Annual 2017

2017 OUTLOOK 6 8 10 12 14

Sluggish growth to persist for HK in 2017 What to expect from HK property in 2017 China-based firms to drive hiring in HK The prospects are positive for accounting Strong HK$ to drag retail sector’s growth

MOST READ IN 2016 16

A month-by-month review of Hong Kong’s top stories in 2016

COMPANIES AND INDUSTRIES

22 Architects are drawing up a green Hong Kong 24 The future is clear for Hong Kong’s AV industry 26 HK banks are cashing in on economic partnership 28 Exporters are nailing it by diversifying their business 30 Hong Kong struts its way to global recognition 32 High-tech Hong Kong is pushing the right buttons 34 Footwear companies step up to improve capabilities 36 Hong Kong’s digital readiness is paying off 38 Jewellery making enters a new level of sophistication 40 Hong Kong’s leather goods industry toughens up 42 Law practitioners in Hong Kong set the bar high 44 Hong Kong welcomes brands’ licensing activities 46 Hong Kong’s lighting industry smartens up 48 Hong Kong’s processed F&B is cooking up a storm 50 The sporting goods industry’s sprint to success 52 Telcos are ready to answer when the future calls 54 The textiles industry keeps up with the trends 56 Watchmakers are wasting no time in enhancing quality 58 Cheers! Hong Kong winemakers have reasons to celebrate

BY THE NUMBERS 60 Labour force, unemployment, and underemployment 61 GDP and its main expenditure components at current market prices 62 Nominal Wage Indices for employees up to supervisory level 63 Number of Establishments, Persons Engaged and Vacancies Analysed by Industry Sectionl 66 Number of Regional Headquarters in Hong Kong by Country/Territory where the Parent Company was Located 67 Seasonally adjusted Consumer Price Indices 69 Population by Age Group and Sex

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56

Contents Annual 2017

74

High-Flyers 2016

84

88

74 ​HSBC Insurance (Asia) Limited 78 Able Mobile Limited 80 Athena Best Financial Group 82 British Airways 84 Canadian International School of Hong Kong 86 Elite Concepts 88 ​FTLife Insurance Company Limited 90 GODIVA Chocolatier (Asia) Ltd.

100

92 Hang Seng Insurance Company Limited 96 InterContinental Grand Stanford Hong Kong 98 MassMutual Asia Ltd. 100 Mercedes-Benz Hong Kong Limited

112

102 Platinum Financial Services Limited 104 Rhombus Group 106 Standard Chartered Bank (Hong Kong) Limited 108 Suncity Group 110 Towngas Telecommunications Co. Ltd. 112 Faculty of Business, The Hong Kong Polytechnic University 114 TMA 116 Wharf T&T 118 Zchron Design

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ANNUAL 2017

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ECONOMy OUTLOOK

Sluggish growth to persist for HK in 2017 Analysts say the mainland’s sluggish trade outlook will continue to weigh on the territory.

T

he clouds have not lifted over Hong Kong, which once again faces a dim outlook for next year as it tracks weak growth prospects in mainland China and the United States — its two largest trading partners. Property correction has also led to tighter government regulation, hampering the development of new real estate projects and denting investor and consumer sentiment.

Hong Kong posted a real GDP growth of 1.9% year-on-year (y-o-y) in Q316, bringing growth for the first three quarters of the year to 1.4%.

Export growth has also accelerated 1.1% y-o-y in the same quarter, up from 0.6% y-o-y. However, the rebound is expected to be temporary and the full-year forecast of 1.2% is down from 2.4% for 2015. Chua Han Teng, senior Asia country risk and financial markets analyst at BMI Research, believes that the Special Administrative Region (SAR) continues to face significant external

6 HONG KONG BUSINESS ANNUAL 2017

“Hong Kong’s trade sector is dominated by imports and re-exports to and from China, with re-exports totalling HK$2,873.4b for the first 10 months of 2016.”

economic challenges. “Hong Kong will have to deal with the structural slowdown in the mainland economy, and an uncertain global environment, which could see protectionist policies from newly elected US President Donald Trump,” he says. Teng explains that the mainland’s sluggish trade outlook will continue to weigh on the territory, which serves as a key port for Chinese exports and imports.

The mainland’s export growth, in turn, will likely remain slow due to a weak global environment, particularly weak investment outlook and poor factory output in the US. He sees global trade outlook turning even bleaker should Trump pursue protectionist policies and impose tariffs on Chinese imports.

China’s structural slowdown Teng also believes that China is in a midst of a long-term structural slowdown. Even as it grapples with rising labour and rental costs, the mainland economy’s structural

weaknesses — such as the dominance of inefficient state-owned enterprises and rising corporate leverage — continue to persist, and in the case of the latter, has even deteriorated.

Hong Kong’s trade fortunes are largely informed by China’s economic performance, as it has long ceded the bulk of its manufacturing operations to the mainland.

Hong Kong’s trade sector is dominated by imports and re-exports to and from China, with re-exports totalling HK$2,873.4b for the first 10 months of 2016 — a massive 98.8% of the territory’s total exports of HK$2,908.9b. Whilst trade flows have improved gradually since the bottom in March 2016 — with overall exports growing by 0.8% y-o-y (on a three-month average basis) in October and growth in imports printing at 2.5% y-o-y — it will continue to be affected by China’s economic slowdown.

Overall export and import forecasts, meanwhile, are

ECONOMy OUTLOOK downgraded to 0.8% and 1.2%, respectively, from 4.6% and 4.9% previously.

Coupled with expectations of further Chinese yuan depreciation against the Hong Kong dollar, anti-mainland sentiment in the territory is also threatening to slash tourist arrivals from the mainland, which account for 75% of all visitor arrivals. Protests have erupted anew in November over an antiindependence legal intervention by Beijing, seen by many as directly undermining the “one country, two systems” rule. Weak tourism arrivals, in turn, is likely to dampen retail sales and private consumption in the coming months.

Weak housing market Aside from the anemic global economy, Hong Kong must also contend with domestic economic pressures, primarily a prolonged correction in its property sector.

While domestic fixed capital formation hit 6% y-o-y in Q316, this is unlikely to be sustained in the coming quarters amid worsening housing affordability.

In an attempt to stem further increase in real estate prices and reduce financial instability risks, the territory’s policymakers have raised the stamp duty for non first-time homebuyers to 15% for individual and corporate buyers, which will be up 1.5% to 8.5% depending on the transaction price. Foreigners (including mainland Chinese), will now have to pay a 30% stamp duty, versus 16.5% to 23.5% previously.

According to Demographia’s 12 International Housing Affordability Survey, median house prices in the territory hit 19.0 years of median household income in 2015 — more than thrice Australia’s 5.6x, the next most expensive market.

The policy changes have caused property transaction volumes to fall, with data from Midland Realty showing that secondary sales of 35 major estates falling to a nine-month low in the week ending December 4, versus 68 transactions at endOctober. Primary market for private residential property also appears to have already peaked, falling to 2,216 units in November against 3,480 in September. Furthermore, rental yield

for the residential real estate market continues to trend downwards, nearing a low of 3.6% in October.

Another factor that has the potential to weigh on the territory’s property market over the coming months will be rising mortgages.

With the Hong Kong Monetary Authority (HKMA)’s interest rate policy being tied to the US Federal Reserve, rate hikes by the US Fed (even at a gradual pace) is set to put upside pressure on mortgage rates.

The general outlook on the path of US rates is a further 25bps of hikes in 2017, 50 bps in 2018, and 75 bps in 2019, from a target rate of 0.50-0.75% at the end of 2016. The Hong Kong Interbank Overnight Rates (HIBOR) have already been rising since August, and are set to rise further.

Government support key to growth The Hong Kong government is looking to increase the amount of housing units to be built over the coming years in an effort to cool the residential housing market.

According to the government’s FY2016-2017 budget announcement, it is planning to supply 280,000 units of public housing over the next ten years, while utilizing the Land Sale Programme to produce more units in the private housing sector. The 2016/17 Land Sale Programme alone comprises of 29 residential sites, which are sufficient to supply about 19,000 units.

The government aimed to complete 18,203 new units for 2016, and completion rate stood at 62.8% in October. Despite being behind schedule, the increase in public housing is likely to drive up housing supply and put downside pressure on property prices.

It appears that there is widespread support for the government to take further action to address Hong Kong’s economic woes and sustain its global competitiveness.

Economic survey data from CPA Australia, one of the world’s largest professional accounting bodies, reveal that there is a real appetite for reforms to remove the territory’s economy out of its rut. Bleak sentiment — 56% of respondents say they expect the economy to decline in 2017, while 61% say they expect their employers to retain headcount or

Chua Han Teng

Jeffrey Chan

Lily Lo

make cuts — further highlights the need for the government to combat underperformance.

Jeffrey Chan, Divisional President 2016 Greater China at CPA Australia, says that it is imperative for the Hong Kong government to provide support for businesses and entrepreneurs to undertake innovation in the territory. “Taking further action to make the Hong Kong economy more competitive will not only boost growth, it will have positive influence on employment, salaries, and career advancement opportunities,” he adds.

Chan further highlights that Hong Kong’s increasing integration into the mainland’s economy, its businessfriendly environment, low taxes, well-developed capital markets, and a large pool of professional talent position the territory to build on earlier reforms.

Lily Lo, a former DBS analyst and now an independent economic expert, echoes Chan’s view, saying the territory’s core competitiveness, “such as strong legal foundations, low tax rate, and a unique east-west mix” should offer some buffer against its economy’s dependence on the mainland’s. “Specifically, this means that unemployment rate should stay around 4%,” she adds.

Chan further identifies the key drivers for Hong Kong’s growth in 2017, which include low interest rates and major infrastructure projects like the Hong Kong-Zhuhai-Macao Bridge and the Western Kowloon Cultural District.

“E-commerce, healthcare, and IT/ technology are the industries that are viewed as having the highest growth potential,” he adds, while cautioning that the volatile political environment will continue to be a drag on the economy.

Rebound temporary as economy still faces challenges

Source: BMI Research

HONG KONG BUSINESS ANNUAL 2017 7

PROPERTY OUTLOOK

What to expect from HK property in 2017

Home prices, Grade A office rents will both increase by 5%, and retal rents are expected to bottom out.

T

he Hong Kong economy and the property sector have endured a roller-coaster year and came out stronger. Colliers’ 2017 Market Outlook notes that at the start of 2016, Hong Kong’s economy had been hit hard by weak tourist arrivals and retail sales data, whilst the stock market was anxious about economic slowdown in China and the residential sector was under pressure due to expected interest rate hikes.

Fast forward to yearend, and YoY real GDP growth has risen from 0.8% in Q1 to 1.7% in Q2 and 1.9% in Q3 — firmer than expected numbers which reflect healthy domestic consumption and investment — whilst overall business sentiment has moved back into positive territory, according to the Quarterly Business Tendency Survey conducted by the government’s Census and Statistics Department.

In 2017, abundant supply as well as economic and policy uncertainties

8 HONG KONG BUSINESS ANNUAL 2017

“Notwithstanding the latest stamp duty measure, residential prices are expected to rise up to 5% in 2017.”

may drag down mass residential prices by 5%, says David Ji, head of research & consultancy, Knight Frank​​​ Greater China​. “Luxury residential prices, with the scarcity of the stock, will remain stable, but home rents are set to move upward with potential homebuyers shifting to the leasing market given their unaffordability,” he says.

Residential Also, mainland developers have been increasingly active in residential land site acquisition in Hong Kong. Total residential sales are expected to have reached over 50,000 in 2016, and remain stable in 2017, according to Ji. “With various cooling measures, including lowered Loan-to-Value (LTV) ratios, tightened stress test requirements and increased stamp duty rate to 15%, residential affordability remains a major concern for potential homebuyers,” he says.

Meanwhile, notwithstanding the latest stamp duty measure, residential

prices are expected to rise up to 5% in 2017, according to JLL. The competition in land market will continue next year due to the influx of mainland developers and new local players. It has become harder for Hong Kong heavyweight developers to win development sites.

Joseph Tsang, managing director at JLL, said: “Under the latest cooling measure, residential sales volumes will shrink over the short-term as buyers adopt a wait-and-see attitude.

Developers will need to reassess their sales strategies. But this measure is unlikely to have a huge impact on capital values, given strong pent-up demand, large number of cash-rich buyers in the market (including mainland Chinese buyers), and still low mortgage rates.”

Hence, he notes, whilst volumes are likely to soften, capital values of mass and luxury residential are expected to remain broadly stable and rise by up to 5% in 2017. The rental market for luxury properties, on the other hand,

PROPERTY OUTLOOK is forecasted to fall by up to 5% given the ongoing tenant downgrading trends that have characterised the market for the past 12-months.”

submarkets are expected to post declines with rents in Kowloon East, where vacancy is concentrated, under the greatest pressure.

Office Grade-A office rent in the core areas is expected to increase by 5% in 2017, notes Ji, as vacancy remains low. However, Kowloon office rent is expected to fall by 8% given the abundant supply. In terms of trends and challenges, Central’s Grade-A office rents are expected to continue outperforming the market in 2017 because of tight availability, Ji says.

Other Hong Kong Island districts with new completion, such as 18 King Wah Road in North Point and Lee Garden Three in Causeway Bay, should see limited office rental growth. In Kowloon, abundant new supply in the pipeline will impose downward pressure on office rents in 2017, especially Kowloon East, with over 2 million square feet (sq ft) scheduled for completion.

For Daniel Shih, director​of ​ research​​​, ​Colliers Hong Kong, overall office rent will continue to grow in 2017. With limited new supply and healthy demand, Hong Kong Island rents should grow by 4%, he says.

Wong Chuk Hang, following the opening of the MTR South Island Line along with the availability of quality office buildings, should see rent grow by 19%, similar to 2016.

“We expect that capital values in the office market will continue to benefit from the influx of new investment capital and predict an increase of 10% in 2017,” he says. “We think that strata-title offices in Admiralty and Wanchai will be the most popular investment target in the segment.”

Moreover, Tsang observes, “The launch of Shenzhen-Hong Kong Stock Connect should further support demand from PRC financial services firms in Central. But we expect leasing demand will moderate in 2017 owing to the modest growth forecasted for the local economy.”

He further notes that net take-up is expected to amount to about 690,200 sq ft, compared with a net withdrawal in 2016. JLL expects Central to be the only submarket to record rental growth next year, in the range of 0-5%, on the back of a tight vacancy environment. All other office

Industrial & retail Despite tightening in the second half, the overall vacancy rate for warehouses ended the year higher at 2.6% compared to 1.7% at the end of 2015, says JLL. Warehouse rents climbed 3.5% in 2016, driven by growth in the lower end of the market as tenants sought more cost-effective space. Average rent of warehouses now stands at HK$13.2 per sq ft.

Data from JLL also show that in the broader industrial market, flatted factories rents rose 2.7% to HK$ 12.3 sq ft, supported by demand from warehouse users looking for storage options against a limited supply of cargo lift access warehouses.

Colliers’ Shih says industrial rents should trend upwards, led by industrial/office (I/O) buildings.

Meanwhile, warehouse rents should rise due to better conditions in import and export markets. “We expect the industrial market to benefit from the new stamp duty on residential property,” he says. “We believe that investors, who have been staying away from industrial property since the end of the government’s revitalisation scheme, will now re-enter the market and snatch up smaller units, i.e. those costing HK$10 million or less.”

In the retail industry, more international luxury brands are expected to retreat in 2017 from their prime street flagship stores, which would put further pressure on landlords in the near term, says Ji. However, the retail sector is expected to see notable signs of improvement in 2017, as most negative factors have been reflected in 2016. “We expect prime street shop rents should reach the bottom in the first half of 2017, if the recent signs of stabilisation of inbound tourism and retail sales continue after the holiday season,” he notes.

Tsang also says: “High Street Shop rents are expected to bottom-out in the second half of 2017 after having dropped 37% over the past two years.

Still, with concentration of demand coming from mid-range retailers and F&B operators, we expect rents

David Ji

Joseph Tsang

Daniel Shih

of High Street Shops and Prime Shopping Centres to retreat a further 0-5% in 2017.”

Shih notes that retail rents in prime locations should continue to drop in the low-single digit percent range in 2017, given Colliers’ assumption of modestly lower tourist arrivals and spending. They expect that rents will stabilise towards the end of 2017.

Investment Hong Kong’s investment market, meanwhile, has been described as very firm. According to Colliers, the improving economic background in Hong Kong helps explain higher property investment. “Based on data from Real Capital Analytics, total property transactions in Hong Kong grew by 16% y-o-y over the first nine months of 2016, on which basis the territory ranks as the second most urban investment market in the AsiaPacific region,” Shih notes.

Tsang also observes that the investment market for commercial and industrial properties is now at a crossroads. Tsang says although the markets ended the year higher, they face increasing pressure from weakening rental markets and rising interest rates.

Rental market outlook

Source: Colliers International

Capital value outlook

Source: Colliers International

HONG KONG BUSINESS ANNUAL 2017 9

HiRing and salary OUTLOOK

China-based firms to drive hiring in HK A survey reveals that the likelihood of career progression with Chinese employers is at 77%.

H

ong Kong’s labour market will be less active this year compared to recent years, owing to the uncertainties surrounding the global economic and political environment. The changing economic landscape is also affecting employees who are deciding to explore career opportunities outside of their current company and post.

According to Connie Leung, Hong Kong information solutions business leader at Mercer, there are indications of a hiring slowdown as many companies become relatively conservative on business expansion and investment on human capital.

Initial findings from the 2017 Asia Salary and Employment Outlook survey by Michael Page also show that employers across most sectors are expected to adopt a more cautious approach to hiring this year.

Despite this outlook, 35% of employers are still looking to increase headcount over the year

10 HONG KONG BUSINESS ANNUAL 2017

“35% of employers are still looking to increase headcount over the year and more mainland Chinese firms are planning to expand in the city.”

and more mainland Chinese firms are planning to expand in the city, thus potentially increasing the number of jobs available for all. The Michael Page survey indicates that these mainland Chinese firms will primarily be conglomerates, property developers, banks and buy-side firms, including hedge funds and private equity funds.

Employment surveys across Hong Kong indicate a few hiring trends that are clear for 2017: less hiring activity from last year, stable demand for technology professionals and stable salaries across the board, the impact of the mainland connection, and higher demand for contracting and consulting positions.

Cautious headcount increases Over the past few years, hiring and salary trends in Hong Kong have been relatively stable. Mercer’s survey shows that about 20% of companies are still looking to add staff in 2017 and only 6% will reduce

staff. Leung says that other than sales positions which are always hot jobs in the market, experienced paraprofessionals in supply and logistics functions are the most in demand for the coming year.

Adam Johnston, managing director for Robert Half Hong Kong and Japan, says that there will also be continued demand for technology professionals who possess proficient digital and data analytics skills, particularly in the finance and insurance sectors. Due to the competitive nature of techrelated services in these industries, the demand for technology professionals includes demand for project managers and business analysts responsible for the rollout and implementation of new digital products and tools that are constantly developing.

Johnston says the changes in financial regulations in Hong Kong will also increase the demand for finance professionals with specific

HiRing and salary OUTLOOK skillsets, primarily in the areas of risk and compliance. “In addition, International Financial Reporting Standards 4 and 9 recently issued by the Accounting Standards Board will continue to drive demand for compliance professionals in the banking sector, especially in the areas of anti-money laundering and corporate social responsibility,” he says.

The ManpowerGroup Employment Outlook Survey has a slightly different set of results for increased headcount across sectors. According to their survey, the strongest hiring prospects are reported in the services sector, with a net employment outlook of +20%. The results also indicate that employers anticipate steady payroll gains in the mining & construction sector and the finance, insurance & real estate sector, with outlooks of +16% and +15%, respectively.

“The digital and fintech sectors are also bucking the cautious hiring trend, with continued investment in new hires with relatively novel skills such as app development, social media and digital marketing.

Such hires can command up to a 30% salary increment with each job switch,” adds Sharmini Wainwright, managing director of Michael Page and Page Personnel Hong Kong.

Connie Leung

Adam Johnston

Sharmini Wainwright

The China connection Meanwhile, Wainwright expects that the highest levels of hiring will stem from China-based multinational corporations and financial services firms. “Large Chinese banks, asset management and insurance firms will continue to drive much of the growth in Hong Kong’s financial services sector. These organisations are recruiting aggressively to gain Hiring intentions (Comparison by industry)

Source: Mercer

traction in Hong Kong by offering prospective candidates highly attractive compensation packages, with a particularly higher offering on the bonus component,” she says.

Johnston reveals that they are also seeing a preference for candidates with general Chinese language speaking skills, probably also due to the increasing number of mainland Chinese companies in the city.

According to the Michael Page survey, Chinese firms are utilising Hong Kong as a springboard for international recognition and expansion.

This specific trend will definitely increase competition for top talent in 2017, adds the Michael Page survey which shows that the likelihood of career progression with Chinese employers is at 77%, 13 percentage points higher than that with Hong Kong employers at 64%. As for salary increases, Hong Kong employers are more likely to increase salaries by 6 percentage points at 68% compared to Chinese employers at 62%.

Salary woes According to Mercer’s Leung, employers are making up for lacklustre employee compensation increases by developing differentiated employee value propositions that appeal to the different employee segments such as increasing focus on flexibility in workplace and benefits as well as providing more learning and development opportunities for younger generation in the workforce.

Candidates for employment are also expected to be more open to

innovations in their employment schedule, as employers especially throughout the financial services sector are increasing demand for contracting and consulting roles as opposed to the traditional permanent jobs where demand has remained stable, according to Johnston.

Candidates who initially want a permanent job are being led to consider a more flexible arrangement and take on contract and consulting roles.

“Another employment trend many Hong Kong employers are turning to is the use of contract staff as an alternative and flexible talent solution to headcount allowances. About one in two (52%) companies surveyed currently use contract solutions. Of those, one in five are planning to increase their contractor headcount in 2017,” Wainwright says.

Leung says that employees need not fret as most companies still offer salary increases, despite not being the most attractive increases that employees these days are seeing.

According to the Mercer survey, the 2016 salary increase rate is at 3.8% on average and the rate for 2017 will be slightly higher at 3.9%. But there are some companies (about 3.8%) adopting salary freezes in 2016.

In terms of variable bonus, most of the companies in the Mercer survey are providing bonus to their employees, the amount is averaging at around 2 months of salary. In the banking sector, professionals can expect salary increments of up to 5% and bonuses of up to three months’ worth of salary.

HONG KONG BUSINESS ANNUAL 2017 11

ACCOUNTING OUTLOOK

The prospects are positive for accounting

More Hong Kong accountants are needed both locally and in the mainland due to economic integration.

W

ith the signing of the Agreement on Trade in Services over a year ago to apply liberalisation measures for Hong Kong service suppliers and professionals on the mainland from June 2016, much of the effect will continue to be felt in the coming years. Technology has also been cited as changing the way industries, including accounting, function.

Three professionals share their insights on what to expect in Hong Kong’s accounting sector in 2017.

Sunny outlook The prospects for Hong Kong’s accounting industry are positive, according to Clement Chan, managing director, BDO Limited.

“The queue for A shares IPO in mainland China is still long which will push a lot of Chinese companies that need fresh capital for business expansion to come to Hong Kong’s capital market for capital raising,” he

12 HONG KONG BUSINESS ANNUAL 2017

“Hong Kong accountants will continue to benefit from Chinese economic growth.”

says.

However, Chan notes that the recent stronger control over capital outflow from China may see the slowing down of Chinese corporates’ buying spree outside of the East Asian nation. “Therefore we probably will be seeing a slowing down of M & A activities for Chinese corporates,” he says. “However, the continuous growth of the Chinese economy will provide the momentum for the sustained growth of our industry in 2017.”

He also shares that Hong Kong accountants will continue to benefit from Chinese economic growth, with demand for more Hong Kong accountants needed to work both in Hong Kong and China increasing due to the continuous economic integration between the two economies.

In terms of 2016 trends that will persist in the Year of the Rooster, Chan shares that the tendency

for Chinese companies to come to Hong Kong’s capital market to raise capital will continue. This is related to expectations that the Hong Kong Stock Exchange will remain as the most attractive overseas capital market to Chinese companies because of the high liquidity, receptiveness of Chinese companies and market, and the stock connection between Hong Kong stock exchange and mainland exchange, amongst others.

“The biggest challenge is how to further enhance the attractiveness of the Hong Kong capital market to companies in the new economy without compromising its quality,” notes Chan. He says that in the past, there were cases where companies engaged in new economies such as e-commerce chose not to list in Hong Kong because the Hong Kong listing rules are seen to be incapable of accommodating the typical holding structure of these kinds of companies.

ACCOUNTING OUTLOOK “To go forward, the Hong Kong Stock Exchange needs to explore the possibilities of changing the existing rules or launching new boards to cater for these kinds of new economy companies as they are going to be one of the main engines driving the economy forward,” Chan says. The other challenge is how to open up the Chinese market further for the Hong Kong trained accountant, he also adds.

The continuous economic integration between Hong Kong and China, particularly the official connection between the stock exchanges of the two places, excites Chan most in the long run as, he says, it enables Hong Kong listed companies to tap the capital of China, which greatly enhances the capital raising potential of all Hong Kong listed companies.

“In the long run it will increase the attractiveness of Hong Kong’s capital market to overseas companies, particularly the quality Asian companies in our region, which will further establish Hong Kong as one of the most established financial centres in the world,” Chan says.

“Being one of the financial service industries in Hong Kong, this development will likely benefit us in the long run.”

As for the biggest drivers of growth in the accounting industry in 2017, he believes it has to do undoubtedly with industries that are engaged in new economies, such as the telecommunication, media, and technology (TMT) sector. “With the ever changing technology and its impact on our communication, buying habits, and ways of paying debts, among others, these companies will undoubtedly provide the biggest drivers and changes in 2017 and beyond,” Chan says.

More talented professionals wanted Jay Harrison, advisory in audit leader for Deloitte China, expects Hong Kong’s 2017 moderate growth to be driven largely from accounting advisory services. In terms of 2016 trends that he thinks will persist in 2017, Harrison believes the increasing reliance on information technology and data analytics will continue for the foreseeable future and will have a significant impact

on finance functions, auditors, and advisors.

However, he cites quality talent as the biggest challenge that the industry in Hong Kong will face in 2017. “The availability of talented professionals who have deep knowledge of accounting, auditing, and, increasingly, information technology whilst also easily adjusting to new opportunities remains a challenge,” Harrison says.

Another significant challenge is a misconception within organisations and their finance functions that certain new accounting standards are just about financial reporting when in fact they have much broader operational implications, he notes.

When it comes to upcoming developments, though, Harrison says the way that robotics/automation is impacting finance functions, the audit process, and all professional services is very exciting. In addition, he notes the several new accounting standards such as IFRS 9, 15, 16, and 17. “The adoption of these standards provides companies with a real opportunity to look again at how best to run their businesses broadly and how to capture and disseminate financial information more effectively,” says Harrison.

“However, many companies are deferring their analysis of the full impact of adoption. Without proper planning and a rush towards adoption at the last minute, companies run the risk of potentially significant business interruptions.

IFRS 17, in particular, will be a revolutionary step for the insurance industry.”

Harrison adds that he thinks the adoption of the new accounting standards, the increasing use of technology and data, and an emphasis on finance function effectiveness should all be significant drivers of growth and change in 2017.

Additional regional headcount “Over the next 12 months we expect new headcount for regional accounting and finance teams to be added to help companies implement and monitor regional statutory reporting requirements,” says Dean Stallard, regional director, Hays Hong Kong.

He also notes that the steady level

Clement Chan

Jay Harrison

Dean Stallard

of accounting and finance hiring seen in 2016 is likely to continue this year across all industries and sectors at both a regional and local level.

Meanwhile, Stallard also notes that in the banking sector, they expect to see an increase in regulatory reporting positions and strategic finance business partner roles in 2017. “However, organisations want greater flexibility in how they manage headcount, so converting permanent roles into contract positions will continue and even increase,” he says.

The non-banking financial services industry will continue to benefit from an influx of Chinese capital.

A number of strategic acquisitions have already created hiring demand within back and middle office service providers in Hong Kong, and increased demand for Mandarinspeaking professionals, Stallard notes.

Further, candidate demand is likely to follow a number of new acquisitions due to be completed by year-end.

In the insurance sector, he shares, they saw consistent movement of mid to upper tier management talent in 2016 across both life and general insurance. Rising incomes across Southeast Asia and China will also drive up demand for management accounting candidates in the insurance and retail sectors.

“In addition, we expect greater demand for Hong Kong-based regional commercial financial planning analysts from IT and telecom organisations, although both sectors continue to outsource routine accounting functions overseas,” Stallard says. “The market is not as strong for candidates in routine roles as many employers are opting to outsource these roles to shared service centres in other countries.”

Average monthly salaries of selected occupations

Source: Hong Kong Census and Statistics Department

HONG KONG BUSINESS ANNUAL 2017 13

RETAIL OUTLOOK

Strong HK$ to drag retail sector’s growth The rallying HK$ will discourage inbound tourism as travel to Hong Kong becomes more expensive.

A

fter facing a rather weak year in 2016, Hong Kong’s retail sector is expected to narrow its year-on-year sales decline on the back of improved appetite for local and basic goods — but not before hurdling stiff challenges from a variety of overseas and local economic factors that were present in 2016 and may remain in 2017.

The past few years have been less than stellar, if not stagnant, for Hong Kong’s retailers. Giordano, for instance, has seen a restricted revenue trajectory in the last five years. The international fashion company — which boasts of 8,000 staff and 2,300 shops worldwide in over 30 territories worldwide — has failed to significantly grow its earnings beyond the HK$1 million mark in Taiwan and Hong Kong, according to data from Giordano International Ltd and BMI Research. Seen as the culprit here are Hong Kong’s weak tourism inflows, depressing the company’s

14 HONG KONG BUSINESS ANNUAL 2017

“For 2017, analysts will be watching out for two data points that could be key to Hong Kong’s retail sector growth: sales volume and tourist arrivals from China.”

revenue growth.

“Hong Kong hosts a large number of global fashion retailers, across the spectrum from mass market fast fashion to high-end designer labels. However, the segment has been suffering on the back of the Chinese economic slowdown, which is reducing the number of highspending Chinese tourists visiting the Special Administrative Region (SAR),” BMI Research says, with Hong Kong’s Census and Statistics Department noting that retail sales in the clothing and footwear category dropped by 5.9% YoY in April 2016 and 5.8% YoY in May 2016 in value terms. For most of 2016, Hong Kong’s retail sector retail appears to have only notched muted growth in terms of sales volume and rents.

Tourists, which comprise a critical bulk of Hong Kong’s shoppers, were not too eager to spend in 2016. BMI Research noted that according to the Hong Kong Trade Development

Council, total tourist arrivals fell by 8.8% y-o-y for January to April. For mainland China alone, tourist arrivals decreased by a larger 12.6% y-o-y, reflecting weak consumer sentiment from abroad.

For 2017, analysts will be watching out for two data points that could be key to Hong Kong’s retail sector growth: sales volume and tourist arrivals from China. Alicia Garcia Herrero, Natixis chief economist for Asia-Pacific remains on the cautious side, seeing economic headwinds taking their toll on the sector.

Strong HK$’s effect on tourism “The sector would be continually dragged by strong HK$ and weakening growth in China (2017 GDP: 6.6%),” Herrero predicts, specifically by a slowdown in spending on “mainland Chinarelated” items such as cosmetics, jewelry, clocks, and watches, coupled with durable goods that require fuel

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Joe Lin

Alicia Garcia Herrero

such as motor vehicles.

As a result, tourist arrivals are not expected to pick up or even stabilise in 2017 because of the rallying HK$.

“The strong HK$ will discourage inbound tourism as travel to Hong Kong becomes more expensive,” says David Ji, Greater China Research Head at Knight Frank.

“Hong Kong should appear less attractive to Chinese tourists, not only because of the reasons above, but local attractions have started to lose their uniqueness. For example, there is a new Disneyland in Shanghai, and even Hong Kong Ocean Park recorded the first deficit since 2003. With Chinese tourists representing more than 70% of arrivals and taking up more than 30% of retail sales, tourist number would likely go south further,” Herrero says.

Nevertheless, the overall picture for Hong Kong’s retail sector seems to be looking bright, with most challenges already overcome or, at the least, beatable. Herrero is the first to concede: “With a favorable base effect, we expect contraction to be relatively mild compared with 2016.”

The woes of 2016 may have already been factored in — giving 2017 a boost. “The retail sector is expected to see a notable sign of improvement next year in 2017, as all negative factors have been reflected in 2016,” explains Ji. Even for tourist arrivals, the general view continues to be positive in the longterm. “In the near future, growth in the industry will not duplicate the

record of the last several decades, but the long-term outlook remains very positive,” BMI Research says.

Resilient growth for 2017 “Looking ahead, we expect retail sales growth to remain resilient in the near term, partly helped by an easier base in 4Q2016. In our view, local consumption growth will remain robust amid stable labour market conditions,” says Sylvia Sheng, economist at BofA Merrill Lynch Global Research, noting that latest data for October shows better-thanexpected results — a good sign for 2017. For the month of October alone, retail sales volume dropped by a 2.7% y-o-y following a 3.8% y-o-y decline the previous month (versus a market consensus of -4.7%), while in value terms, October retail sales growth fell by 2.9% versus 4.0% (versus a market consensus of -5.2%).

“The narrowing of the retail sales contraction was mainly driven by improvement in tourist spending, while local spending remained relatively stable,” Sheng explains.

Come 2017, more affluent retail brands are expected to suffer amidst the slowdown in tourist arrivals.

“We expect luxury retailers to be hit the hardest as Chinese consumers account for a large proportion of luxury sales in the SAR,” says BMI Research. Ji agrees: “Fast fashion and luxury wears will continue to drag sales values in Hong Kong, as international brands continue to expand their sales network in China via both brick & mortar and

David Ji

ecommerce platform.”

Joe Lin, executive director, advisory & transaction services – retail at CBRE Hong Kong, is more measured: “Although we are seeing most luxury retailers change their strategies to deal with the down-trending retail climate, it may be too early to comment on their sales values,” he said.

Nevertheless, any slack is expected to be picked up by basic goods, where demand is likely to be robust. “With Hong Kong’s economy still stagnant, we believe more consumption will be allotted to basic necessities from luxurious goods. In particular, sales value generated by supermarkets/ basic food has been steadily expanding over years,” according to Herrero. Ji also says food and beverage, sportswear, and other lifestyle segments are expected to be strong in 2017.

The rise of online For 2017, Hong Kong retailers are seen to ramp up innovations to make their businesses more competitive, and this includes exploring and taking advantage of online technology. “Products which can be consumed through digital channels are already leaving the market or changing their operation mode, e.g. music, films, books, magazines, newspapers,” says Lin, who describes online shopping as an area whose impact is “underestimated.”

“We believe more retailers would try to foster better shopping/customer experiences that should include more elements of technology (linkage to social websites) and better in-store customer service as travelers (usually mainland visitors) are looking for other non-price competition amongst retailers,” Herrero says.

Tourist arrivals & international tourism receipts

Source: National sources, BMI

HONG KONG BUSINESS ANNUAL 2017 15

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carried and the volume of cargo and mail uplifted compared to December 2014.

Cathay Pacific and Dragonair carried a total of 2,933,382 passengers in December 2015 – an increase of 5.8%.

Daily news: www.hongkongbusiness.hk

HOTELS & TOURISM

Hong Kongers spending the most amongst Asian travellers this CNY

COMMERCIAL PROPERTY

APAC investors to inject US$240b into world property markets by 2020

RESIDENTIAL PROPERTY

HK faces 25% residential price correction in three years

The combination of the slowing economic growth in China and Hong Kong, potentially rising HK$ interest rates, increasing new home completions, and the prospect of a weaker labour market has led to expectations that the HK residential property market will weaken. Credit Suisse forecast prices to drop 15%/5%/5% in 2016/2017/2018.

Asia Pacific institutional investors, including those from Hong Kong, are expected to pump an additional US$240b into the world property markets by 2020. According to CBRE, the total allocation of APAC investors into global real estate is expected to reach US$500b. In 2015, the Hong Kong Government announced plans to establish the Hong Kong Future Fund to invest in high return assets.

Based on data from Q3 to Q4

by Morgan McKinley, there was a 12% decrease in jobs on offer and an increase of 12% for professionals, much in line with what is expected during the end of the year.

In Asia, Hong Kong tends to be the most correlated with international markets such as the UK and the USA. 16 HONG KONG BUSINESS ANNUAL 2017

Foodpanda collaborates with OpenRice Hong Kong

Food delivery platform Foodpanda has partnered with OpenRice Hong Kong, a comprehensive platform for sharing dining experiences.

Foodpanda says the crossplatform collaboration will enable users to order directly from Foodpanda’s partnered restaurants via OpenRice’s app or mobile-friendly website.

Over 50% of HK bosses shifted to flexible staffing

HK still amongst Chinese tourists’ top travel spots

Jobs offers in Hong Kong dropped by 12%

FOOD & BEVERAGE

Travel search site Wego. com has shared insights into the higher budgets of Asian travellers who celebrate Chinese New Year. The average booking values for both flights and hotels on Wego.com is much higher this year, compared to 2015, an indication that travellers have allowed a higher budget allocation for travel during the Chinese New Year period.

HR & EDUCATION

HOTELS & TOURISM

HR & EDUCATION

ecosystem has received a $4.5b boost, with a multipronged commitment to foster innovation and entrepreneurship. According to a story from HKTDC, in his 2016 Policy Address announced in January, Hong Kong Chief Executive CY Leung unveiled a $2b Innovation & Technology Venture Fund.

Recent analyses of the Chinese market from market research firm GfK show that China produced 109m outbound tourists in 2015 – with retail spend of US$229b. China is one of the top global sources of tourists, in terms of number of trips and money spent.

In 2015 54% of employers in Hong Kong used flexible staffing arrangements, with temporary and contract staff the most popular option. The 2016 Hays Asia Salary Guide, based on a survey of over 3,000 employers representing more than 6m employees, shows 18% of organisations in Hong Kong plan to increase their use of temporary and contract staff this year.

AVIATION

Cathay Pacific’s carried passengers soar by 5.8% in December 2015

Cathay Pacific Airways has released combined Cathay Pacific and Dragonair traffic figures that show an increase in the number of passengers

INFORMATION TECHNOLOGY

HK startup ecosystem funneled with $4.5b

Hong Kong’s startup

ECONOMY

These 2 forces will impact HK’s economy big time

A report that analysed two external forces – a plunge in crude oil prices and an increase in financial market volatility – has noted that these will probably pull in different directions in terms of their impact to the economy. Hang Seng Bank says, if mainly due to supply factors, the oil price decline would be generally good news for Hong Kong and the mainland. However there appears to be the emergence of demand-side factors that are pushing down on crude oil prices, reducing the positive impact that lower oil prices might have. Meanwhile surging global financial market volatility would likely dampen business investment and consumer spending sentiment.

TOP NEWS IN 2016

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Daily news: www.hongkongbusiness.hk that technology has a major impact on their job.

FOOD & BEVERAGE

Foodpanda buys HK business of delivery.com

RETAIL

HK retail sales contracting for almost a year now

Hong Kong retail sales growth improved modestly mainly helped by seasonal distortions stemming from an early Lunar New Year this year. Bank of America Merrill Lynch says retail sales volume dropped by 5.2% yoy in January, after declining 6.1% yoy in December (vs. market consensus of -5.1% yoy). In value terms, January retail sales growth was at -6.5% yoy vs.

-8.5% yoy in December.

Online food delivery company Foodpanda has acquired delivery.com Hong Kong’s business. With the goal to consolidate its market leading position, the company has also acquired and integrated other local food delivery players.

properties which remain to be disposed from real estate funds. Only 3% of these assets are located in Hong Kong, which are mainly commercial and hospitality assets located on the fringes of Hong Kong Island.

HR & EDUCATION

Asian employers fear negative impact of skills shortages

A massive 96% of employers in Asia believe skills shortages have the potential to impact the effective operation of their business or department this year. According to Hays, 34% believe they don’t have the talent they need right now to meet business objectives.

AVIATION

HK Express launches reward-U loyalty programme

ECONOMY

Digital economy capable of adding US$1t to ASEAN GDP in next decade

The growth of the Digital Economy could add US$1t to the GDP of the Association of Southeast Asian Nations (ASEAN) bloc over the next 10 years, according to a report

by A.T. Kearney and Axiata Group Berhad (Axiata).

Low-fare airline HK Express’ “reward-U” loyalty programme has features such as allowing users to redeem points for any available seat with no blackout dates, the ability to have a Friends & Family account, and a straightforward system that makes it easy to earn and redeem rewards.

3 out of 10 Hong Kongers don’t believe in major impact of technology on their jobs

Hong Kong employees are skeptical of technology use in the workplace, based on Randstad Hong Kong’s Q1 Workmonitor research.

Coming second last in Asia is Hong Kong, where only seven in 10 (71%) employees see

Robust IPO market ahead

Based on the latest analysis of the new share markets of Hong Kong and the Chinese mainland by the National Public Offering Group of Deloitte China, stock exchanges from Hong Kong, Shenzhen, and Shanghai overtook that of New York to be amongst the top five initial public offering (IPO) bourses based on the proceeds raised in the first three months of 2016. Whilst Hong Kong is likely to move further ahead, bourses in Shenzhen and Shanghai are expected to see slower activity as compared to the same period last year.

Retail industry turn to bringing “art” into malls

Only 3% of remaining APACfocussed private equity real estate funds are in HK

Asia Pacific-focussed private equity real estate funds disposed 310 assets, totalling US$25.5b in 2015 – 37% higher than the five-year average of US$18.7b. According to a research note from CBRE, amongst the remaining assets for sale, there are 430

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17,106. With potential buyers expecting increasing supply and a further drop in prices, residential sales are expected to fall to 50,000 units this year.

RESIDENTIAL PROPERTY

Residential sales volume bounce back 45% to 17,106

Data from the Land Registry in March show that residential sales volume rebounded 45% month on month from the lowest level in 25 years, to

It has been noted that amidst deteriorating visitor number and retail sales, Hong Kong’s retail industry is seeking new elements and new angles to rebalance business. According to a research note from Knight Frank, the art atmosphere has been well-cultivated in the city, particularly in the SoHo and NoHo neighbourhoods.

Meanwhile, landlords are also bringing elements of art into their malls.

HONG KONG BUSINESS ANNUAL 2017 17

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from CBRE, there were just eight deals in the office sector and seven involving retail properties. The expiry of the industrial revitalisation scheme at the end of March prompted less interest in the sector.

Daily news: www.hongkongbusiness.hk HEALTHCARE

Insurance firms are dead set to boost hiring of medically experienced professionals

HR & EDUCATION

Hong Kongers want bosses with excellent communication abilities

A Regus survey into the key traits that make a successful business leader has revealed that honesty and the ability to communicate with others are the must-haves. Almost 40,000 business people globally, including 294 Hong Kong professionals, rated a variety of qualities to help sketch out the portrait of a good leader.

Insurance companies in Hong Kong are set to increase hiring of experienced professionals in medical operations as they vie for a bigger share of the buoyant health insurance market. According to Hays, headcount growth in the insurance sector will remain stable as companies move into the second quarter. An increasing number of merger and acquisition deals are also creating new opportunities.

Total retail sales in March recorded a 9.8% yoy drop, bringing a 12.5% yoy slash for Q1 2016. According to CBRE, the double-digit decline was the steepest first quarter drop since 1999 (-13.7% yoy in Q1 1999), when Hong Kong was still in the aftermath of the Asian Financial Crisis. Tourist arrivals continued to decline in Q1 2016, down 11% yoy.

18 HONG KONG BUSINESS ANNUAL 2017

Hong Kong’s economy grew a measly 0.8% in Q1 2016 HR & EDUCATION

Are Hong Kong employers addressing talent wishes?

Changing employee demands have remained largely unmet

by Hong Kong employers.

According to recruitment firm Randstad, Hong Kong employers lagged behind those in Singapore and Malaysia.

Randstad compared the attractiveness factors valued by talent versus the key attributes companies scored well in.

The latest GDP print indicates that Hong Kong’s economy grew at its slowest pace since mid-2012, as GDP growth eased to 0.8% yoy over Q1 2016. In fact, in sequential terms, the economy actually shrunk by 0.4% qoq, the first sequential contraction since 2014. According to a research note from HSBC Global Research, subdued global demand has been weighing heavily on Hong Kong’s trade performance, with both exports and imports registering sharp contractions.

CIOs increasingly getting seats at the C-level table

Over half of SMEs say economic improvement is at least a year away

March retail sales down 9.8%

ECONOMY

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appealing destinations for luxury retailers to set up shop, says a report from real estate consultant JLL. The Destination Retail 2016 report reveals that the region boasts seven of the top ten cities with the highest presence of luxury retailers.

According to a release from JLL, the research, which for the first time provides a global ranking of cities by their appeal to cross-border retailers, reveals that Hong Kong is second only to London in popularity.

Sentiment amongst small and medium-size enterprises (SMEs) in Hong Kong fell to another a record low for Q2 2016. The Hong Kong SME Leading Business Index (SME Index) deteriorated to 40.4 in Q2 2016 from 42.8 in Q1 2016.

The roles of CIOs are increasingly being given more importance in Hong Kong.

James O’Callaghan, Partner, KPMG China, says, “With the emergence of the CDO, and the repositioning of roles between technology, data and digital we see the Hong Kong market as a leading incubator for much of the digital and fintech capability and talent in the region.”

MARKETS & INVESTING

Investment market records drop in number of transactions in Q1 2016

In the investment market of Hong Kong, the number of transactions fell significantly across all sectors in Q1 2016.

According to a research note

RETAIL

Luxury retailers eye Asian cities for expansion plans

Asia Pacific cities are the most

COMMERCIAL PROPERTY

Five consecutive floors of Kowloon Commerce Centre Tower B up for grabs

Colliers International has been appointed as the sole agent by order of the owner to sell the whole floor of 18/F-22/F, Tower B of Kowloon Commerce Centre (KCC) with 25 car parking spaces. Willis Mak, senior director of Capital Markets and Investment Services of Colliers International Hong Kong, says KCC is one of the best office buildings in Kwai Chung, Tsuen Wan, and New Territories in terms of quality and building specifications.

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Daily news: www.hongkongbusiness.hk profits, hiring has slowed, and stock trading is in a slump.

ECONOMY

Positive growth projected in 2017 for Asia export values

RETAIL

Chow Tai Fook eyes closing 7-8 stores in Hong Kong

It has been noted that Chow Tai Fook delivered poor FY16 results. The operating environment is unlikely to improve meaningfully in the near term, but product mix change and cost-saving measures could mildly ease margin pressure. According to a research note from Jefferies, with higher Capex budget and stable inventory level guided, they believe the likelihood of further special dividend is low.

Asia’s export values look set to return to positive growth in 2017. According to a research note from Standard Chartered, Asia’s export volume growth was more resilient than value growth in a weak global trade environment.

and Dragonair carried a total of 2,870,943 passengers last month – an increase of 2.1% compared to June 2015.

ECONOMY

Hong Kong hailed as world’s most competitive economy

Hong Kong has been crowned the world’s most competitive economy, unseating the three-year incumbent United States, says the Institute for Management Development (IMD) World Competitiveness Centre, a research group of Swiss-based IMD business school. Professor Arturo Bris, the Centre’s Director, notes Hong Kong’s resilience to the Chinese mainland’s slowdown got it over the line this year.

HR & EDUCATION

Chinese businesses to spur recruitment in Hong Kong

RETAIL

Will Hong Kong’s property firms survive the retail market’s downtime?

Property companies rated

by Moody’s with meaningful revenue exposure to Hong Kong’s retail market will maintain their credit quality and ratings despite the pressures resulting from muted domestic GDP growth rates.

The banking boom days are officially over in Hong Kong

Asia’s two top financial hubs are facing a rapid growth decelaration with China’s slowdown and the continuing shrinkage of the financial industry striking both Singapore and Hong Kong.

Bloomberg reports banks are finding it harder to grow

Planning at banks will soon be spurred

Hong Kong has passed legislation establishing a resolution regime for its financial institutions, and banks are therefore likely to step up their work on recovery and resolutions plans. According to a release from Fitch Ratings, the new law closes the gap between Hong Kong’s limited power to intervene in financial institutions and the Financial Stability Board’s key attributes for effective resolution regimes.

TELECOM & INTERNET

HKBN scores approval to offer mobile virtual network operator services

Our performance has been below expectations: Cathay Pacific’s CEO

Cathay Pacific Airways released combined Cathay Pacific and Dragonair traffic figures for June 2016 that show an increase in both the number of passengers carried and the amount of cargo and mail uplifted compared to the same month last year. Cathay Pacific

FINANCIAL SERVICES

A rising demand for banking and e-commerce professionals from Chinese businesses will become a new driving force for recruitment in Hong Kong, fuelling competition for capable talent. This is one key finding from the Hays Quarterly Report for the July to September quarter.

AVIATION FINANCIAL SERVICES

fewer big-fish transactions.

Research firm CBRE says total investment turnover has fallen by 52%. Transaction volume has remained at $32.7b.

COMMERCIAL PROPERTY

HK’s property investment plummets by 52%

The expectation gap between buyers and vendors in the commercial real estate investment market has been widening, and this has led to

The Office of the Communications Authority has licensed fibre broadband service provider Hong Kong Broadband Network to offer mobile virtual network operator services. The expanded scope of its ServicesBased Operator Licence allows HKBN to offer mobile telecom services by making use of the radio communications infrastructure of mobile network operators, and to sell mobile handsets and devices.

HONG KONG BUSINESS ANNUAL 2017 19

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

The survey looked at five categories including corporate governance culture.

Daily news: www.hongkongbusiness.hk

RETAIL

Shoppers will splurge more on brands with loyalty programmes: survey

COMMERCIAL PROPERTY

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

HOTELS & TOURISM

Mainland visitors to HK down by 10.6% to 20.4m

In the first half of 2016, it has been noted that Hong Kong welcomed 20.4m mainland visitors, down 10.6% year-onyear. According to a research note from Knight Frank, mainland visitors also reduced their spending in Hong Kong whilst increasing it abroad.

However factors driving away tourists from other areas could benefit Hong Kong.

In the luxury residential market, it has been noted that in the short term, curbing measures are expected to remain in the mainland’s first-tier cities. Meanwhile, according to Knight Frank, the Shenzhen-Hong Kong Stock Connect is set to shore up the office letting market in Hong Kong. The territory’s retail market, on the other hand, is expected to bottom out in early 2017.

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

Morgan McKinley says hiring managers should be more collaborative. Lack of feedback from hiring managers and complaints that the role did not match the job description were a common theme.

20 HONG KONG BUSINESS ANNUAL 2017

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

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

Cathay Pacific braces itself for “loss-making” 2017

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

Why Hong Kong employers risk losing millennial talent

ECONOMY

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

AVIATION

ECONOMY

HR & EDUCATION

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

Analysts agree that Hong Kong has indeed stabilised but only due to the territory’s pacified headwinds. UBS says headwinds are not reversing and turning into boons, calling into questions how far the ongoing improvement will go.

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

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

MARKETS & INVESTING

Singapore knocks Hong Kong off top spot in corporate governance ranking

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

HR & EDUCATION

Over 7 in 10 HK youth eye starting their own businesses

It has been noted that, fuelled

HOTEL & TOURISM

Hong Kong must expand tourism infrastructure: CLSA

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

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

RETAIL

September retail sales values beat market expectations

FINANCIAL SERVICES

HK ranks fifth among fintech hubs worldwide

It has been noted that the global top five fintech hubs in 2016 are London, Singapore, New York, Silicon Valley, and Hong Kong. According to a release from Deloitte, based on its report Connecting Global FinTech: Hub Review 2016, Hong Kong ranks fifth and Singapore has moved up to second place, overtaking New York. South Korea comes sixth right after Hong Kong, and Shanghai is in 11th place.

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

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

HR & EDUCATION

Why Hong Kongers enjoy work-life balance less than Singaporeans

A Compass Index survey revealed that Singaporeans enjoy more of a work-life balance than those working in Hong Kong. Singaporeans take work home less than employees in Hong Kong, and they also work shorter hours.

RETAIL

Sales of luxury goods plunged 19.7%

ECONOMY

HK as ‘parking lot’ can capture mainland investments

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

Uninspiring leadership generating ‘culture of unhappiness’ in Hong Kong

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

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

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

ECONOMY

Hong Kongers fear that competitiveness will dwindle in the region

Government jacks up residential Stamp Duty to 15%

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

RESIDENTIAL PROPERTY

According to JLL, arrivals from mainland China are on track to drop for the second consecutive year after decreasing by 8.2% yoy in the first ten months of 2016 and 3% in 2015. Mainland visitors utilising the Individual Visit Scheme (IVS) was down 15.6% yoy over the same period.

RESIDENTIAL PROPERTY HR & EDUCATION

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

SHIPPING & MARINE

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

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

Professional accounting body CPA Australia encourages the SAR government to provide even greater support to spur businesses and entrepreneurs to undertake innovation in Hong Kong. The recommendation follows the release of economic sentiment survey data that reveals strong support for the government to take further action to ensure Hong Kong’s position as one of the world’s best places to do business is maintained.

HONG KONG BUSINESS ANNUAL 2017 21

company and industry - architecture industry

Architects are drawing up a green Hong Kong Ongoing awareness of environmental protection is leading to an increasing demand for green buildings in Hong Kong.

A

rchitects perform a diversity of functions which can be broadly grouped under three categories, namely planning, design, and development.

At the outset, a design plan is required to set up the project, commonly referred to as a master plan or concept design. It is the initial creative part of the assignment.

Once a master plan or concept design has been devised, detailed design drawings are prepared for submission to the necessary government departments for approval.

Construction drawings and specifications are then prepared for construction purposes.

Knowledge of local rules and regulations is important in this stage.

The development stage is primarily associated with the supervision of construction work. It is usually the longest and most involved part of the project. Hong Kong’s architectural firms are renowned for their project management expertise, giving assurance to effective control over quality, cost and project time.

All practitioners have to register with the Hong Kong Institute of Architects (HKIA).

Currently, the HKIA has more than 4,000 members. Most of the architect firms in Hong Kong are locally owned. Attracted by the business opportunities in the region, a number of foreign architects have come to work in Hong Kong.

Many overseas projects for Hong Kong architects are assigned by Hong Kongbased companies investing overseas, and the Chinese mainland is the largest export market for Hong Kong's architectural services. In recent years, the construction markets in Middle East and Southeast Asia have attracted Hong Kong architects as well. Well-known architectural firms, such as P&T and Aedas, have established offices in Thailand, Singapore and the United Arab Emirates (UAE), participating in both residential and commercial projects.

Hong Kong's exports of architectural, engineering, scientific and other technical services increased by 7.7% to HK$4,107 million in 2014. Since the ten major infrastructure projects were announced in 2007, the local demand for architectural services has shown signs of increase. In

“A lot of opportunities are being brought to Hong Kong architects and construction engineers.” addition, with the government undertaking revitalisation of heritage sites, a lot of opportunities are being brought to Hong Kong architects and construction engineers.

For example, for the conversion project of the Murray Building in Central, the government rezoned the site and annotated it as “Building with Architectural Merits Preserved for Hotel Use”.

In November 2013, the tender was awarded to a Hong Kong-based real estate company to convert the building into a luxury hotel. In June 2015, three projects under the Revitalising Historic Buildings Through Partnership Scheme were selected for revitalisation (RHBTPS), namely, No. 12 School Street in Tai Hang, the Old Dairy Farm Senior Staff Quarters in Pokfulam and the Lady Ho Tung Welfare Centre in Sheung Shui. Furthermore, the Hong Kong government announced in 2016 to introduce a built heritage fund of HK$500 million fund to finance the RHBTPS and for privatelyowned graded historic buildings under the Financial Assistance for Maintenance Scheme.

In the 2016-2017 Budget, the government reiterated its commitment to infrastructure investment. Major projects currently underway include the Kai Tak Development (KTD), the Hong Kong-Zhuhai-Macau Main Bridge, the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, the West Kowloon Cultural District and the expansion of road and railway networks. In addition, to increase the land supply for commercial and residential uses, the government is planning new development areas, including the Hong Kong-Zhuhai-Macau Bridge Hong Kong Boundary Crossing Facilities (HKBCF) and the airport's North Commercial District, as part of the plan to develop the Lantau Island with retail, tourism facilities and supporting infrastructure.

Urbanisation in China drives up demand for architectural services In the 2014-20 urbanisation plan announced in March 2014, the Chinese government aims to increase the urbanisation rate from 53.7% in 2013 to 60% by 2020, with approximately 100 million people expected to move from the rural areas into cities. To accommodate the rural-urban migration, massive infrastructure development will continue in the coming years. In addition,

22 HONG KONG BUSINESS ANNUAL 2017

architecture industry - company and industry Industry Data March 2016

Establishments

Architectural, surveying and engineering services related to real state and construction

2,266

Employment 27,529

Hong Kong's Export of Architectural, Engineering, Scientific and other Technical Services Hong Kong's export of Architectural, engineering, scientific and other technical services (HK$ million) Share of total services exports (%) Change(% YoY)

2012

2013

2014

3,946

3,815

4,107

0.5

0.5

0.5

+5.8

-3.3

+7.7

SOURCE - Hong Kong Trade in Services and Statistics 2014 Edition, Census and Statistics department

the continuous development of small- and medium-sized cities in China will strengthen the economic hinterland of larger cities. The broader urbanization will further spur demand for housing, hotels and office buildings in both larger cities and their satellite cities. It is expected that such infrastructure expansion, which covers housing, rural infrastructure and transport infrastructure, will bring enormous opportunities to Hong Kong architectural firms.

Hong Kong architectural firms in the mainland market Hong Kong architectural firms started entering the Chinese mainland market in the late 1970s. Hong Kong architects, who excel at projects requiring advanced technical requirements and complexity, have been involved in designing landmark buildings and multipurpose complexes in major cities. They have also drawn up the blueprints for upmarket residential developments as well as “green” buildings in smaller cities.

The common practice of Hong Kong architectural firms entering the mainland market is to cooperate with local design institutes. The mainland design institutes assist the Hong Kong partners in understanding and complying with the planning and building approval processes.

On the other hand, Hong Kong architects provide input on advanced building design and technology. Hong Kong architects also have expertise in contract management and preparing tender documentations in accordance to international practices.

There were 369 Hong Kong, Macau, or Taiwan-funded construction service enterprises operating on the Chinese mainland as at the end of 2014 (with 154,400 employees), of which 78 were wholly owned. In addition, there were another 261 foreign-invested construction enterprises operating on the mainland (with 86,300 employees), and 81 of them were wholly owned.

To provide architectural, engineering, urban planning and landscape architectural services on the mainland, Hong Kong companies are allowed to set up joint-venture or wholly owned operations. In this regard, Hong Kong funded companies have to comply with the capital and other requirements (for details please see CEPA section below).

Green building boom Ongoing awareness of environmental protection leads to an increasing demand for green buildings in Hong Kong.

For example, the Buildings Energy Efficiency Ordinance enacted in 2010 specifies

"The Hong Kong Green Building Council launched Building Environmental Assessment Method Professional programme in 2010 to provide industry professionals trainings on green building."

the energy efficiency design standards for four types of building services installations, and requires certain buildings to conduct energy audits. With the new legislation taking full effect since 2012, there will be more business opportunities for related professional services.

On the other hand, the Hong Kong Green Building Council launched Building Environmental Assessment Method Professional (BEAM Pro) programme in 2010 to provide industry professionals trainings on green building. As at August 2016, more than 1,400 practitioners were accredited as BEAM Professionals and about 270 of them were from the architecture sector.

Apart from Hong Kong, the Chinese mainland and other emerging countries are also going green. In 2013, the Chinese government issued the Action Plan for Green Buildings, aiming to promote sustainable development in the country’s urbanisation process.

The Plan’s main objectives included enforcing mandatory energy saving standard on new buildings in urban areas and constructing green buildings of one billion sqm by end-2015, with 20% of the new buildings in urban areas to meet the green standard. In the UAE, the Masdar City in Abu Dhabi aims to be a carbon-free city, relying on renewable energy sources.

HONG KONG BUSINESS ANNUAL 2017 23

company and industry - audio-visual equipment industry

The future is clear for Hong Kong’s AV industry Hong Kong was the world’s second largest exporter of video recording/ reproducing apparatus in value terms in 2014.

H

ong Kong exports a wide range of audio-visual (AV) equipment.

According to the latest available statistics, Hong Kong was the world’s second largest exporter of video recording/ reproducing apparatus, the world’s third largest exporter of sound recording apparatus and the world’s fourth largest exporter of video cameras (including digital cameras) in value terms in 2014.

The largest export item is parts and accessories, including parts and accessories for recorders, radios, microphones and speakers. Meanwhile, exports of finished items are mainly for domestic use.

Major items include digital cameras and camcorders, headphones/earphones and microphones, as well as video recorders/ players like the Blu-ray disc players. Other items like digital radios and car radios, hi-fi equipment and large-screen TV sets are also among Hong Kong’s exports.

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.

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 AV equipment decreased 14% in the first half of 2016. Exports of major items like parts and accessories and TV cameras/digital cameras declined in the period. The Chinese mainland is Hong Kong’s largest export market, absorbing over half of the total

"Hong Kong companies are attentive to the growing popularity of green consumerism in the marketplace."

AV equipment exports. In the first half of 2016, exports to the mainland, of which the majority were parts and accessories for processing production, decreased 13%.

Exports to the US and the EU were also lacklustre.

Distribution channels Hong Kong is a popular sourcing centre for high-end AV products. Notably, most Hong Kong companies produce for reputable American, European and Japanese brand owners. A number of overseas buyers have also set up offices in Hong Kong for direct sourcing in the region.

In view of intensified competition, especially those related to OEM production, Hong Kong companies have enhanced their value-added and put more focus on ODM business, rendering increased value-added services to overseas customers. The most important attribute of their success is their product design and development capability, while knowledge of world product trends and consumer preferences in different markets is also their edge.

There are also a number of large Hong Kong companies marketing AV equipment under their own brand names, while smaller companies also sell their brand products to smaller importers and distributors in overseas market. Their sales network covers not the advanced countries, but also emerging economies like Latin America and Eastern Europe. Promotion via participation in trade fairs is an effective way for Hong Kong companies of AV equipment to explore market opportunities. Important trade fairs include the CES Show held in the US, CeBIT Fair in Germany and the Hong Kong Electronics Fair organised by the Hong Kong Trade Development Council (HKTDC). Business missions organised by the HKTDC to the Chinese mainland and other emerging markets also provide opportunities for Hong Kong companies to establish connections with potential 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

24 HONG KONG BUSINESS ANNUAL 2017

audio-visual equipment industry - company and industry Performance of Hong Kong’s Exports of AV Equipment ^ 2014 HK$Mn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

Total Exports by Major Market

2015 HK$Mn. Growth %

Jan-June 2016 HK$Mn. Growth %

504

-10

492

-2

163

-36

178,295

-11

171,847

-4

70,992

-13

136,320

-13

132,142

-3

54,695

-13

178,799

-11

172,339

-4

71,156

-14

2014 Share % Growth %

2015 Share % Growth %

Jan-June 2016 Share % Growth %

Chinese mainland

57

-11

58

-2

58

-13

EU

9

-9

9

-4

8

-13

Netherlands

2

-12

2

-13

2

-18

Hungary

2

*

2

+4

2

-3

10

+3

11

+2

10

-19

US Japan

6

-21

5

-10

6

-4

ASEAN

6

-19

6

-2

7

*

Total Exports by Categories

2014 Share % Growth %

2015 Share % Growth %

Jan-June 2016 Share % Growth %

Part and Accessories

62

-9

62

-5

63

-12

TV Cameras and Digital Cameras

10

-20

11

+3

9

-29

Headphones, earphones and microphones

7

-8

7

*

7

-13

Audio/video recorders and players

4

-23

3

-19

3

-12

TV receivers

4

-21

4

-18

4

-14

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

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

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. With regard to electromagnetic compatibility (EMC), Hong Kong companies can well observe that products sold to the US require compliance with FCC standard, while EU’s CE-mark has also required the compliance with relevant EMC directives. As for sales in the China market, most electronic products have to be in compliance with the safety and other requirements of a unified compulsory product certification system known as 3C (China Compulsory Certification or CCC).

Green consumerism 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

"Hong Kong is a popular sourcing centre for high-end AV products."

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).

The Chinese mainland has adopted similar environmental protection regulations. These include the already effective Management Methods on Prevention and Control of Pollution Caused by Electronic Information Products and the Management Methods on Prevention of Waste Electronic Equipment Pollution on Environment. The regulation on recycling and treatment of waste electrical and electronic equipment has also come into effect since 1 January 2011.

Amid the growing popularity of Internet of Things (IoT) application and the increasing availability of various kinds of smart gadgets, more consumers recognise the importance of smart consumer electronics.

HONG KONG BUSINESS ANNUAL 2017 25

company and industry - banking industry

HK banks are cashing in on economic partnerships With lower barriers set for Hong Kong banks entering the mainland market, Hong Kong’s banking sector benefits greatly under CEPA.

T

he banking system in Hong Kong is characterized 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 2015, there were 157 licensed banks, 24 restricted licence banks and 18 deposit-taking companies.

There were also 64 representative offices of overseas banks. Banks are among the most important channels for fund-raising in the region. 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

26 HONG KONG BUSINESS ANNUAL 2017

Fintech hub in Asia amid 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 2015, Hong Kong ranked third in the financial centre league after New York and London. Since releasing the first semi-annual results in March 2007, GFCI has consistently ranked Hong Kong as the top international financial centre in Asia, ahead of Singapore and Tokyo.

Renminbi businesses in Hong Kong 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,

"The easing of restrictions under CEPA benefits not only Hong Kong newcomers to the mainland market." 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 among foreign traders doing business with China. In 2014, around 22% of Chinese external trade was settled in RMB, up from 15% in 2013, 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 fifth mostused payment currency as of October 2015 (trailing the US dollar, Euro, British pound and Japanese yen), with Hong Kong being the leading offshore RMB hub that handles about 70% of global payment in RMB. In 2014, RMB trade settlement handled by banks in Hong Kong amounted to RMB6.3 trillion, a year-on-year (YOY) growth of more than 60% over the year-earlier period.

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 third quarter of 2015, the trade settlement amount increased by 27.4% YOY to RMB2.05 trillion.

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, while 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.

banking industry - company and industry Industry Data ^ Number of authorised institutions - December 2015 Licensed Banks

157

Restricted licensed banks

24

Deposit-taking companies

18

Representative offices of foreign banks

64

TOTAL Employment - end September 2015

102,945

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

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, among 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 Chinese-foreign joint venture bank in China. The minimum registered capital for a wholly foreign-funded bank or a Chinese-foreign 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, among 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 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. For Hong Kong banks to set up branches or body corporate on the mainland, the total asset requirement at the end of the year preceding application is lowered to not less than US$6 billion, compared with US$20 billion otherwise for nonCEPA foreign banks. There is no requirement for setting up a representative office on the mainland before a Hong Kong bank establishes a joint venture bank on the mainland.

For mainland branches of Hong Kong banks to apply to conduct RMB business: They should have been operating on the mainland for more than two years and profitable for one year prior to the application.

The profitability assessment is based on the overall profitability position of all branches of the bank on the mainland instead of the profitability position of its individual branches.

According to Supplement VI to CEPA, starting from October 2009, branches of Hong Kong banks in any municipality in Guangdong can apply with the relevant authorities to set up sub-branches in other municipalities within the province. Any foreign banking institution established on the mainland by a Hong Kong

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

bank can establish specialised institutions for providing financial services to small enterprises in accordance with the relevant mainland requirements. From April 2012, any mainland-incorporated banking institution established by a Hong Kong bank can engage in the sale and distribution of mutual funds as per CEPA Supplement VIII. Under Supplement IX to CEPA, Hong Kong banks are allowed to provide custodian services for the settlement funds of securities firms' customers and margin deposits on futures transactions.

From January 2014, Hong Kong banks' mainland-based operating institutions are granted under the provisions of Supplement X to provide Rmb services to enterprises on the mainland recognised as owned by Hong Kong investors, even where those investors are situated in a place other than Hong Kong. A new agreement on trade in services under the CEPA framework was signed in November 2015.

For the banking industry, the new agreement removes the requirement of minimum years of operation for foreign-funded banks set up by Hong Kong banks on the Chinese mainland to conduct RMB business.

The easing of restrictions under CEPA benefits not only Hong Kong newcomers to the mainland market, but also Hong Kong banks that have already operated on the mainland. As of end-2015, 10 Hong Kong banking and financial services providers (excluding insurance and securities) had obtained certificates of Hong Kong Service Supplier.

HONG KONG BUSINESS ANNUAL 2017 27

company and industry - building materials and hardware industry

Exporters are nailing it by diversifying their business

Manufacturers have also begun reviewing production facilities and processes in order to comply with environmental protection laws.

H

ong Kong exports a number of building materials and hardware.

The largest export item is electrical apparatus for building, including airconditioning machines, relays, switches, electric conductors, electric insulators, wires and cables. Hong Kong also exports a variety of building hardware like nails, screws, nuts, hand and machine tools, sanitary ware and locks and keys.

Meanwhile, steel/iron such as steel tubes and steel pipes for building, as well as wood/ board for building, including fibreboards, wooden doors and wooden window frames, also share a significant portion of total exports. Other smaller export items include plastic tubes, plastic pipes, paints, wallpapers, tiles, floor coverings, sheet glass, lime, cement, marble, stone, sand and gravel.

For production of building materials and hardware requiring large space and special treatment, most Hong Kong companies have relocated their production facilities to the Chinese mainland on the grounds of cost and environmental considerations. Offices in Hong Kong are mainly responsible for

quality control, management, marketing and logistic support. In the wake of the relocation, these companies have been re-classified as non-manufacturing establishments, despite the fact that they have manufacturing activities across the border.

The success of Hong Kong’s building materials and hardware industry lies in efficient management. Against the fast changing markets, Hong Kong companies emphasise quick response to ensure effective marketing services to their customers, and to monitor the changing product trends.

Moreover, due to the growing quality consciousness of overseas buyers, many companies have strengthened their quality assurance systems. The Chinese mainland is the largest export market, sharing more than 60% of the total exports. Sales to the mainland dropped by 2% in 2014 and continued to decline by 9% 2015.

Sales channels Hong Kong exporters of building materials and hardware usually sell their products

"The success of Hong Kong’s building materials and hardware industry lies in efficient management." directly to constructors, builders, real estate developers, architects and relevant sub-contractors in overseas markets. Some companies also sell to specialised importers, who then distribute the products to their clients.

As for the Chinese mainland, potential buyers include real estate developers, builders and sub-contractors. Hong Kong companies also sell to commercial project owners who have been authorised to conduct infrastructure and construction projects in the mainland and other Asian countries, as well as construction project developers who undertake private real estate development projects.

Promotion via participation in trade fairs is an effective way for Hong Kong companies of building materials and hardware to explore market opportunities. Important trade fairs related to the industry include the National Hardware Show in Las Vegas, Hong Kong International Building and Hardware Fair, and Light+Building in Franfurt. Business missions organised by the Hong Kong Trade Development Council to specific markets also provide opportunities for Hong Kong companies to establish connections with overseas buyers.

Industry trends Environmental protection has increasingly affected the production of building materials and hardware. Against this background, many manufacturers have begun to review their production facilities and processes in order to comply with such regulations.

The introduction of management system complying with the international environment standards, notably the ISO 14000, is to be a focus of the industry.

On the back of keen competition from the mainland and Southeast Asia in the low-end market segment, Hong Kong companies have diversified their businesses to higher value-added products. Compliance with BS of the UK and ASTM of the US are the cutting edge of companies selling higher-end building materials and hardware, especially to western markets.

CEPA The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was concluded in June 2003 and subsequently expanded in following years.

All products made in Hong Kong, subject

28 HONG KONG BUSINESS ANNUAL 2017

building materials and hardware industry - company and industry Performance of Hong Kong’s Exports of Building Materials and Hardware ^

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

2013 HK$Mn. Growth %

2014 HK$Mn. Growth %

HK$Mn.

2015 Growth %

964

*

876

-9

821

138,441

+7

139,255

+1

128,913

-7

90,229

+1

89,535

-1

83,638

-7

139,405

+7

140,131

+1

129,735

-7

2013 Share % Growth %

2014 Share % Growth %

Share %

-9

2015 Growth %

Chinese mainland

66

+9

64

-2

63

-9

US

8

+6

9

+5

9

-1

EU 28

7

-3

8

+8

8

-9

2

-5

2

+17

2

-8

ASEAN

6

+7

6

+3

6

*

Japan

4

-3

4

+1

4

-9

Germany

Total Exports by Categories

2013 Share % Growth %

2014 Share % Growth %

Share %

2015 Growth %

Electrical apparatus for building

69

+4

67

-3

69

-5

Building hardware

12

-3

12

+4

13

-3 -11

Other materials for building

14

+32

15

+6

14

Iron/steel for building

3

+3

4

+9

3

27

Wood/Board for building

1

+20

2

+60

1

-50

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

to CEPA's rules of origin, enjoy duty-free access to the Chinese mainland.

General trade measures affecting exports Initiation of anti-dumping proceedings in western countries against goods originating from the Chinese mainland, including certain building materials and hardware, has been a concern for Hong Kong companies with sourcing or production activities in the mainland.

For instance, the US has imposed anti-dumping duties on the mainland-origin iron construction castings, copper pipe and tube, heavy forged hand tools, steel wire rope and steel concrete reinforcing bars.

Meanwhile, the EU has antidumping duties against certain tube and pipe fittings of iron or steel, steel ropes and cables and certain stainless steel fasteners originated in the mainland.

Product trends Alongside a steady growth of the markets for building materials and hardware, there is a demand

for do-it-yourself (DIY) products for interior decoration, including demand for floorings, wall coverings, paints and fittings serving for DIY purposes, as well as hardware and electrical tools like electric screwdrivers, drill drivers, hand pumps and DIY home security systems.

Moreover, building hardware is increasingly designed with emphasis on easiness of installation and maintenance.

Products like parts and accessories for sanitary ware and domestic drainage systems have become standard-sized items, thus facilitating repairing and replacement by users.

With the advancement of technology, durability of items like wooden boards has been enhanced by improving fireproof, waterproof and scratch resistance capabilities.

In addition, moulded kitchen sinks of fibreglass have become popular, due mainly to its seamless surface, durability and easiness to clean. New types of materials are being adopted to raise the flexibility, durability,

"Environmental protection has increasingly affected the production of building materials and hardware."

and both environmental and cost efficiency.

Green-building technology is getting more popular as the consumers are becoming more environmentally responsible and are looking for ways to save money in the long run with green technology, such as waterless urinals and dual-flush fixtures. Wall systems and roofing systems are popular requests to minimize heating and cooling expenses and increase energy efficiency.

Builders also require products that provide more value with little or no maintenance. One industry source estimates that global green building material market will grow by about 18% per annum from 2012 to 2016.

More projects now use no or low-volatile-organic compounds, including adhesives and binders that are more environmentally friendly. Some manufacturers are adopting the approach of de-materialisation, that is, to use less material, to use materials that can be recycled and to design products with longer term product life cycle.

HONG KONG BUSINESS ANNUAL 2017 29

company and industry - clothing industry

Hong Kong struts its way to global recognition

Many international premium designer labels source clothes in Hong Kong through their buying offices or other intermediaries.

T

he clothing industry is a major manufacturing sector of Hong Kong.

It is the third largest manufacturing employer in Hong Kong, with 796 establishments hiring 5,773 workers as of December 2015. 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. The professionalism that they command and the combined services offered are not easily matched elsewhere. They altogether form

30 HONG KONG BUSINESS ANNUAL 2017

one of the largest groups involved in importexport trade in Hong Kong.

Performance of Hong Kong’s exports 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 like Bangladesh, Vietnam (expected to benefit by 2018 from the Trans-Pacific Partnership (TPP), which is a trade agreement among twelve Pacific Rim countries signed on 4 February 2016), Cambodia and Indonesia. Their manufacturing operations on the mainland are now focused on more sophisticated and

"As a global sourcing hub, Hong Kong attracts a number of international trading houses and major retailers." higher value-added items or urgent orders.

Hong Kong’s total exports of clothing slid by 12% year-on-year in the first four months of 2016 after a 10% decrease in 2015. In January-April 2016, Hong Kong’s domestic exports of clothing slumped by 41%, while re-exports fell by 11%. Among the major export destinations, Hong Kong's clothing exports to the US decreased by 11% in the first four months of 2016, while those to the EU plunged by 19%. Clothing exports to major EU markets including the UK, Germany, the Netherlands, France and Italy fell by 9-28%. Taken together, sales to the US and the EU accounted for almost 60% of Hong Kong's total clothing exports.

Meanwhile, sales to Japan dropped by 6%, whereas the Chinese mainland market showed a 3% decrease in January-April 2016.

Product wise, Hong Kong’s exports of woven wear fell by 12% year-on-year in the first four months of 2016. Exports of knitted wear subsided by 13%, whereas clothing accessories and other apparel articles declined by 15% and 10%, respectively.

Sales channels Hong Kong’s clothing manufacturers have comprehensive knowledge about sourcing and products. They are able to understand and cater for the preferences of the dispersed customer bases. Exporters also have good knowledge of international and national rules and regulations governing clothing exports, such as rules of origin, quota restrictions, tariff rates and documentation requirements. Cut, make and trim (CMT) arrangements are common, although many Hong Kong manufacturers have moved to higher value added activities such as design and brand development, quality control, logistics and material sourcing.

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. Some well-known manufacturing retailers include Baleno, Bossini, Crocodile, Episode, Esprit, G-2000, Giordano, I.T, JEANSWEST and Moiselle.

As a global sourcing hub in Asia, Hong Kong attracts a number of international trading houses and major retailers.

Buyers sourcing from Hong Kong include

clothing industry - company and industry Performance of Hong Kong’s Exports of Clothing ^ 2014 HK$Bn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

Total exports by Major Market

2015 HK$Bn. Growth %

Jan-Apr 2016 HK$Bn. Growth %

1.4

-16

0.9

-37

0.2

-41

157.5

-7

141.7

-10

35.1

-11

144.2

-7

128.2

-11

30.8

-13

158.9

-7

142.6

-10

35.3

-12

2014 Share % Growth %

2015 Share % Growth %

Jan-Apr 2016 Share % Growth %

US

36.2

-8

37.5

-7

35.9

-11

EU

28.0

-6

25.6

-18

23.3

-19

United Kingdom

7.1

-3

6.7

-15

6.4

-13

Germany

7.0

-8

6.3

-19

5.4

-22

Netherlands

2.6

-3

2.5

-14

2.6

-9

France

3.3

*

3.1

-18

2.4

-28 -10

Italy

2.6

-11

2.4

-18

2.3

Japan

7.2

-16

6.8

-15

7.5

-6

Chinese Mainland

6.0

*

6.8

+1

7.3

-3

Australia

3.0

-4

3.1

-6

4.2

-1

Canada

3.1

-13

3.1

-10

2.6

-22

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

American and European department stores (e.g. Macy's, JCPenney, Federated, Karstadt Quelle, C&A), discount stores (e.g. Sears, Target and Carrefour), specialty chains (e.g. The Gap, The Limited), mail order houses (e.g. Otto and Great Universal Stores) and e-tailers (Zalora and YOOX).

Many international premium designer labels – such as Calvin Klein, Donna Karen, Ralph Lauren, Tommy Hilfiger and Yves Saint Laurent – source clothes 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. In February 2016, three Hong Kong designers, Harrison Wong, Hidy Ng and Polly Ho, were invited to showcase their Fall/Winter 2016 collections at the show of Fashion Hong Kong during New York Fashion Week. In addition, medium to high-priced fashion clothing bearing Hong Kong designer labels is being sold/ has been sold in renowned department stores overseas such as Bloomingdale's, C&A,

Harrod's, Isetan and Macy's.

In the 2016-17 Budget announced on 24 February 2016, Financial Secretary John Tsang unveiled that HK$500 million has been earmarked to further the development of the fashion industry through (a) strengthening the promotion of local fashion designers and emerging fashion brands in Hong Kong and overseas; (b) establishing an incubation programme for fashion designers, drawing on the experience of other fashion capitals like London, New York and Seoul; and (c) setting up a resource centre to provide technical training and support for young designers.

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 led by the Hong Kong Trade Development Council (HKTDC), including the ones in Beijing, Budapest, Chengdu, Dalian, Dubai, Dusseldorf, Hong Kong, Moscow, Mumbai, Paris, Tokyo, Warsaw, Istanbul and Jakarta.

‘Hong Kong Fashion Week’

"Hong Kong’s fashion designers have been gaining worldwide reputation."

is organised twice a year and attracts international suppliers and buyers to participate in the exhibition. Organised by HKTDC, ‘World Boutique, Hong Kong’ is the first independent event in Hong Kong dedicated to promoting designers’ collection and brands from around the world. To better align the event with the international fashion trade calendar, the fair, from 2016 onwards, will be rescheduled from January to September and re-named CENTRESTAGE, serving as a dedicated marketing platform for international and regional brands, ready-to-wear and designer labels to showcase their collections, targeting regional fashion media, buyers and invited consumers.

Industry trends Online shopping is increasingly popular in Hong Kong’s major markets, including the Chinese mainland. Across the board, clothing is among the most purchased items online. With the number of online shoppers soaring by 14% to 413 million in 2015, online clothing sales are estimated to account for 30% of the total online shopping turnover in the Chinese mainland.

HONG KONG BUSINESS ANNUAL 2017 31

company and industry - electronics industry

High-tech Hong Kong is pushing the right buttons

Hong Kong is the world’s largest exporter of phones, and the second largest exporter of computer parts and electronic integrated circuits.

H

ong Kong’s electronics industry is the largest merchandise export earner of the territory, accounting for 64% of Hong Kong’s total exports in 2015. A substantial portion of such exports are regarded as hightech 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.

According to the latest available statistics, Hong Kong was the world’s largest exporter of telephones/mobile phones; the second largest exporter of computer parts/ accessories, video recording apparatus and electronic integrated circuits; and the world’s third largest exporter of sound recording apparatus and electric micro motors and in value terms in 2014. 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.

Parts and components constitute about three quarters of Hong Kong’s electronics

32 HONG KONG BUSINESS ANNUAL 2017

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.

Also, many Hong Kong companies have further strengthened their quality assurance and environmental management systems,

"Hong Kong companies are capable of meeting the technical requirements of relevant authorities overseas." 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 decreased 2% in the first half of 2016. Although exports of semiconductors increased 9%, exports of telecommunications equipment/parts, IT equipment/parts and AV equipment/ parts were lacklustre. Market-wise, exports of parts and components to the Chinese mainland, which accounted for over 60% of the total electronics exports, declined in the first half of 2016, due mainly to the sluggish input demand of mainland’s outward processing production. While exports to the US were lacklustre, exports to the EU continued to rise in the period.

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, while 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. As regards finished items, Hong Kong companies mostly produce on ODM basis for reputable brand names in overseas markets. Some of these major buyers have set up buying offices in Hong Kong for direct sourcing. Hong Kong companies also sell to specialised importers and traders in North America and Europe, who distribute the merchandises under their own channels or re-sell to their clients for further distribution.

There are also a number of Hong Kong companies marketing electronic products

electronics industry - company and industry Performance of Hong Kong’s Exports of Electronics ^ 2014 HK$Mn. Growth % Domestic Exports

2015 HK$Mn. Growth %

Jan-June 2016 HK$Mn. Growth %

3,988

-23

3,591

-10

1,600

-12

2,235,125

+6

2,289,365

+2

1,049,822

-2

1,439,059

+3

1,497,210

+4

673,010

-3

Total Exports

2,239,113

+6

2,292,956

+2

1,051,422

-2

Total exports by Major Market

2014 Share % Growth %

Re-exports of Chinese Mainland Origin

2015 Share % Growth %

Jan-June 2016 Share % Growth %

Chinese mainland

64

+4

63

+1

63

-3

EU 28

7

+9

8

+7

8

+11

Germany

2

+6

2

+3

2

+9

Netherlands

2

+18

2

+18

2

+14

US

7

+12

7

+4

7

-5

ASEAN

6

+13

6

+7

6

-4

Singapore Japan

Total Exports by Categories

2

+4

1

*

2

+1

3

+3

3

-1

3

-8

2014 Share % Growth %

2015 Share % Growth %

Jan-June 2016 Share % Growth %

Finished products

25

+5

26

+4

25

-4

Parts and Components

75

+6

74

+2

75

-1

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

under their own brand names, including Truly, V-Tech, Group Sense, Venturer, GP and ACL. Their sales network covers not only the advanced countries, 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. Important trade fairs include the CES Show held in the US, CeBIT Fair and Electronica in Germany, Taipei International Electronics Show in Taiwan, CommunicAsia in Singapore and Hong Kong Electronics Fair organised by the Hong Kong Trade Development Council (HKTDC). Business missions organised by the HKTDC to the Chinese mainland and other emerging markets also provide opportunities for Hong Kong companies to establish connections with potential buyers.

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 tarifffree treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met.

In the main, the CEPA origin criteria 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 value-added 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

"Many Hong Kong companies have further strengthened their quality assurance and environmental management systems."

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. With regard to electromagnetic compatibility (EMC), Hong Kong companies can well observe that products sold to the US require compliance with FCC standard, while EU’s CE-mark has also required the compliance with relevant EMC directives. As for sales in the China market, most electronic products have to be in compliance with the safety and other requirements of a unified compulsory product certification system known as 3C (China Compulsory Certification or CCC).

Meanwhile, Hong Kong companies are also attentive to the growing popularity of green consumerism in the marketplace.

HONG KONG BUSINESS ANNUAL 2017 33

company and industry - footwear industry

Footwear companies step up to improve capabilities

Manufacturers are not only streamlining their processes but are also introducing measures to monitor working conditions in factories.

T

he latest official statistics show that the footwear manufacturing industry had a total employment of 20 workers as of December 2015. The majority of footwear manufacturers have set up offshore production facilities on the Chinese mainland to reduce operation costs and stay competitive, leaving only limited capacity in Hong Kong to meet small and quick orders.

Some manufacturers, after relocation of production facilities offshore, are classified instead as import-export establishments. At the end of 2015, there were altogether 1,200 import/export establishments hiring 6,410 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, while others in sports shoes.

Meanwhile, more companies are paying attention to children’s shoes, like funky

34 HONG KONG BUSINESS ANNUAL 2017

boots with embroidery, shoes with cartoon characters, rubber boots and school shoes.

Hong Kong’s footwear exports slid by 21% in the first four months of 2016, after a 10% decrease in 2015. Re-exports, accounting for nearly all footwear exports, fell on a par with total exports during January-April 2016, while domestic exports fell by 16%.

Playing a leading role, the US, sharing 29% of the city’s total footwear exports in the first four months of 2016, saw a decline of 28%.

Trailing the US were the Chinese mainland, the EU and Japan, accounting for 14%, 14% and 7% of the total exports, respectively.

In January-April 2016, footwear exports to the EU fell by 34%, with Germany, the Netherlands, the UK and Italy seeing respective slides of 25%-38%. Meanwhile, sales to the Chinese mainland decreased by 3%, and those to Japan slid by 23%.

Sales channels Many footwear companies in Hong Kong engage in OEM arrangements to produce for leading brands and retailers in North America, the EU and Japan. With

"Many footwear companies in Hong Kong engage in OEM arrangements to produce for leading brands." improving capabilities in product design and development, engineering, modelling, tooling and quality control, more and more Hong Kong footwear companies engage in ODM projects.

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 retail network in Hong Kong, Macau and the Chinese mainland. While some footwear exporters prefer selling to overseas importers and distributors, many of them are selling to mass merchandisers, such as Wal-Mart, Target, Costco and Kmart.

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

To recognise the creative excellence of local footwear design talent and encourage more Hong Kong footwear suppliers to enhance the design components of their products, the Federation of Hong Kong Footwear, co-organised by HKTDC, organises the Hong Kong Footwear Design Competition every year. Not only is the competition an incubator of talents, it is also a new driving force behind local footwear design and product development.

In 2015, the competition garnered about 1,000 entries, displaying a great deal of creativity. A strong judging panel was comprised of 17 experts from various related sectors such as fashion design, trade associations and retailers, aiming at nurturing local design talent and promoting the sustainable development of the footwear industry.

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 Hong Kong Trade Development Council (HKTDC), including the ones in Budapest, Dongguan, Dusseldorf, Dubai, Guangzhou, Istanbul and Jakarta.

In pursuit of lower production costs, expanding capacity and product

footwear industry - company and industry Performance of Hong Kong’s Exports of Footwear ^ 2014 HK$Bn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

Total exports by Major Market

2015 HK$Bn. Growth %

Jan-Apr 2016 HK$Bn. Growth %

0.002

-59

0.006

+235

*

-16

22.638

-8

30.310

-10

7.574

-21

29.729

-8

26.131

-12

6.290

-24

23.640

-8

30.315

-10

7.754

-21

2014 Share % Growth %

2015 Share % Growth %

Jan-Apr 2016 Share % Growth %

US

33.4

-6

32.3

-13

28.9

EU 28

9.9

-8

12.0

+9

14.2

-3

20.2

-9

17.4

-22

13.6

-34

Germany

-28

UK

4.1

-6

3.6

-20

2.9

-38

Netherlands

3.7

-2

3.7

-11

2.7

-26

Italy Chinese Mainland

3.1

-9

3.1

-10

2.6

-25

3.2

-16

2.4

-31

2.3

-30 -23

Japan

6.6

-24

6.0

-17

7.1

Macau

3.5

+17

3.8

-1

5.2

+8

Australia

2.9

-11

3.5

+11

3.6

+29

South Korea

1.8

+13

1.5

-26

2.3

+18

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

range extension, footwear manufacturers in Hong Kong have shifted a significant part of their production facilities to the Chinese mainland and Southeast Asian countries, especially Vietnam, which, among other preferential market accesses, is expected to benefit by 2018 from the Trans-Pacific Partnership (TPP). 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.

Industry trends 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.

China is not only the world’s largest shoe exporter and manufacturer, but the biggest footwear consumer (surpassing the US since 2011). According to National Bureau of Statistics, exports of footwear reached Rmb 332 billion in 2015, while footwear sales in China are projected to reach Rmb 380 billion in 2015.

Footwear manufacturers nowadays focus more on valueadded service. Quick response in sample making, prompt delivery and high quality are widely required. They are also tapping the global green trends towards a sustainable economy by producing shoes made with recycled, eco-friendly 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 also launched a product line called 'Considered' where designers are encouraged to design shoes using less harmful adhesives and more recycled materials.

Meanwhile, most of these brands have developed ecofriendly packaging solutions by utilising eco-friendly, bio-degradable and sustainable materials such as soy-based ink, recycled cork, nylon and foam. For instance, Puma has replaced its original shoe box

"In view of soaring production costs, manufacturers, in addition to relocation, have further invested in advanced automated machinery and operation systems."

with a simple cardboard sheet and a special bag made of non-woven polyester consisting of recycled PET. 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 even allows customers to customise their own shoes online. 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.

HONG KONG BUSINESS ANNUAL 2017 35

company and industry - information technology services industry

Hong Kong’s digital readiness is paying off

The development of the information technology industry is key to underpinning Hong Kong’s position as a world centre of business.

H

ong Kong has a robust ICT infrastructure and is consistently ranked among the best in the world in terms of digital readiness and internet access capabilities. According to the annual global ICT Development Index published by ITU in November 2015, Hong Kong ranked second in Asia and ninth in the world, which together with top-ranking Korea, were the only two Asian economies making into the top 10. According to the World Economic Forum's Networked Readiness Index 2015, Hong Kong ranked fourth in Asia and 14th globally in terms of readiness to participate in and benefit from IT developments.

Hong Kong has a large pool of skilled ICT professionals, providing services to clients spanning a wide range of businesses: Banking and finance Some of the world's largest and most sophisticated computer applications can be found in Hong Kong's financial sector. The electronic off-platform trading system of the Hong Kong's stock exchange and the interbank real time gross settlement (RTGS)

system leapfrog many of the similar systems in the world. Technological innovations have brought about not just new types of electronic money, but also new bankcustomer relationship through Internet/ mobile phone. Online/wireless investment, securities and banking services are gaining increasing popularity. In line with increased online trading, Hong Kong Exchanges & Clearing Ltd. (HKEx) upgraded its trading system to AMS/3.8 in December 2011.

“HKEx Orion” was launched in 2012 to improve the core trading platforms with better price information and faster trade execution. In April 2016, HKEx rolled out its Pre-Trade Risk Management (PTRM) system, helping derivatives market players enhance pre-trade control. The PTRM is expected to strengthen HKEx’s clearing house protection and facilitate new connectivity for additional mutual market access.

Shipping, freight forwarding and logistics Many shipping and freight forwarding companies have been using electronic data

"The government’s Innovation and Technology Fund has provided an alternative source of funding." interchange (EDI) and Internet-based networks to transmit information and documents among themselves and with traders. Traders are able to track the flows of their goods online. Advanced applications such as global positioning system (GPS) are used in warehousing, transportation, container management and other supply chain related activities. Radio frequency identification (RFID) is used to facilitate warehouse management and supply chain management. The Hong Kong International Airport is considered one of the biggest champions for this technology in facilitating air cargo transportation.

Trading All import and export shipments involve government documentations. Tradelink provides an electronic platform to facilitate those transactions such as certificates of origin and trade declaration applications.

In turn, these documentations could be shared between government departments and different stakeholders along the supply chains. Tradelink also offers a number of value-added transaction management facilities including message checking, matching and validation, message authentication and security, electronic billing and payments, message archiving and audit trail services. Tradelink has built and maintained a customer database of over 54,000 companies.

Transportation Founded by major transport operators in Hong Kong, Octopus Cards Limited developed and launched Octopus card in 1997 using RFID technology, making it the world’s second contactless smart cards system in the world. Besides being used in paying transportation fee, this micro transactions and clearing system is also being applied in small retail payments.

According to Octopus Cards Limited, there are more than 20 million cards in circulation.

Wholesale and retailing Many retail shops have installed barcoding and point-of-sale (POS) systems for inventory control and sales analysis.

Some retail chains have linked up their POS systems with vendors, exchanging purchase orders and invoices. Data mining technology has been applied to analyse the vast amount

36 HONG KONG BUSINESS ANNUAL 2017

information technology services industry - company and industry Employment in IT Sector 2014

No. of IT Employees

% Share

% Chance 2014/12

IT/Software development

31,414

37.9

Operation Services

19,105

23.0

8.7 11

Field support

9,148

11.0

-0.3

IT sales and marketing

6,710

8.1

0.1

Telecommunications and networking

5,923

7.1

-1.4

System programming

4,103

4.9

10.7

IT Education and training

3,571

4.3

-0.4

IT management

1,462

1.8

1.7

915

1.1

12.2

Database IT Security TOTAL

622

0.7

7.8

82,973

100

5.4

Exports of Telecommunications, Computer and Information Services HK$ Million

2011

Computer Services Information Services Telecommunications services TOTAL

2012

2013

2014

6,621

7,027

7,293

742

766

760

7,380 726

9,695

10,840

12,401

13,766

17,058

18,632

20,454

21,873

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

of information collected by POS to support managerial and marketing decision.

Manufacturing Manufacturers are automating their ordering, production management, sales and distribution systems. Computeraided design/manufacturing (CAD/CAM) is also widely used in the manufacturing sector. The collaboration with manufacturing engineering in the use of IT has improved the workflow of operation. The efficient flow of information also allows the growth of discrete manufacturing (digital manufacturing) by which manufacturing process is so flexible that customers can participate in the design, engineering, assembly and production of specific products.

Graphics and multimedia Hong Kong possesses the best design and multimedia capabilities in the region.

Computer graphics has a wide application in various Hong Kong industries. Computer generated images are becoming trends in electronic games, advertising, film production and

web design.

Industry development The development of the IT industry is key to underpinning Hong Kong's position as a world centre of business and has brought innovations to many sectors. Examples include Octopus cards in public transport, the Airport Management System, the Modern Port Management System used in the container ports, the Online and Wireless Banking System in the financial sector, and the Smart ID of the public sector. In return, demand for premier financial and business services has provided a suitable environment to nurture the growth of Hong Kong IT businesses.

In terms of infrastructure, Hong Kong has provided the industry with the Cyberport, a hi-tech multimedia hub costing HK$13 billion, under the joint efforts of the public and private sectors. It provides support to the IT industry in different aspects, such as training, organising business matching events, offering financial assistance to nurture ICT companies and entrepreneurs.

"Demand for premier financial and business services has provided a suitable environment to nurture the growth of Hong Kong IT businesses."

As of March 2015, companies in Cyberport had raised more than HK$300 million. For 2015, Cyberport helped 295 tech companies via its incubation programme.

Financially, the establishment of the Growth Enterprise Market (GEM) in 1999 has provided a fund-raising venue for Hong Kong IT-related companies.

As of April 2016, GEM's total market capitalisation had reached over HK$ 267billion, with 231 companies listed. As the GEM also functions as an exit platform for venture capitalists, it continues to facilitate venture capital firms to consider financing local software startups.

The Hong Kong government's Innovation and Technology Fund (ITF) has provided an alternative source of funding for the IT industry. As of end-March 2016, the ITF had approved 5,088 funding applications on projects with a total of HK$ 11 billion. In 2015, Hong Kong topped the Asia Pacific Information and Communications Technology Awards (APICTA) with one Winner Award and nine Merit Awards.

HONG KONG BUSINESS ANNUAL 2017 37

company and industry - jewellery industry

Jewellery making enters a new level of sophistication Hong Kong is the seventh largest economy in terms of retail value of luxury jewellery and timepieces in 2015.

H

ong Kong's jewellery industry can be broadly classified into two sectors: jewellery made of precious metal and imitation jewellery. In terms of value, 86.5% of Hong Kong's total exports of jewellery are made of precious material. Hong Kong's jewellery industry is known for its flexibility in accommodating customer needs. Production of fine jewellery encompasses a wide range of medium to high-priced products. The most popular product category is 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. Their gem-setting skills and design capability are competitive compared with world-class European manufacturers.

Hong Kong has a highly skilled and productive labour force capable of handling small orders and making elaborate designs at reasonable prices. 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 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.

After expanding by 8% in 2014, Hong Kong’s exports of precious jewellery dropped 12% in 2015. In 2015, sales to the US, the biggest market which accounted for 31.7% of the total, saw a mild growth of 3%. However, Hong Kong’s exports of precious jewellery to other major markets – the EU, Switzerland, the UAE, ASEAN and Macau – experienced respective slides of 2%, 32%, 41%, 16%

"Hong Kong has long been recognised as a leading centre for the production of jade jewellery." and 15%. On the other hand, Hong Kong’s exports of pearls, gem-stones and rough diamonds decreased 4% in 2015, after a 15% jump in 2014.

According to the World Gold Council, the demand for gold jewellery is strong for the US market, while remaining modest in China and India, where acquiring jewellery is connected to celebrations, relationships, self-expression and hopes for the future.

On the supply side, Hong Kong's jewellery exporters are facing intensifying competition from suppliers in the Chinese mainland and other countries, particularly India and Thailand. This, together with the price fluctuation of precious metals, diamonds, precious stones and materials due to the diverse monetary policies of the major central banks worldwide, has somewhat trimmed down their profit margins. On the other hand, overseas retailers and importers often press Hong Kong suppliers for extended credits, exchange for unsold items, shorter delivery lead time and better designs.

However, the impact of labour cost increase in the mainland is modest compared with other industries because mainland content only accounts for a relatively small part of a jewellery article's value, compared with costs of precious materials, which are primarily imported into the mainland for export processing.

Hong Kong is the world's largest exporter of imitation jewellery in 2013, according to the latest available statistics. In 2015, total exports of imitation jewellery amounted to HK$8.4 billion, dropped 3% from the previous year. Unlike fine jewellery, imitation jewellery is rarely domestic-made but re-exported from origins outside Hong Kong, notably the Chinese mainland, which accounts for 94% of all exports from Hong Kong in 2015.

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. Mass production of jewellery products is normally restricted to established manufacturers which are equipped with more sophisticated and automated

38 HONG KONG BUSINESS ANNUAL 2017

jewellery industry - company and industry Performance of Hong Kong’s Exports of Jewellery ^ 2013 HK$Mn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

Precious Jewellery by Major Market

2014 HK$Mn. Growth %

HK$Mn.

2015 Growth %

8,373

-4

7,580

-10

6,830

-10

48,342

+9

53,896

+12

47,134

-13

24,520

+5

23,954

-2

22,426

-6

56,715

+7

61,476

+8

53,964

-12

2013 Share % Growth %

2014 Share % Growth %

Share %

2015 Growth %

US

29.7

+7

27.2

-1

31.7

EU

17.9

+10

16.3

-1

18.1

-2

7.7

+9

6.9

-4

8.9

+14

France

5.2

+38

4.4

-9

4.1

-18

Italy

1.7

-10

1.8

+15

2.1

+3

10.1

+21

12.1

+29

9.4

-32

UK

Switzerland

+3

UAE

4.6

-8

10.9

+155

7.3

-41

ASEAN

5.9

+12

7.2

+32

6.9

-16

Macau

10.5

+83

6.9

-29

6.6

-15

Precious Jewellery by category

2013 Share % Growth %

2014 Share % Growth %

Share %

2015 Growth %

Articles jewellery of precious metal

96.8

+6

96.8

+8

96.6

Articles of pearls, precious semi-precious stones

3.0

+9

3.1

+14

3.2

-12 -9

Goldsmiths and silverstmiths wares, precious metals

0.2

+55

0.1

-37

0.2

+41

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

production machines. The jewellery items made for exports usually bear buyers' brand names or logos. Some jewellery makers have set up overseas offices and outlets to promote sales. Online display is another growing trend.

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 2014, overnight visitors spent HK$23.4 billion on jewellery, accounting for 17.1% of their total spending on shopping; as for those from the Chinese mainland, the share was higher at 18.5%. In addition, Hong Kong is the seventh largest economy in terms of retail value of luxury jewellery and timepieces in 2015, according to Euromonitor International.

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 cooperative arrangement. They

have successfully earned a recognised brand image there.

A recent survey conducted by 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 35.9% over their domestic counterparts.

Promotion via participation in trade fairs is an effective way for Hong Kong companies to explore export opportunities (below is a list of selected trade fairs in the industry). Besides, HKTDC from time to time organises study missions for Hong Kong manufacturers to visit specific markets for establishing new business relations.

Industry trends Articles of jewellery are getting more fashion oriented. Innovative designs are important for moving up-market. In doing so, it is necessary for manufacturers

"Hong Kong is leading in the production of gold items."

to have more metallurgical knowledge. New technology also allows the development of new or innovative designs.

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, some in the form of brand jewellery.

Recent technological development allows massive production of jewellery products with good quality and competitive prices. While 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.

HONG KONG BUSINESS ANNUAL 2017 39

company and industry - leather consumer goods industry

Hong Kong’s leather goods industry toughens up Manufacturers, in addition to relocation, have further invested in advanced automated machinery and operation systems.

T

he latest official statistics show that there was a workforce of 100 people in the leather consumer goods industry in December 2015. In face of rising operation costs in Hong Kong, the majority of local manufacturers have shifted a significant part of production to the Chinese mainland and Southeast Asia, leaving only limited capacity in Hong Kong to meet small and quick orders. Some manufacturers have invested heavily in advanced automated machinery and operation systems to streamline the whole production process.

At the end of 2015, the number of establishments involved in the importexport trade of leather consumer goods was 2,500, while direct workforce employed by these establishments totalled 9,680.

In addition to competitive labour costs, a broad spectrum of raw materials, parts and fittings (like hides and buckles) are supplied by nearby sources on the Chinese mainland. Indeed, some Hong Kong, Taiwan and mainland manufacturers are vertically integrated, which further enhances quality control and flexibility in production and

40 HONG KONG BUSINESS ANNUAL 2017

creates synergy. For instance, Yue Yuen Industrial (Holdings) Limited, a Hong Kong listed company, teams up with upstream suppliers ranging from raw materials to shoes components. Many Hong Kong companies are engaged in the trading of leather consumer goods. Some of them are appointed by foreign brands as their agents in the region, including the Chinese mainland. A number of Hong Kong's leather consumer goods companies, such as Izzue, Collect Point, Mirabell, Staccato and Belle, take strong initiatives in developing the mainland market.

Performance of exports After registering a decrease of 11% last year, Hong Kong’s exports of leather consumer goods fell another 20% to HK$9.4 billion in the first four months of 2016. Re-exports, accounting for almost all exports of leather consumer goods from Hong Kong, also fell by 20%, while domestic exports were down 7%. The US remains the leading export destination for Hong Kong's leather consumer goods, accounting for 27% of the

"The United States remains the leading export destination for Hong Kong’s leather consumer goods." total during January-April 2016, followed by the Chinese mainland and the EU, with respective shares of 17% and 12%.

In terms of performance, Hong Kong’s exports of leather consumer goods to the US declined by 25% in the first four months of 2016. On the other hand, sales to the Chinese mainland lost 4%, whereas sales to the EU plummeted by 35%, with major member states like Italy, the Netherlands and Germany seeing respective descents of 53%, 40% and 36%. Product wise, exports of leather footwear, representing 46% of Hong Kong’s total exports of leather consumer goods, fell by 28% during the first four months of 2016, while sales of handbags, trunks and suitcases and other clothing accessories slid by 10% and 3%, respectively.

Sales channels The majority of leather goods manufacturers in Hong Kong are small and medium enterprises (SMEs) which predominantly produce on an OEM basis for leading brands in North America, Western Europe and Japan. An increasing number of manufacturers are involved in product design and development, engineering, modelling, tooling and quality control.

However, many of them still prefer selling to overseas importers and distributors, who in turn market to wholesalers and retailers.

Rather than relying solely on OEM/ ODM contracts, a number of large leather consumer goods companies have developed their own wholesale and retail networks.

Certain suppliers, such as Giordano, Goldlion, Crocodile Garments and Le Saunda, have already been selling their brand-named products in the Chinese mainland as well as other overseas markets.

To recognise the creative excellence of local footwear design talent and encourage more Hong Kong leather footwear suppliers to enhance the design components of their products, the Federation of Hong Kong Footwear, co-organised by Hong Kong Trade Development Council (HKTDC), organises the Hong Kong Footwear Design Competition every year. Not only is the competition an incubator of talents, it is also a new driving force behind local footwear design and product development. In 2015, the competition garnered about 1,000 entries, displaying a great deal of creativity.

A strong judging panel was comprised of 17 experts from various related sectors

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

Total exports by Major Market

2015 HK$Bn. Growth %

Jan-Apr 2016 HK$Bn. Growth %

0.009

+79

0.012

+38

0.002

-7

41.471

-8

37.039

-11

9.353

-20

30.139

-8

26.730

-11

6.039

-26

41,480

-8

37.051

-11

9.354

-20

2014 Share % Growth %

2015 Share % Growth %

Jan-Apr 2016 Share % Growth %

US

30.6

-8

31.1

-9

26.5

Chinese Mainland

12.9

-8

14.6

+1

17.3

-25 -4

EU 28

18.2

-2

16.1

-21

12.3

-35

Italy

4.1

-4

3.8

-18

2.6

-53

Netherlands

4.0

+16

3.8

-16

2.4

-40

Germany Macau

3.5

-7

3.0

-22

2.2

-36

8.5

+9

7.8

-18

9.5

-12

South Korea

5.0

-33

4.8

-15

6.6

-10

Japan

5.1

-21

4.9

-15

5.4

-26

Australia

3.2

-6

3.5

-5

3.9

-23

Taiwan

2.7

-2

2.9

-4

2.7

-30

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

such as fashion design, trade associations and retailers, aiming at nurturing local design talent and promoting the sustainable development of the footwear industry.

To establish business contacts with overseas buyers, Hong Kong manufacturers and traders have involved themselves actively in international trade shows led or sponsored by TDC, including GDS Shoe Fair (Dusseldorf), Expo Riva Schuh International Shoe Fair (Trento), China (Dalian) International Garment & Textile Fair (CIGF), Style Hong Kong (Wuhan, Harbin, Jinan, Guangzhou, etc.), MOTEXHA (Dubai) and All China Leather Exhibition (Beijing). Some of them, particularly those selling handbags, wallets and other accessory items, also participate in trade fairs for gift items such as Birmingham Spring Fair International, Ambiente Frankfurt and the Tokyo International Gift Show.

Industry trends In pursuit of lower production costs, higher profit margins, expanding capacity and product range extension, leather consumer goods

manufacturers in Hong Kong have shifted a significant part of their production facilities to the Chinese mainland and Southeast Asian countries, especially Vietnam. 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.

In the meantime, advanced processing techniques in leather manufacturing have contributed to the popularity of leather consumer goods. Nowadays, leathers can be worked up to more complex designs with digital leather cutting systems, while some can be dyed into more fashionable colours. In addition to durability, softness, lightness and smoothness have made leather garments everpresent and attractive around the year. For instance, clothing made of the ultra-thin leathers, of which thickness is 0.2mm-

"To curb pollution, different regulations are imposed to improve the production processes and product designs for better environmental protection."

0.3mm, has become a stylish choice for spring/summer fashion season.

Since leather processing usually involves production procedures and chemicals that can cause environmental pollution, the industry is considered one of the most polluting industries. To curb pollution, different regulations are imposed to improve the production processes and product designs for better environmental protection.

For instance, China's Ministry of Environmental Protection (MEF) has established a new discharge standard for water pollutants emitted from the leather and fur making industry.

Effective from 1 March 2014, the new discharge standard, GB 30486-2013, isolates the total nitrogen, chlorine ion and other primary target pollutants.

Together with technological advancements in wastewater treatment in the leather and fur industry, the new standard sets tougher emission limits and “referential discharge indicators” than the previous one. Along with MEF’s effort, the State Council released the Water Pollution Control Action Plan in April 2015.

HONG KONG BUSINESS ANNUAL 2017 41

company and industry - legal services industry

Law practitioners in Hong Kong set the bar high

Hong Kong is said to be the international law capital of Asia, with over 10,000 practising solicitors and barristers.

H

ong Kong has become a Special Administrative Region of the People’s Republic of China (the PRC) since 1 July 1997. Under the principle of “One Country, Two Systems”, Hong Kong’s previous legal system has continued in place. The Basic Law of the Hong Kong Special Administrative Region (the HKSAR) was enacted by the National People’s Congress in accordance with the Constitution of the PRC. It is akin to a miniconstitution for the HKSAR, and took effect on the establishment of the HKSAR. Under the Basic Law, all the laws previously in force in Hong Kong shall be maintained, except for any that contravenes the Basic Law and is subject to amendment by the HKSAR legislature. National laws of the PRC shall not be applied in the HKSAR except for laws relating to defence and foreign affairs as listed in the Annex III to the Basic Law. The legal profession in Hong Kong is divided into two distinct branches, namely solicitors and barristers. Solicitors have limited rights of audience before the courts,

42 HONG KONG BUSINESS ANNUAL 2017

whereas barristers have unlimited rights of audience in all courts. Lawyers practising within one branch of the profession are not, at the same time, allowed to practise within the other. Organisations governing the professional standard of solicitors and barristers are, respectively, The Law Society of Hong Kong and Hong Kong Bar Association.

While the majority of members of the legal profession are engaged in private practice, a significant number work in one of the Hong Kong government’s legal department, or are employed as legal advisers to public or private companies, or engaged in teaching and research at one of Hong Kong’s tertiary institutions.

Hong Kong is the international law capital of Asia, with over 10,000 practising solicitors and barristers. As of July 2016, 870 local solicitor firms and 76 foreign law firms had set up presence in Hong Kong, including more than half of the Global 100 law firms with a presence in Hong Kong.

As Hong Kong is a leading international financial centre, the growing demand for

“The liberalisation measures have enhanced the access of Hong Kong’s legal sector to the mainland market.” services related to finance, such as IPO, will help stimulate continual demand for legal services.

Foreign law firms also play an important role in Hong Kong’s legal market. According to the latest available data, 33 foreign registered law firms (including Mainland law firms) had formed associations with local firms as of July 2016. Meanwhile, local firms employed more than half of the registered foreign lawyers.

Exports of services According to the latest available figures, Hong Kong’s exports of legal services amounted to US$307 million (HK$2.4 billion) in 2014, up 13.4% from the yearearlier period.

Hong Kong’s legal services sector plays a pivotal role in satisfying the professional services needs associated with mainlandrelated investment. As the Chinese mainland is one of the largest mergers and acquisitions (M&A) markets in Asia, many top legal advisors in the world have made a significant presence in Hong Kong to serve the region.

Meanwhile, Hong Kong law firms have established a strong international-mainland business network and clientele.

The listing of mainland enterprises in Hong Kong, along with the simplified procedures for mainland enterprises to set up offices in Hong Kong, further boosts the demand for a wide range of professional services provided by Hong Kong law firms.

In recent years, arbitration and mediation have gained in popularity as alternative dispute resolution means to legal litigation, and Hong Kong is seen as a preferred venue for dispute resolution in the region. The Hong Kong Arbitration Ordinance is widely recognised as one of the most advanced arbitration statutes in the world. Arbitration awards made in Hong Kong are enforceable through the courts of most of the world’s trading economies through its being a party to the New York Convention. These awards are also enforceable on the Chinese mainland since the establishment in 2000 of the arrangement on mutual recognition and enforcement of arbitral awards between Hong Kong and the mainland.

Under the Hong Kong Arbitration Bill came into effect in June 2011, both domestic and international arbitrations follow a single set of rules. This can reduce confusion and bring the laws of Hong Kong in line with

legal services industry - company and industry Number of Solicitors and Firms As of end-July 2016 Solicitors with a practising certificate

8,836

Hong Kong solicitors’ firms

870

Registered foreign lawyers

1,323

Registered foreign law firms

76

Number of Barristers As of end- July 2016 Total practising barristers

1,375

- Senior counsels

100

-Juniors

1,278

Sources: The Law Society of Hong Kong and Hong Kong Bar Association

international standard. The new ordinance also adopts the United Nations Commission on International Trade Law (UNCITRAL) standards.

Closer Economic Partnership Arrangement between Hong Kong and the mainland As a member of the WTO, China has improved market access conditions for foreign firms to the mainland’s legal sector. In addition, the liberalisation measures adopted under CEPA have also enhanced the access of Hong Kong’s legal sector to the mainland market.

Since the implementation of CEPA in 2004, the Chinese mainland has further opened up its market to Hong Kong’s legal service sector. Among the provisions, the residence requirement for representatives of representative offices of the Hong Kong law firm on the mainland has been relaxed; Hong Kong permanent residents are allowed to sit the National Judicial Examinations; Hong Kong lawyers are allowed to be employed as legal consultants by mainland law firms; and restrictions on association between Hong Kong and mainland law firms have been relaxed. Under Supplement IX to CEPA, Hong Kong law firms with representative offices on the mainland are allowed to operate in association with one to three mainland law firms.

As of end-July 2016, Hong Kong law firms (including many Hong Kong-based foreign law firms) had set up

71 representative offices on the mainland, of which 39 were set up after the implementation of CEPA in 2004. Beijing, Shanghai and Guangzhou are the most popular cities to establish mainland presence. Besides, 16 Hong Kong law firms have entered into association arrangements with their mainland counterparts under CEPA. CEPA allows mainland law firms to employ Hong Kong legal practitioners, but those who are employed by mainland law firms are not allowed to handle matters of mainland law.

Hong Kong lawyers providing professional assistance at the request of mainland law firms on the basis of individual cases are not required to apply for a Hong Kong legal consultant permit.

Yet, CEPA allows Hong Kong residents with Chinese citizenship to sit the mainland’s National Judicial Examinations.

Hong Kong legal practitioners, who have passed the examinations and obtained the required internship, intensive training and assessment, are allowed to engage in nonlitigation legal work in mainland law firms. In 2015, 127 Hong Kong residents had sat National Judicial Examinations in Hong Kong and 9 of them passed.

Under Supplement X to CEPA, which took effective from January 2014, mainland lawyers are allowed to be seconded as consultants to work in mainland representative offices of Hong Kong law firms

“Hong Kong’s legal services sector plays a pivotal role in satisfying the professional services needs associated with mainland-related investment.”

set up in Guangdong Province, advising on mainland law.

Currently, there are 14 Hong Kong law firms that have established representative offices in Guangdong, and they will be able to provide a more broadbased service as a result of the new Supplement X measure, thereby advising on both mainland and international law.

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. This was then followed in November 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. Unlike the Supplements which adopted a positive-list approach to introducing liberalisation measures, the two latest CEPA agreements adopt a hybrid approach to granting preferential access to Hong Kong using both positive and negative lists. For example, Hong Kong residents who have acquired mainland lawyer qualifications or legal professional qualifications and hold a mainland lawyer’s practice certificate are allowed under ATIS to engage in activities as agents in civil litigation cases relating to Hong Kong in the capacity of mainland lawyers on the mainland from mid-2016.

HONG KONG BUSINESS ANNUAL 2017 43

company and industry - licensing industry

Hong Kong welcomes brands’ licensing activities

Many famous foreign licensors have entrusted the exclusive property rights to Hong Kong licensing agents to develop the business in Asia.

H

ong Kong’s licensing market began to take shape in the early 1990s.

Despite a relatively short history of development, Hong Kong has grown into a highly developed licensing market in Asia. Similar to the global and regional pattern, characters and entertainment properties from the US and Japan are popular properties in Hong Kong. Hong Kong consumers are sensitive to the latest market trends, with trendy licensed products and high-end international brands having a strong local presence. Main categories of licensed products are food and beverages, toys, books, gift items, stationery, computer supplies and sales promotions for fast food chains and banks. As a popular destination of shopping and entertainment in Asia, Hong Kong has attracted a number of sports brands to launch their licensing activities.

Services providers Hong Kong has relatively few homegrown brands and properties for licensing.

Nevertheless, many international licensors, like Warner Bros., Mattel and the National

44 HONG KONG BUSINESS ANNUAL 2017

Basketball Association (NBA) have chosen to set up offices in Hong Kong, many of which also function as the licensors’ regional headquarters in Asia. Moreover, many famous foreign licensors have entrusted the exclusive property rights to Hong Kong licensing agents to develop the business in Asia. Hong Kong companies, such as YGM Trading, are also licensees of European designer brands, handling the sales and distribution on the Chinese mainland as well as in other Asian markets. There are some Hong Kong licensing agents which are also licensors of local properties, such as B Duck. Many licensing industry participants are members of the Licensing Executive Society of China, Hong Kong Chapter.

Utilising Hong Kong as a springboard to the Greater China and Southeast Asia markets, several global licensing agents and brand management companies, including those from Europe, Japan and the US like Iconix Brand Group, have also established their offices in the city.

The significance of Hong Kong’s licensing business lies in its status as a hub for

"Collaborations or co-branding among retailers and licensors have become popular in recent years." licensing activities in Asia. Local business usually accounts for a small proportion of overall business of licensors and licensing agents, who are most active in other Asian countries. Licensing activities between Hong Kong and the rest of the world can be partly reflected in the cross-border payments for the use of intellectual properties.

Industry developments The global retails sales of licensed goods amounted to US$251.7 billion in 2015.

57.7% of the sales were in the US and Canada, with 21% and 8.9% in Europe and Asia respectively. With a market size of US$7.6 billion, Hong Kong and China was the second largest licensing business market in Asia Pacific in 2015, accounting for 25% of the Asia Pacific market, following Japan.

Licensing has become a global business.

According to LIMA, about one-third of the global licensed product revenues are generated outside the US compared with only one-tenth a decade ago. Meanwhile, developing economies like China and Southeast Asia are turning into the new focus of licensing companies looking for business. Retail sales of licensed merchandise in Hong Kong and China had grown by 25% from US$6.1 billion in 2014 to US$7.6 billion in 2015.

As blockbuster films are keen to have simultaneous releases in various markets to maximise the global buzz, international co-productions are becoming popular and contributing to a rise of cross-border entertainment properties in the global licensing market. For instance, Warner Bros is successful in creating a continued revenue stream from Harry Potter through various types of licensing deals. For example, the Wizarding World of Harry Potter at Universal Orlando, a 20-acre theme park opened in 2010, was the result of the licensing partnership between Warner Bros and Universal.

Entertainment/character remained the fastest growing group of licensing property in terms of global licensed merchandise sales in 2015. Boosted by Star Wars, sales of licensed entertainment/character merchandise grew by 5.6% in 2015 with more than US$113 billion sales value.

The internet and mobile commerce is affecting international licensing business.

Characters, fads, brands and fashion trends now travel at hyper-speed across

licensing industry - company and industry Charges for the use of intellectual properties* Export

Import

% Share in total services exports

US$ mn

Growth %

% Share in total services imports

US$ mn

Growth %

2012

517

+12.8

0.5

2,007

+0.1

2013

571

+10.3

0.5

2,016

+0.4

2.7

2014

619

+8.5

0.5

1,926

-4.4

2.6

2.6

* Include 1) Franchises and trademarks licensing fees. 2) Periodic receipts/payments on authorised use of patents, copyrights and other non-financial proprietary rights and receipts/payments for licences to reproduce and/or distribute intellectual property embodied in products not included elsewhere.

Source: Report on Hong Kong Trade in services statistics for 2014, Census and Statistics Department

the markets, cutting short the time needed to get a product from licensed concepts to retail shelves. With increased internet penetration and the possession of electronic gadgets in Asia, digital media, online videos and games, such as Angry Birds, play an active role for licensed product promotion. Social media, particularly Facebook, is also an important channel for marketing new properties.

Meanwhile, the characters of mobile games and social networking platforms, such as LINE Friends, are popular licensed properties in Asia.

Collaborations or co-branding among retailers and licensors have become popular in recent years. Through partnership with international licensors, licensees or retailers launch limited editions or character specific collections. For examples, LINE had set up permanent store and pop-up stores for selling LINE Friends merchandise. The company also collaborated with local Hong Kong illustrators to launch special editions LINE stickers in the app. Bandai licensed the cartoon character Gundum to Times Square for the Gundum docks at Hong Kong II exhibition.

Both the public and private sectors have been working hard to promote Hong Kong as an international licensing hub.

For instance, the Hong Kong government signed the first IP co-operation agreement with the mainland government in November 2011, strengthening the co-operation in areas of laws, education and staff training. The fifth Business of IP Asia Forum, held in December 2015, was

jointly organised by the Hong Kong Government, the HKTDC and the Hong Kong Design Centre. The two-day event was attended by more than 2,400 professionals and business leaders in design, R&D, finance and legal profession, as well as IP traders from 37 countries and regions. Global issues and opportunities in licensing was one the main discussion topics during the Forum.

The Hong Kong International Licensing Show (HKLS) held since 2002 has been well-known in Asia and has helped further promote Hong Kong as the regional licensing hub. In January 2016, HKLS attracted about 20,800 trade visitors from over 100 regions and countries, including manufacturers, licensees, retailers and distributors. Over 860 brands & properties were shown by 340 exhibitors from 15 regions and countries.

During the event, more than 600 business-matching meetings were arranged to help industry players to explore new partnership opportunities.

The Asian Licensing Conference 2016, concurrently held with HKLS, was joined by 32 expert speakers from various international brands and many sectors in the licensing industry, focusing on new opportunities and strategies for licensing business in Asia. The event also serves as a networking platform for international licensing executives and business people to gather latest industry intelligence and explore new opportunities.

The Asian Licensing Association was established by

"The huge size of the economy has made Hong Kong and China the second largest licensing market in Asia Pacific, following Japan."

Hong Kong industry leaders in 2011, aiming to promote Hong Kong as an international licensing hub. The Innovative Entrepreneur Association organised the first Cross Industry Matching Showcase in the same year, which aimed to provide a platform for business synergy between local licensors, licensing agents and enterprises.

Burgeoning licensing market While the global licensing market has generally been stagnant, licensing activities are growing in Asia with the exception of Japan, particularly the China market. Hong Kong and China is a fast growing market for licensed goods, which has grown from US$6.1 billion in 2014 by about 25% to US$7.6 billion in 2015. The huge size of the economy has made Hong Kong and China the second largest licensing market in Asia Pacific, following Japan.

In China, e-commerce has become one of the top trends in the licensing industry. Many foreign brands and properties are fast gaining popularity in China through utilising some B2C online platforms, which often require more support and resources from the licensors.

For instance, basketball sport brand NBA has established an online shop in Alibaba’s Tmall, which helped the brand strengthen its presence in the Chinese consumer market.

Leveraging the marketing impact of social media platforms, such as Sina’s Weibo, NBA China established its online fans club with interactive campaigns to help promote licensed NBA products.

HONG KONG BUSINESS ANNUAL 2017 45

company and industry - lighting industry

Hong Kong’s lighting industry smartens up

The industry is keeping an eye on the so-called “smart” lighting system on the advent of the Internet of Things.

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 decreased 12% in the first half of 2016. Exports of all major product categories, including electric lamps, discharge lamps and portable lamps, decreased in the period. The EU and the US are among the largest markets, together absorbing about half of Hong Kong’s lighting exports. Although exports to the US

"Hong Kong’s total exports of lighting products decreased 12% in the first half of 2016." continued to expand, exports to the EU were lacklustre in the first half of 2016.

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

46 HONG KONG BUSINESS ANNUAL 2017

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

Total exports by Major Market EU 28 Germany France

2015 HK$Mn. Growth %

Jan-Jun 2016 HK$Mn. Growth %

34

-14

35

+3

14

-17

10,604

-4

10,355

-2

4,360

-12

9,787

+7

9,455

-3

3,993

-12

10,638

-4

10,390

-2

4,374

-12

2014 Share % Growth %

2015 Share % Growth %

Jan-Jun 2016 Share % Growth %

25

-1

21

-16

20

-17

7

+2

6

-7

6

-20

6

-12

3

-39

4

-6

US

29

+25

34

+13

38

+4

Chinese Mainland

15

-38

15

+1

14

-23

Japan

9

-5

8

-4

9

-15

Canada

3

+8

2

-13

2

-21

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

rule of origins being agreed and met. In the main, the CEPA origin criteria 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 value-added 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%.

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

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

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 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 started to phase out the imports and sale of certain incandescent light bulbs since October 2012, with a plan to phase out most of such light bulbs by 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.

The industry is also 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 2017 47

company and industry - processed food and beverages industry

The processed F&B industry is cooking up a storm

Large Hong Kong manufacturers have expanded their global networks and set up offices or factories in several major markets.

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 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 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.

Many Hong Kong food and beverages manufacturers deal directly with overseas

"Health and wellness offerings are increasingly adapted to meet the expectations of consumers ." 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 (instant noodles), Vitasoy (soft drinks), Amoy, Lee Kum Lee (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 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 cholesterollowering spreads and high calcium milk.

While health issues are creating new openings, convenience foods such as microwaveable and packaged foods, are also looking promising in growth terms.

As people become more health conscious,

48 HONG KONG BUSINESS ANNUAL 2017

processed food and beverages industry - company and industry Industry Features No. of Establishments

Manufacturing

Import-export trade

No. of Establishments

1,140 (March 2016)

7,010 (Dec 2015)

Employment

28,753 (Mar 2016)

34,210 (Dec 2015)

Note: Industry statistics cover activities in Hong Kong only.

Performance of Hong Kong’s Exports of Processed Food and Beverages ^ 2014

HK$ mn Domestic Exports Re-Exports Of Chinese mainland origin Total Exports

By markets ASEAN Vietnam Chinese Mainland

Growth %

3,545

+14

3,867

46,111

+9

8,464

-7

49,656

+9

Growth %

2,066

48,524

+5

31,185

+14

7,206

-15

3,998

+16

52,390

+6

33,251

+14

2015 Growth %

Jan-Jul 2016 HK$ mn Growth %

+9

2014 Share %

2015

HK$ mn

Share %

Growth %

+2

Jan-Jul 2016 Share % Growth %

42.0

+4

45.6

+15

27.5

-32

37.6

+2

41.3

+16

25.6

-28

24.5

+20

27.4

+18

38.3

+64 +992

Taiwan

6.8

+4

1.3

-80

10.8

Macau

16.8

+20

16.7

+5

14.6

-4

US

2.5

+3

2.3

-1

2.1

+6

EU

1.4

-13

1.2

-11

1.1

-4

Japan

0.8

+3

0.6

-23

0.7

+51

Korea

1.2

+48

1.4

+24

1.4

+29

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

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 Asian 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.

GM food labelling The regulatory approaches on GM food labelling vary in different countries and regions, and can be broadly classified as voluntary or mandatory. For the voluntary labelling approach, only GM food that is significantly different from its conventional counterpart, in terms of composition, nutritional value and allergenicity, needs to be labelled.

For the mandatory labelling approach, it can be further divided into “pan-labelling” and “labelling for designated products only”. The “panlabelling” category requires labeling for any food products that either contain GM materials exceeding a threshold level or have any significantly different characteristics as a result of genetic modification.

"Many Hong Kong brands have successfully entered overseas markets."

The “labelling for designated products only” category requires that only the designated products, which are genetically modified, need to be labelled.

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.

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 also a major trend.

HONG KONG BUSINESS ANNUAL 2017 49

company and industry - sporting goods industry

The sporting goods industry’s sprint to success

The rising number of sporting events is expected to encourage more people to participate in various sports.

H

ong Kong companies export a diverse range of sporting goods on a global basis. The major categories include sports equipment and accessories (65.8% of the total), sports apparel (26.8%) and sports footwear (7.4%). Sports equipment and accessories cover a wide range of products, including sporting bags, life-jackets, water-skis, surf-boards, skateboards, golf equipment, fishing and hunting requisites, and tennis and badminton racquets. Hong Kong is one of the world’s leading suppliers of sporting goods.

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

50 HONG KONG BUSINESS ANNUAL 2017

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, 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) and Nikko (camping gear and accessories). Several Hong Kong companies act as agents/distributors for foreign sportsgear/sportswear companies, often sponsoring local sports teams as part of their promotional activities.

Many Hong Kong sporting goods are exported under licensing and contract manufacturing arrangements with overseas manufacturers and brand owners, such as Nike, Puma, Umbro, Quiksilver and Wilson. Typically, buyers provide the production specifications and product

"Close connections with sports stars and coaches prove a resource that provides a competitive advantage." designs. Hong Kong manufacturers, though, are increasingly becoming adept at product design and development, engineering, modelling, tooling and quality control, allowing them to generate higher value along the supply chain.

Sales channels 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. It is 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 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 secondand 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, while the big players in Europe include Decathlon, Intersport and Go Sport.

The International Sportsmen Exposition (ISE) in the US and ISPO in Germany are the leading trade fairs for sporting goods. As well as staging trade fairs, 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. They also

sporting goods industry - company and industry Performance of Hong Kong’s Exports of Sporting Goods ^ 2013 HK$Mn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

Total exports by Markets

2014 HK$Mn. Growth %

Jan-Nov 2015 HK$Mn. Growth %

192

-4

138

-28

90

-30

38,422

-2

30,021

-6

29,430

-10

35328

-3

33,024

-7

27,092

-9

38,614

-2

36,158

-6

29,520

-10

2013 Share % Growth %

2014 Share % Growth %

Jan-Nov 2015 Share % Growth %

US

27.1

-9

27.2

-6

28.7

-4

EU 28

26.9

-5

27.3

-5

25.5

-15

UK

6.2

-7

6.1

-9

6.0

-9

Germany

5.9

*

6.7

+7

6.4

-14 -19

Japan

13.1

+3

12.5

-11

11.6

Chinese Mainland

10.6

+13

10.1

-11

10.3

-9

ASEAN

3.8

+1

3.9

-3

4.3

-2

Australia

3.6

-2

3.6

-6

3.7

-8

Total Exports by Categories

2013 Share % Growth %

2014 Share % Growth %

Jan-Nov 2015 Share % Growth %

Sports equipment and accessories

71.1

-1

68.9

-9

65.8

Sports apparel

23.6

-2

24.6

-2

26.8

-14 -2

Sports footwear

5.3

-15

6.5

+14

7.4

+3

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

shift the inventory risk on to the manufacturers.

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 standard of living.

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 fashions. Luxury brands have entered into the sporting goods business by introducing their own sneakers and sporting accessories. A “life cycle hypothesis” has been proposed to describe the boom and bust in the specialised sporting equipment market.

As people grow older, they prefer fishing, golf and exercise equipment, as opposed to the more strenuous sports, such as football and tennis.

With capital intensive products being the exception,

sporting goods are like other consumer goods, with R&D and marketing figuring highly in the value-added part of the process. These have seen many businesses look to off-shore their physical production to the Chinese mainland, Vietnam, Indonesia and Thailand in order to lower their production costs.

Hong Kong manufacturers have also largely off-shored their plants to low-cost countries.

With international players focusing their R&D on the use of new materials and generating designs incorporating engineering, biomechanics and physiology, several Hong Kong manufacturers have also looked to refine their R&D capabilities.

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. Close connections with sports stars and coaches prove a resource that provides a competitive advantage.

"Luxury brands have entered into the sporting goods business by introducing their own sneakers and sporting accessories."

Feedback on products from such individuals could help direct R&D activities.

Following 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 a zero tariff. According to the stipulated procedures, products that have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers if comply with the CEPA rules of origins.

Trade measures Many sporting equipment items are required to observe the safety and technical standards of the importing countries.

Japan, for example, has banned the use of a list of substances in consumer products under the Japan Green Procurement Survey Standardised Initiative (JGPSSI). In May 2012, the European Chemicals Agency (ECHA) published an updated version of the EU’s Guidance on Registration in the framework of the REACH Regulation.

HONG KONG BUSINESS ANNUAL 2017 51

company and industry - telecommunications industry

Telcos are ready to answer when the future calls Worldwide mobile data bandwidth usage continues to grow as the mobile phone increasingly integrates into users’ daily life.

T

he Local Fixed Telecommunications Network Services (FTNS) market has been fully liberalised since 1 January 2003, with no pre-set limit on the number of licences issued, nor specific requirement on network rollout or investment. As at May 2016, there were 25 local fixed network operators in Hong Kong. Also as at May 2016, there were four mobile network operators. In March 2016, the number of mobile service subscribers reached 16.7 million, representing one of the highest penetration rates in the world at about 228%.

Among these subscribers, 14.7 million were 3/4G service customers.

As at May 2016, there were 217 Internet Service Providers (ISPs) licensed to provide broadband services. As at March 2016, more than 2.35 million customers had used broadband services with speed up to 10 Gbps (Gigabits per second). In the residential market, 84% of the households use broadband service. Internationally, Hong Kong's broadband penetration rate is among the highest in the world. International Direct Dialing (IDD) service to most countries and

regions of the world is available. In 2015, the volume of outgoing and incoming traffic for telephone calls was 8,351 million minutes and 2,002 million minutes respectively.

IDD costs have gone down significantly since 1999, when fixed-line operators were allowed to offer non-exclusive international services.

As at May 2016, there were 42 licensees permitted to operate either external cable or non-cable based facilities for the provision of external communication services in Hong Kong, with more than 220 satellite earth station antennas in operation. Hong Kong adopts an open sky policy in regulating the provision of satellite services. Hong Kong provides dedicated relay services for multinational companies, international press agencies and TV channels to downlink or uplink their satellite signals over the Asia Pacific region.

Hong Kong is connected to a number of submarine cable systems, including: The Okinawa-Luzon-Hong Kong system connects Hong Kong to the Philippines, Japan and North America; The Asia Pacific

"As at May 2016, there were 217 Internet Service Providers (ISPs) licensed to provide broadband services."

Cable (APC) system links Hong Kong to Malaysia, Singapore, Taiwan and Japan; The Thailand-Vietnam-Hong Kong (TVH) system connects Hong Kong to Thailand and Vietnam; The Asian Pacific Cable Network (APCN) system connects Hong Kong to Taiwan, Korea, Japan, Thailand, the Philippines, Malaysia, Singapore, Indonesia and Australia; The Fibre-optic Link Around the Globe (FLAG) connects Hong Kong to Thailand, Shanghai, South Korea, Japan and other countries around the world; The SEAME-WE-3 cable connects Hong Kong to various countries in South East Asia, Middle East and the Western Europe; The Asian Pacific Cable Network 2 (APCN2) connects Hong Kong to the Chinese Mainland, Taiwan, Korea, Japan and other Asian countries.

C2C Network connects Hong Kong to the Philippines, Taiwan and Singapore; The Asia America Gateway (AAG) connects Southeast Asia and North America, via Hong Kong, Guam and Hawaii; The East Asia Crossing (EAC) connects Hong Kong with Japan, South Korea, Taiwan, the Chinese mainland, Singapore and the Philippines; The North Asia Cable System (NACS) connects Hong Kong with Japan and Taiwan; The Reach North Asia Loop (RNAL) connects Hong Kong with Taiwan, Korea and Japan; The Trans Pacific Cable (TPC-1 & TPC-2) connects Hong Kong with Vietnam, the Philippines, Japan, Taiwan, Singapore, South Korea, Guam and Hawaii; The VSNL SG HK JP Guam connects Hong Kong with Singapore, Japan and Guam.

Exports The main form of cross-border exports of telecommunications services is through incoming calls from another country, in the form of revenue collected for the service of completing the call. Other export incomes are derived from: offering roaming services to overseas mobile phone users; selling satellite transponder capacities to other telecommunications operators, broadcasting and multinational corporations to meet their regional communications, broadcasting and international communications needs; consultancy services (e.g. technology transfer and training programmes) to overseas customers; and telecommunications services provided to travellers to Hong Kong.

With the opening up of the

52 HONG KONG BUSINESS ANNUAL 2017

telecommunications industry - company and industry Telecommunications Industry Data March 2016 Number of establishments

299

Employment

19,670

Business Receipts HK$ billion 2012

2013

2014

Public local phone/facsimile/telegraph services

4.8

5.0

5.2

Public long distance phone services

9.3

6.7

7.1

Mobile phone services

22.8

27.9

29.9

Othher telecommunication service

26.4

26.8

27.9

Total

63.3

66.4

70.1

Ohone/Household Broadband Penetration Rate April 2016 Houshold fixed phone line penetration rate

94.99%

Mobile subscriber penetration rate

228.1%

Household broadband penetration rate

84.5%

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

telecommunications market in most countries, many Hong Kong operators have gained a foothold in the overseas markets, particularly in the mobile telephone sector. For example, Hutchison Telecom has 3G operations in different regions and countries (e.g. the UK, Denmark, Italy, Sweden, Ireland, Israel, Macau, Australia and Austria).

Many other operators have invested in the development of telecommunications networks in Asia, including India, Indonesia, the Philippines, Sri Lanka, Taiwan and Vietnam.

The bulk of Hong Kong's international call traffic is now with the Chinese mainland.

International private leased circuits are offered to several mainland gateway cities, while some operators provide roaming services to mobile phone and pager users when they are on the mainland.

Local industry developments As of end-June 2008, mandatory type II interconnection policy had been withdrawn. Type II interconnection is a regulatory tool widely deployed in the world, requiring the incumbent fixed network operator (“FNO”) to open up its copper-based

customer access network (CAN) to new entrants so that the latter may provide competing service to customers in the start-up phase when their own self-built CANs are not as extensive as the incumbent’s. As at March 2015, over 86% of local households have the choice of more than one FNO. The increasing use of data services such as instant messaging and mobile internet services among the younger generations helps stimulate the mobile data usage in Hong Kong. As at March 2016, local mobile data usage recorded a remarkable surge to 20,557 Terabytes (1Tb=1,000Gb). This represents a growth of 1.18 times in the mobile data usage over the same period in 2015 and 1.58 times over the same period in 2014. The current digital terrestrial television (DTT) network coverage stands at around 99%, on a par with that of the analogue TV broadcasting. As of December 2015, take-up rate of DTT is close to 85% of total number of households in Hong Kong.

WiFi access is increasingly widespread in Hong Kong. As at May 2016, there were more than 43,000 public WiFi hot spots in Hong Kong. Since

"The increasing use of data services such as instant messaging and mobile internet services among the younger generations helps stimulate the mobile data usage in Hong Kong."

the Hong Kong government launched the Government WiFi programme in 2007, there were free public WiFi services in 603 government premises as at May 2016.

Macro-trends in the industry Worldwide mobile data bandwidth usage continues to grow as the mobile phone increasingly integrates into users’ daily life. Services and functions that can be done through the mobile phone include payment, receiving news, exchanging files, music, and movies and trading. Driven by the increased affordability of smart gadgets and more extensive network coverage, "going wireless" continues to gain momentum in the global consumer market. According to the GSM Association, mobile broadband connections (i.e.

3G and 4G technologies) is estimated to increase from 39% at the end of 2014, to account for 69% of the global connections by 2020. With the deployment of the 4G technologies such as the Long Term Evolution (LTE) and other advanced technologies progressively by mobile network operators, consumers can enjoy even higher speed of mobile data services up to 375 Mbps.

HONG KONG BUSINESS ANNUAL 2017 53

company and industry - textiles industry

The textiles industry keeps up with the trends Modern technologies like automatic web spreading and nano biofunctional materials finishing are no strangers to manufacturers.

T

he textiles industry – comprising spinning, weaving, knitting and finishing of fabrics – had a total of 544 manufacturing establishments as of December 2015, employing 3,386 workers or 3.4% of the local manufacturing workforce.

The textiles industry is one of Hong Kong's major export earners, accounting for 2.0% of the total exports in 2015. 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 stricter 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 valueadded items, including quality ring-spun,

54 HONG KONG BUSINESS ANNUAL 2017

open-end yarn, fine gauge knitted fabrics as well as complicated dyed and printed fabrics.

To enhance competitiveness in the global market, some Hong Kong textiles companies have formed strategic partnership with indigenous Chinese companies. For instance, some of them join force with mainland cotton suppliers in producing cotton textiles.

Hong Kong's textiles industry is a major supplier to the local clothing industry.

Producing textiles locally, Hong Kong textile manufacturers have an advantage in accommodating orders from local garment manufacturers in short notice. Meanwhile, a significant portion of textile exports is destined for use in Hong Kong companies’ offshore production of garments, especially on the Chinese mainland. After a 7% fall in 2015, Hong Kong’s textile exports decreased further by 13% in the first four months of 2016. Re-exports, accounting for more than 99% of total textiles exports, experienced a similar decline of 13%, while domestic exports slid by 15%. With 75% of the textile re-exports originating from the Chinese

"The Hong Kong Research Institute of Textiles and Apparel helps enhance the competitiveness of the industry." mainland, Hong Kong’s re-exports of textiles of China origin registered a decrease of 13% in January-April 2016. Asia is the leading market for textiles exported from Hong Kong, accounting for 93% of Hong Kong’s textile exports in the first four months of 2016. Of the top 10 export destinations, nine of them are in Asia. The Chinese mainland remains to be the city’s predominant export market, accounting for 53% of Hong Kong's textile exports in January-April 2016.

Other major export markets of Hong Kong textiles include Vietnam, Bangladesh, Cambodia, Indonesia, Sri Lanka, the US, India, Thailand and the Philippines. In particular, because of Vietnam’s cheap labour and WTO membership, many foreign investors, including those from Hong Kong, have set up garment factories there. This gives rise to sustained demand for textile imports, making Vietnam the second largest market for Hong Kong’s textile exports, after the Chinese mainland. Hong Kong's exports of knitted or crocheted fabrics, textile yarns, woven fabrics, finishing accessories, special yarns and fabrics, textile made-up and floor coverings registered respective declines of 1%-23% in the first four months of 2016.

Sales channels Hong Kong is both a leading production centre and a global hub for clothing sourcing. As such, Hong Kong's textiles industry is well positioned to serve both local and overseas clothing manufacturers and merchandisers. While many Hong Kong textile manufacturers and traders supply their products to the clothing manufacturers in Asia, particularly on the mainland, international textile companies are also using Hong Kong as a gateway to promote their products to other Asian economies.

For instance, Brazil’s fast-growing fashion industry is attempting to leverage Hong Kong’s trade platform to promote their textiles and apparel on the Chinese mainland.

The industry is capable of producing either a wide range of quality products in bulk or specialised items within a short leadtime for varied applications. Its competitive edge lies in the superb quality and swift response to fashion trends and market demand. The industry has also earned a worldwide reputation for unique quality, expertise, workmanship and flexibility.

Hong Kong is an ideal one-stop shopping

textiles industry - company and industry Performance of Hong Kong’s Exports of Textiles ^ 2014 HK$Bn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

Total exports by Major Market

2015 HK$Bn. Growth %

Jan-Apr 2016 HK$Bn. Growth %

0.851

-32

0.598

-30

0.176

-15

74.975

-8

69.891

-7

20,707

-13

54.797

-7

52,102

-5

15.525

-13

75.827

-9

70.579

-7

20.881

-13

2014 Share % Growth %

2015 Share % Growth %

Jan-Apr 2016 Share % Growth %

China

59.9

-13

55.8

-13

52.8

Vietnam

9.1

+2

11.3

+15

11.7

-19 -7

Cambodia

5.1

+2

5.8

+6

6.6

-2

Bangladesh

5.8

-2

6.1

-2

6.5

-8

Indonesia

3.7

-14

4.1

+5

4.4

-12

Srilanka

2.4

+2

2.7

+7

3.1

+3

US

1.8

-10

1.9

+10 7

1.8

-8

Thailand

1.2

-3

2.4

+10 -3 -3

1.8

+11

India

1.4

+2

1.5

=10 -3

1.7

-4

Philippines

1.2

1.2

1.2

-3

1.3

-7

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

centre for buyers looking for new and trendy fabric materials.

The Interstoff Asia Essential, held twice a year in spring and autumn, is a significant marketing and sourcing platform in the region for both fabric manufacturers and buyers alike. Organised by the HKTDC, the Hong Kong International Home Textiles Fair offers a wide range of high quality products such as bathroom textile, bedroom textile, kitchen textile, carpet and floor covering. It is a specialist platform, giving exhibitors and buyers of home textiles immediate access to markets in Asia and beyond.

The Hub, a bi-annual fashion and designer trade show, also showcases a wide range of products from textile, leather and fashion industries.

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. Today, the operation

of the textiles industry in Hong Kong is focused mainly, if not all, on higher value-added activities such as sales and marketing, quality control, designs and development, while offshore plants are specialised in production operations.

This, in turn, results in a high proportion of re-exports (almost 99%) in Hong Kong’s textiles exports portfolio.

With rising labour costs and volatile raw material prices and stricter environmental regulations on the Chinese mainland, many Hong Kong's textiles manufacturers have relocated their production facilities to other Southeast Asian countries, like Vietnam (expected to benefit by 2018 from the Trans-Pacific Partnership (TPP), which is a trade agreement among twelve Pacific Rim countries signed on 4 February 2016), Cambodia and Bangladesh.

A few companies have even set up offshore production in Latin America (e.g. Mexico) and Africa (e.g. Nigeria) to take advantage of preferential treatments allowed by regional trade agreements such as

"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."

North American Free Trade Agreement (NAFTA) and the EU’s GSP scheme.

Keeping up with technology To stay tuned to the advancements of manufacturing technology and product requirements, the textiles industry, as a capital-intensive business, has invested heavily to keep 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 bio-functional materials finishing and Texparts® Zero Underwinding are no strangers to local manufacturers.

Meanwhile, 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. As such, Hong Kong textiles manufacturers are able to offer a wider range of fibres, yarns and fabrics to clients.

HONG KONG BUSINESS ANNUAL 2017 55

company and industry - watches & clocks industry

Watchmakers are wasting no time in quality upgrade

More and more watches manufacturers have acquired the ISO 9000 certification to strengthen their quality management systems.

H

ong Kong is a leading exporter of watches and clocks in the world.

The largest export item is batterypowered wrist watches, accounting for 46% of the total exports. Wrist watches exports range from analogue to digital watches, metal to plastic watches, fashion to classic watches, standard to jewellery watches, and novelty to sport watches. Hong Kong also exports a variety of parts and components of watches and clocks, such as assembled movements, cases, watch straps, dials and parts for watch cases and bands. During the first half of 2016, major sources of imports include Switzerland (36% of total imports), the Chinese mainland (35%) and Japan (9%).

Hong Kong has established strong ancillary and supporting industries for its watches and clocks manufacturing.

Local watch assemblers are well served with a variety of high quality watch cases, dials, watch straps, hands, button cell batteries, crowns, electronic parts and other accessories. However, the industry relies heavily on imported watch and clock

56 HONG KONG BUSINESS ANNUAL 2017

movements, and core components such as quartz, crystals and integrated circuits.

Hong Kong’s watches and clocks companies largely rely on OEM and ODM business. Because order quantity for each model is usually small, making it difficult for scale economy through automation.

Production of complete watches and clocks remains fairly labour-intensive in Hong Kong.

Most manufacturers had relocated the labour intensive processes to the Chinese mainland to reduce costs, but a number of manufacturers still maintain their production bases for higher value products in Hong Kong. In fact, with rising production costs on the mainland, the need for product upgrade becomes more compelling. Meanwhile, as buyers are increasingly quality conscious, more and more watches manufacturers have acquired the ISO 9000 certification to strengthen their quality management systems.

The Hong Kong Watch Manufacturers Associations Ltd. has also strengthened the industry’s intellectual property protection

"Hong Kong’s watch and clock enterprises are keen to move up market." by running a “Watch & Clock Design Depository Centre”, where members can store their product designs there and the centre will provide a third-party certification services for the duration-in-record of a copyright. In additional, Hong Kong Watch & Clock Technology Centre was established with the ITF funding of the Hong Kong SAR Government. It is jointly managed by the Hong Kong Productivity Council (HKPC) and the Hong Kong Watch Manufacturers' Association Limited. The Centre acts as a central body to transfer relevant technologies to support Hong Kong manufacturers. It also provides independent testing services in quality assurance, and particularly in areas where tests are unavailable commercially.

Sales channels Major Hong Kong’s watches and clocks OEM customers include importers and distributors in the US, the EU and Japan. A small number of manufacturers have OEM arrangements directly with chain stores and fashion labels, which require unique designs to complement with their brand image.

With respect to ODM products that Hong Kong companies own the designs, though the sales channels are similar, they are especially preferred by smaller distributors, who are constrained by their financial strength in investment in design and tooling. Some low-priced products may also be sold to large companies directly as premium items for promotional campaigns.

Market-wise, sales to the Chinese mainland, Southeast Asian countries and other emerging economies are usually on ODM arrangement.

There are a number of Hong Kong companies selling watches with their own brands. There are also some few examples that Hong Kong companies have acquired Swiss brand names or their Swiss counterparts as a means to extend marketing and distribution network, and/or to gain access to better technology and designs. In addition, some Hong Kong companies have begun business in major cities in the Chinese mainland via co-operation arrangements with department stores and shopping malls, aiming at promoting their own-brand products there.

In April 2013, Hong Kong Watch Manufacturers Association signed the Strategic Agreement of Development and Promotion of Hong Kong’s Clock and

watches & clocks industry - company and industry Performance of Hong Kong’s Exports of Watches and Clocks^ 2014 HK$Mn. Growth % Domestic Exports Re-exports of Chinese Mainland Origin Total Exports

Total exports by Major Market

2015 HK$Mn. Growth %

Jan-June 2016 HK$Mn. Growth %

909

22

671

-26

91

79,413

4

76,050

-4

32,593

-8

43,060

4

42,254

-2

18,286

-6

80,321

4

76,721

-5

32,684

-9

2014 Share % Growth %

2015 Share % Growth %

-77

Jan-June 2016 Share % Growth %

Switzerland

16

6

17

*

17

Chinese Mainland

16

8

16

-2

17

-7

US

16

3

16

-6

15

-11

EU 28

14

-1

14

-6

15

2

5

*

5

-8

5

9

Germany

-14

UK

2

-11

2

-1

2

-12

Japan

7

9

9

14

9

-1

ASEAN

6

10

7

1

7

2

Macau

9

5

7

-26

6

-30

Total Exports by Categories

2014 Share % Growth %

2015 Share % Growth %

Jan-June 2016 Share % Growth %

Complete watches

69

2

67

-8

67

-10

Parts and components

23

11

24

2

24

-10 -14

Complete clocks

2

-4

2

-12

2

Watch straps and parts

6

6

7

10

7

1

Other chronographic apparatus

1

5

7

3

1

-7

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

Watch Brands with Chongqing Municipal Government. In accordance with the agreement, Chongqing Municipal Government shall assist Hong Kong’s clock and watch brands in setting up the sales base in Chongqing and to expand their businesses throughout the country. In April 2014, “Western China (Chongqing) Watches Timing and Precision Processing Industrial Park” was formally founded in Dianjiang county of Chongqing. In this way, the Association, with the help of Chongqing Municipal Government, can provide convenience and assistance for Hong Kong’s clock and watch brands intending to enter the mainland markets.

The Basel Watch, Clock and Jewellery Fair held in Switzerland is an important event for Hong Kong companies to promote their business. The Hong Kong Watch & Clock Fair, organised by the Hong Kong Trade Development Council (HKTDC), is another major

event for companies to exhibit their products to overseas buyers. Business missions organised by the HKTDC to the Chinese mainland, Indonesia, Middle East, Russia, etc., also provide opportunities for Hong Kong companies to establish connections with buyers in emerging markets.

Industry trends Hong Kong’s watch and clock enterprises are keen to move up market and are interested in developing locally designed and produced mechanical movement, and even mass production of chronometers.

Many enterprises will send products manufactured in-house or distributed as dealers to independent testing laboratory prior to assembly for assuring their quality. For example, chronometer test for mechanical movements (with reference to ISO 3159); 2D measurements of geometric dimensions for positions, linear dimensions and diameter, etc.

"Technologies such as computer-aided design have been applied to improve the design of complete watches and clocks, dial faces, watch cases and related components, while reducing time and costs involved."

In addition, manufacturers have paid more attention to the design patent issues in order to protect their intellectual property rights. Technologies such as computer-aided design (CAD) have been applied to improve the design of complete watches and clocks, dial faces, watch cases and related components, while reducing time and costs involved.

Applications such as the use of 3-dimension computer aided industrial design (CAID) and rapid prototyping also facilitate Hong Kong companies to enhance their design capabilities.

Some companies have also invested in the research and development of movements to reduce their reliance on imports and overcome the constraints of standard movements to product design.

Besides, Hong Kong’s watches and clocks manufacturers have increased investment in modern production technology to enhance quality and productivity.

HONG KONG BUSINESS ANNUAL 2017 57

company and industry - wine industry

Cheers! Winemakers have reasons to celebrate Training institutions are enriching their courses and developing enhanced manpower training programmes to meet rising demand.

H

ong Kong has a significant pool of experienced fine wine merchants with good wine knowledge and international wine trade experience. Amid 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.

Besides wine trading and distribution, winerelated business includes auction, retailing, warehousing, catering and transportation.

Following the deregulation, development of the wine industry has accelerated. Wine imports surged some 80% in the first year.

According to an ad hoc survey carried out by the Commerce and Economic Development Bureau to evaluate the economic benefits of wine duty exemption, about 850 new wine-related companies were set up in Hong Kong in 2008 and 2009, bringing the total to 3,550; the wine sector as a whole gained HK$5.5 billion worth of wine-related business receipts in 2009, representing an

increase of over 30% as compared with 2007; and the number of employees engaged in wine-related business increased by more than 5,000 as compared with 2007, reaching 40,000 by the end of 2009. This increase in employment was equivalent to about 1,000 full time jobs, 60% of which were for front-line staff; and the number of winerelated manpower and professional courses (including sommelier training as well as wine business/management courses) grew from 21 in 2007 to 86 in 2009. The number of participants in these courses reached over 8,500 in 2009, representing an increase of more than two times as compared with about 2,400 participants in 2007.

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

"Consumers in Asia are increasingly wine savvy and their demand for wine remains strong." 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 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 reexports of imported wines with Asia being the major market. Chinese mainland and Macau, taking up 95% of the total in the first seven months of 2016, are the major wine exporting destinations of Hong Kong.

On the other hand, Hong Kong’s wine imports have expanded fast since the elimination of import duties in February 2008. In 2015, imports of wine amounted to HK$10.8 billion, more than six times of the value of HK$1.6 billion in 2007. In the first seven months of 2016, the value of wine imports saw a strong year-on-year growth of 24.2%. 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 63.4 million litres of wine in 2015, increased 20.9% from the previous year. About 43% of the imported wines were re-exported in 2015. The rest – about 57% of wine imports were brought away 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 (and its Oregon and Washington states) to strengthen promotional activities in areas including wine-related trade, investment and tourism. Various wine promotional activities, including seminars, wine tastings, receptions and food pairings, also take place in Hong Kong. In particular, trade fairs in Hong Kong provide good business matching opportunities, support new wines and labels launches, and facilitate market testing on Asian Palette. Highvalue, investment grade wines are usually sold through auctions organised by global

58 HONG KONG BUSINESS ANNUAL 2017

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

Total exports by Major Market

Chinese Mainland

Jan-Jul 2016 HK$Mn. Growth %

2,432

+52.1

4,762

+95.8

3,435

-

-

-

-

-

-

2,532

+52.1

4,762

+95.8

3,435

+38

8,436

+5.1

10,762

+27.6

7,221

+24.2

2014 Share % Growth %

Asia

2015 HK$Mn. Growth %

2015 Share % Growth %

+38.0

Jan-Jul 2016 Share % Growth %

96.2

+ 60.6

96.8

+ 97.1

98.8

+42.2

60.6

+86.9

84

+171.6

88.3

+ 50.5

Macau

21.0

+6.8

7.9

-26.3

7.1

+19.9

Vietnam

10.4

+268.6

3.7

-30.4

2.2

-38.4

Singapore

0.9

-27.8

0.4

-15.4

0.4

+5.6

Taiwan

1.1

-14.9

0.4

-26.8

0.3

-35.8

US

2.2

+29.2

1.6

+46.6

0.6

-53.1

Wine Trade in volume

2014 mn litres Growth %

Total exports Domestic exports Re-exports Imports

2015 mn litres Growth %

Jan-Jul 2016 mn litres Growth %

22.153

+15.9

27.252

+23.0

17.739

-

-

-

-

-

+12.9 -

22.153

+15.9

27.252

+23.0

17.739

+12.9

52.429

+4.5

63.367

+20.9

37.495

+5.9

Source: Hong Kong Trade Statistics, Census and Statistics Department

auction houses including Acker Merrall & Condit, Sotheby’s, Christie's and Zachys. 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$98.4 million in 2015, 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.

According to Euromonitor International, wine sales in Hong Kong amounted to US$541 million or 14.9 million liters in 2015, up 9.6% and 5.1% respectively per annum in the past five years. For 2015 to 2020, it is forecast to grow 10.6% per annum in value terms and 4.3% per annum in volume terms.

Off-trade channels account for approximately 46% of total wine sales in value terms and 64% in volume terms in 2015.

While 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$63.8 billion or 5.8 billion litres in 2015, up 3.6% and 3.7% respectively per annum in the past five years. For 2015 to 2020, it is forecast to grow 7.4% per annum in value terms and 5.3% per annum in volume terms. Sales in China are more spectacular, with an amount of US$40.4 billion or 4.4 billion litres in 2015, up 8.4% and 4.8% respectively per annum in the past five years. For 2015 to 2020, it is forecast to grow 9.0% per annum in value terms and 7.0% per annum in volume terms.

Booming wine business 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. For example, Robert Sleigh, senior director and head of Sotheby's wine department in Asia, has been

"Due to the growing demand for wine in Asia and the deregulation of wine imports, wine business has boomed in Hong Kong."

relocated to Hong Kong from New York since September 2010. Also, after six years in Singapore, the Regional Council of Burgundy has moved its only office in Asia to Hong Kong. On the other hand, wine matching with Asian cuisine becomes a trend in the form of food and wine appreciation sessions held by restaurants and hotels.

There is also a food matching competition adjudicated by Asian experts in the HKTDC Hong Kong International Wine and Spirits Fair.

Responding to rising demand and driven by market forces, training institutions are enriching or expanding their courses and developing enhanced manpower training programmes. For instance, the Vocational Training Council (VTC) offers trainings to personnel ranging from sommeliers to frontline catering staff. Meanwhile, the School of Professional and Continuing Education of the University of Hong Kong has partnered with a French institution to launch the first Master of Business Administration’s programme in Hong Kong on wine.

HONG KONG BUSINESS ANNUAL 2017 59

numbers | indicators Labour force, unemployment, and underemployment Period

Labour Force

2013

No. (‘000)

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

3858.8

1.9

Unemployed (‘000)

Unemployment rate(Seasonally adjusted) %

Unemployment rate (Not Seasonally adjusted) %

Underemployed (‘000)

Underemployment rate %

130.8

-

3.4

58.2

1.5

2014

3876.4

0.5

127.2

-

3.3

56.5

1.5

2015

3909.8

0.9

128.9

-

3.3

53.0

1.4

6/2015-8/2015

3927.9

0.5

137.9

3.3

3.5

54.7

1.4

7/2015-9/2015

3916.3

0.3

137.1

3.3

3.5

52.8

1.3

8/2015-10/2015

3907.7

0.3

133.8

3.3

3.4

53.4

1.4

9/2015-11/2015

3908.5

0.3

128.8

3.3

3.3

52.3

1.3

10/2015-12/2015

3913.3

0.2

123.3

3.3

3.2

52.9

1.4

11/2015-1/2016

3931.8

0.5

119.8

3.3

3.0

53.2

1.4

12/2015-2/2016

3937.1

0.5

120.7

3.3

3.1

50.8

1.3

1/2016-3/2016

3942.2

0.6

130.4

3.4

3.3

53.4

1.4

2/2016-4/2016

3940.8

1.0

134.2

3.4

3.3

53.3

1.4

3/2016-5/2016

3935.5

1.2

134.6

3.4

3.4

55.9

1.4

4/2016-6/2016

3943.2

1.1

136.1

3.4

3.5

54.1

1.4

5/2016-7/2016

3950.3

0.9

138.8

3.4

3.5

55.5

1.4

6/2016-8/2016

3958.0

0.8

141.2

3.4

3.6

55.9

1.4

3954.0

1.0

140.6

3.4

3.6

55.3

1.4

3947.0

1.0

136.1

3.4

3.4

55.3

1.4

7/2016-9/2016 8/2016-10/2016

#

Notes: # Provisional figures

- Not applicable

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

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

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

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

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

Notwithstanding the above, the following types of persons are also classified as unemployed: (a) persons without a job, have sought work but have not been available for work because of temporary sickness; and (b) persons without a job, have been available for work but have 60 HONG KONG BUSINESS ANNUAL 2017

not sought work because they: (i) have made arrangements to take up a new job or to start business on a subsequent date; or (ii) were expecting to return to their original jobs.

Unemployment rate refers to the proportion of unemployed persons in the labour force. “Unemployment rate (seasonally adjusted)” refers to the unemployment rate adjusted for seasonal variations. Starting from May 2008, the seasonally adjusted unemployment rate is compiled by the X-12 ARIMA method to replace the previous X-11 ARIMA method.

The seasonally adjusted unemployment rates since November 2006 January 2007 have also been revised using the new method. Figures prior to November 2006 – January 2007 refer to the seasonally adjusted unemployment rates based on the X-11 ARIMA method. Seasonal adjustment is not applicable to annual average unemployment rates.

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

Following this definition, employed persons taking no-pay leave due to slack work during the 7 days before enumeration are also classified as underemployed if they worked less than 35 hours or were on leave even for the whole period during the 7-day period.

The underemployment rate refers to the proportion of underemployed persons in the labour force.

Source : Social Analysis and Research Section (2), Census and Statistics Department (Enquiry telephone no. : 2887 5508 Enquiry e-mail : ghs@censtatd.gov.hk)

numbers | indicators GDP and its main expenditure components at current market prices

Year

Qtr HK$ million

Yearonyear % change

2013

2,138,010

2014 r 2015 r 2015

2016

Changes in inventories

HK$ million

HK$ million

Year-onyear % change

HK$ million

Year-onyear % change

HK$ million

5.0

1,413,058

7.5

198,572

7.2

515,516

-0.4

-1,673

2,258,215

5.6

1,503,093

6.4

214,122

7.8

530,985

3.0

7,473

2,397,124

6.2

1,589,451

5.7

231,424

8.1

543,589

2.4

-23,377

Q3 r

614,106

5.8

385,085

4.8

57,879

7.4

128,543

-1.1

-8,444

Q4 r

644,791

4.8

411,314

3.7

58,804

7.7

144,872

-6.5

949

Q1 r

590,132

3.1

396,873

2.4

63,554

7.5

120,140

-9.2

-1,017

Q2 r

586,780

3.7

414,303

2.1

59,819

7.6

130,722

-5.2

193

Q3 p

635,212

3.4

397,972

3.3

62,086

7.3

136,286

6.0

3,409

Qtr

Quarter

Exports of goods (f.o.b.)

Exports of services

HK$ million

Year-onyear % change

HK$ million

Year-onyear % change

HK$ million

Year-onyear % change

HK$ million

Year-onyear % change

2013

3,816,390

6.3

1,058,289

5.5

4,394,928

6.8

467,214

2.6

2014 r

3,877,458

1.6

1,077,899

1.9

4,471,810

1.7

481,005

3.0

2014 r

3,779,263

-2.5

1,053,474

-2.3

4,289,991

-4.1

486,709

1.2

Q3 r

982,454

-4.3

270,095

-3.4

1,077,763

-6.2

123,743

0.0

2015

2016

Q4 r

1,001,115

-2.9

271,941

-5.4

1,117,321

-5.6

126,883

0.3

Q1 r

823,429

-6.4

244,592

-8.6

937,677

-8.8

119,762

1.3

Q2 r

912,362

-0.4

226,498

-7.2

1,039,442

-2.6

117,675

-0.2

Q3 p

989,270

0.7

260,936

-3.4

1,088,649

1.0

126,098

1.9

Notes : Figures in this table are the latest data released on 11 November 2016.

Trade in goods and services statistics are compiled based on the recommendations made in the United Nations’ System of National Accounts 2008, except the one on adopting the change of ownership principle in recording goods sent abroad for processing and merchanting.

As an interim arrangement, another set of trade in goods and services statistics, compiled based on the System of National Accounts 2008 including the aforesaid change of ownership principle, is presented in the supplementary tables of the Gross Domestic Product reports starting from November 2012 for reference. For details about the concepts, definitions and related compilation methods of the change of ownership principle, please refer to the Special Report on Gross Domestic Product published in September 2012.

Gross domestic fixed capital formation

Yearonyear % change

Year Year

Government consumption expenditure

Private consumption expenditure

GDP

r p

preliminary figures will be revised. This routine revision is in accordance with the international practice to compile and release GDP figures at the earliest possible time by using only partial data. All those figures published subsequently, on revision, are called “revised figures”. In general, the figures are finalised when data from all regular sources are incorporated.

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

The GDP for 2016 is forecast to increase by 1.5% in real terms. For more information on the forecast of GDP, please click here.

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

“Revised figures”.

“Preliminary figures”.

In Hong Kong, the first released GDP statistics in respect of a period are called “preliminary figures”. When more data become available, the

HONG KONG BUSINESS ANNUAL 2017 61

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

Manufacturing Year

Month

Year-onyear % change

Index

2015

2016

2015

2016

Index

Accommodation and food service activities ^

Year-onyear % change

Year-onyear % change

Index

Jun

196.6

+3.6

209.7

+3.3

185.8

+4.6

184.0

+5.5

Sep

199.1

+4.4

210.2

+3.1

189.3

+4.1

185.4

+5.2

Dec

199.1

+4.2

210.5

+2.8

189.1

+4.1

186.2

+5.3

Mar

200.0

+3.5

210.6

+2.9

189.4

+3.8

188.8

+5.0

Jun

203.6

+3.6

215.5

+2.8

192.5

+3.6

193.1

+4.9

Financial and insurance activities Year

Year-onyear % change

Index

Transportation

Month

Real estate leasing and maintenance management Index

Yearon-year % change

+3.0

230.7

+3.3

231.2

Index

Year-onyear % change

Jun

218.4

Sep

222.2

Professional and business services

Personal services

All selected industry sections#

Yearon-year Index % change

Yearon-year % change

Index

Year-onyear % change

Index

+3.9

231.7

+7.4

277.6

+6.3

209.4

+4.6

+4.1

235.0

+7.4

282.9

+5.6

211.3

+4.4

Dec

222.8

+3.5

231.7

+3.7

236.8

+7.0

287.8

+5.9

211.9

+4.2

Mar

224.4

+3.5

234.6

+3.4

234.6

+5.4

291.5

+6.3

212.7

+3.9

Jun

225.5

+3.2

238.6

+3.4

242.6

+4.7

293.7

+5.8

217.3

+3.8

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

^ Accommodation services cover hotels, guesthouses, boarding houses and other establishments providing

short term accommodation.

# Refers to all industries covered by the wage enquiry, including the electricity and gas supply industry, sewerage and waste management activities industry and publishing activities industry, the statistics of which are not separately shown.

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

Source : Wages & Labour Costs Statistics Section (1), Census and Statistics Department (Enquiry telephone no. : 2887 5550 Enquiry e-mail : wage@censtatd.gov.hk)

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

Month

No.

2015

2016

Persons engaged

Year-on-year % change

No.

Year-on-year % change

Vacancies No.

Year-on-year % change

Jun

2

0.0

76

-7.3

***

***

Sep

2

0.0

75

-7.4

***

***

Dec

2

0.0

72

-10.0

***

***

Mar

2

0.0

62

-20.5

***

***

Jun

2

0.0

61

-19.7

***

***

62 HONG KONG BUSINESS ANNUAL 2017

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

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

10 874

-5.2

99 601

-2.6

2 725

-23.9

Sep

10 801

-3.7

99 601

-3.0

2 695

-6.4

Dec

10 705

-3.2

98 879

-2.6

2 473

-1.2

Mar

10 565

-3.5

97 827

-2.5

2 884

-3.5

Jun

10 425

-4.1

96 094

-3.5

2 284

-16.2

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

Month

Jun 2015

2016

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

405

-6.5

10 795

-1.6

***

***

Sep

400

-4.3

10 961

-0.4

***

***

Dec

398

-5.7

10 964

-0.7

***

***

Mar

413

2.0

10 797

-0.7

***

***

Jun

403

-0.5

10 902

1.0

***

***

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

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

1 310

-0.3

92 808

16.4

935

-39.1

Sep

1 368

1.9

93 745

8.3

710

-53.7

Dec

1 391

10.3

101 982

18.1

654

-22.7

Mar

1 441

15.8

104 813

14.1

960

8.8

Jun

1 399

6.8

106 193

14.4

546

-41.6

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

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

116 138

-0.3

545 719

-1.5

8 198

0.6

Sep

115 837

-0.7

545 415

-1.6

7 605

-10.0

Dec

115 364

-2.2

545 464

-1.9

6 449

-19.8

Mar

114 810

-2.2

542 928

-1.1

6 923

-23.1

Jun

114 733

-1.2

543 048

-0.5

6 938

-15.4

HONG KONG BUSINESS ANNUAL 2017 63

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

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

65 446

-0.7

269 868

-0.7

8 439

-4.2

Sep

65 550

-0.4

268 890

-0.3

8 352

-9.6

Dec

65 142

-1.2

268 072

-1.3

7 949

-8.7

Mar

64 498

-2.1

266 245

-1.9

7 655

-10.5

Jun

63 589

-2.8

266 151

-1.4

7 097

-15.9

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

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

9 776

-0.2

176 508

1.1

4 062

0.6

Sep

9 681

-0.5

178 172

1.6

3 441

1.7

Dec

9 641

-1.2

178 497

1.1

3 103

-0.4

Mar

9 584

-1.7

178 625

1.2

3 435

-13.2

Jun

9 656

-1.2

177 864

0.8

3 285

-19.1

Industry Section I : Accommodation and food services Establishments Year

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

17 820

0.1

282 749

-0.1

15 150

-4.1

Sep

17 805

0.7

282 304

-0.2

14 599

-6.1

Dec

17 860

-0.1

283 269

-0.8

13 202

-13.7

Mar

17 737

-0.2

280 616

-1.1

12 930

-16.4

Jun

17 672

-0.8

280 826

-0.7

13 037

-13.9

Industry Section J : Information and communications Establishments Year

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

12 761

2.8

104 941

1.4

2 481

-6.5

Sep

12 736

2.5

105 498

0.7

2 624

11.3

Dec

12 732

1.1

106 527

1.2

3 162

18.3

Mar

12 643

-0.6

105 694

1.6

2 551

-13.0

Jun

12 754

-0.1

105 104

0.2

2 473

-0.3

64 HONG KONG BUSINESS ANNUAL 2017

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

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

23 084

3.5

219 678

2.7

5 308

6.1

Sep

23 078

4.1

219 781

2.4

4 927

1.0

Dec

23 261

2.4

220 436

1.5

6 134

29.8

Mar

23 474

1.7

221 229

1.1

5 178

11.4

Jun

23 769

3.0

220 565

0.4

5 231

-1.5

Industry Section L : Real estate Establishments Year

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

15 543

3.3

129 461

2.2

4 274

11.0

Sep

15 522

3.8

129 688

2.3

4 618

5.1

Dec

15 645

2.3

128 650

-0.1

4 011

2.6

Mar

15 708

1.1

128 463

-1.0

4 232

-3.2

Jun

15 754

1.4

128 878

-0.5

3 998

-6.5

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

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

45 540

4.4

363 131

2.8

9 200

-1.7

Sep

45 592

5.6

363 068

2.8

9 045

5.9

Dec

45 655

2.6

363 285

1.4

9 293

1.4

Mar

45 657

0.4

364 392

0.4

8 986

-3.8

Jun

45 981

1.0

368 556

1.5

8 789

-4.5

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

2015

2016

Month

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

Jun

48 584

4.1

495 195

3.2

17 285

4.1

Sep

49 163

4.3

497 397

3.1

15 764

13.2

Dec

49 240

3.0

501 919

2.2

14 543

1.9

Mar

49 578

3.2

505 464

2.3

14 280

-8.6

Jun

49 513

1.9

503 396

1.7

14 264

-17.5

HONG KONG BUSINESS ANNUAL 2017 65

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

Month

Jun 2015

2016

Persons engaged

Vacancies

No.

Year-on-year % change

No.

Year-on-year % change

No.

Year-on-year % change

367 283

1.1

2 790 530

1.3

78 379

-1.7

Sep

367 535

1.3

2 794 595

1.1

74 666

-0.9

Dec

367 036

§

2 808 016

0.7

71 241

-3.1

Mar

366 110

-0.6

2 807 155

0.5

70 301

-10.0

Jun

365 650

-0.4

2 807 638

0.6

68 199

-13.0

and personal services.

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

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

(9) Figures relate only to those industries covered.

Figures relating to the civil service are excluded.

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

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

§ Increase or decrease within 0.05%.

Source : Employment Statistics and Central Register of Establishments Section, Census and Statistics Department (Enquiry telephone no. : 2582 5076 Enquiry e-mail : employment@censtatd.gov.hk)

Notes : (1) Establishments in construction sites refer to number of sites, while persons engaged and vacanciesrefer to manual workers only. Please refer to “Limitations of the Survey” in Part V of the Quarterly Report of Employment and Vacancies at Construction Sites.

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

(3) Industrial coverage of the transportation, storage, postal and courier services is rather incomplete in the present context.

Main omissions are taxis, public light buses, and part of goods vehicles and inland freight water transport.

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

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

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

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

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

Year

Number of regional headquarters in Hong Kong

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

Japan

The mainland of China

United Kingdom

Germany

France

Switzerland

2012

1 367

333

219

106

122

86

62

41

2013

1 379

316

245

114

126

81

66

43

2014

1 389

310

240

119

120

91

68

45

2015

1 401

307

238

133

126

87

67

43

2016

1 379

286

239

137

124

85

73

51

66 HONG KONG BUSINESS ANNUAL 2017

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

Year

Number of regional offices in Hong Kong

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

Japan

United Kingdom

The mainland of China

Germany

Taiwan

France

2012

2 516

536

456

210

152

130

180

114

2013

2 456

506

484

209

148

133

166

114

2014

2 395

490

465

204

160

125

144

110

2015

2 397

505

447

220

186

121

122

105

2016

2 352

480

420

223

174

131

115

109

Country/Territory where the parent company was located

Year Singapore

Switzerland

Italy

Netherlands

Australia

Korea

Canada

Sweden

2012

93

75

71

74

48

38

33

31

2013

86

73

69

68

43

43

31

31

2014

90

84

61

65

47

40

29

28

2015

93

82

61

62

48

44

31

28

2016

102

80

64

63

54

41

32

29

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

Year

2015

2016

Month

Composite Consumer Price Index

Consumer Price Index (A)

Consumer Price Index (B)

Consumer Price Index (C)

Aug

-0.5

-1.5

0.0

+0.1

Sep

+0.2

+0.1

+0.2

+0.2

Oct

+0.6

+0.8

+0.6

+0.5

Nov

+1.3

+2.7

+0.8

+0.6

Dec

+0.7

+0.9

+0.6

+0.5

Jan

+0.1

+0.2

+0.1

+0.1

Feb

+0.3

+0.4

+0.3

+0.2

Mar

+0.2

+0.3

+0.2

+0.2

Apr

-0.1

-0.3

0.0

+0.1

May

-0.3

-0.6

-0.2

-0.1

Jun

-0.3

-0.5

-0.2

-0.1

Jul

+0.1

+0.1

+0.1

0.0

Aug

+0.1

+0.1

+0.1

+0.1

Sep

+0.2

+0.4

+0.2

+0.1

Oct

+0.3

+0.4

+0.2

+0.2

HONG KONG BUSINESS ANNUAL 2017 67

numbers | indicators Population by Age Group and Sex Mid-2012

End-2012

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

136.4

126.1

262.5

3.7

137.0

127.5

264.5

3.7

5-9

125.8

118.5

244.3

3.4

130.3

122.4

252.7

3.5

10 - 14

158.2

148.2

306.4

4.3

149.2

139.4

288.6

4.0

15 - 19

215.0

204.1

419.1

5.9

212.5

201.2

413.7

5.8

20 - 24

226.3

231.7

458.0

6.4

227.1

231.2

458.3

6.4

25 - 29

225.9

303.2

529.1

7.4

223.0

298.8

521.8

7.3

30 - 34

228.4

334.2

562.6

7.9

230.3

338.6

568.9

7.9

35 - 39

234.4

332.6

567.0

7.9

231.0

330.8

561.8

7.8

40 - 44

241.4

334.9

576.3

8.1

240.6

337.8

578.4

8.1

45 - 49

286.4

351.7

638.1

8.9

278.5

344.5

623.0

8.7

50 - 54

312.0

329.6

641.6

9.0

313.2

335.6

648.8

9.0

55 - 59

267.5

273.2

540.7

7.6

274.2

280.7

554.9

7.7

60 - 64

213.6

215.0

428.6

6.0

217.6

219.7

437.3

6.1

65 - 69

134.9

129.6

264.5

3.7

142.4

138.8

281.2

3.9

70 - 74

112.8

108.3

221.1

3.1

110.7

105.7

216.4

3.0

75 - 79

99.1

109.9

209.0

2.9

101.3

110.9

212.2

3.0

80 - 84

65.4

85.7

151.1

2.1

67.3

86.8

154.1

2.1

>= 85

43.8

90.8

134.6

1.9

46.5

94.8

141.3

2.0

All age groups

3 327.3

3 827.3

7 154.6

100.0

3 332.7

3 845.2

7 177.9

100.0

Mid-2013

End-2013

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

134.5

125.7

260.2

3.6

134.2

124.9

259.1

3.6

5-9

128.0

120.2

248.2

3.5

134.0

125.5

259.5

3.6

10 - 14

149.1

139.6

288.7

4.0

142.9

134.8

277.7

3.8

15 - 19

208.0

196.3

404.3

5.6

204.5

192.9

397.4

5.5

20 - 24

226.4

230.7

457.1

6.4

224.1

228.1

452.2

6.3

25 - 29

221.8

295.8

517.6

7.2

223.4

293.7

517.1

7.2

30 - 34

231.9

343.2

575.1

8.0

232.9

346.3

579.2

8.0

35 - 39

229.5

331.0

560.5

7.8

228.4

332.0

560.4

7.8

40 - 44

239.8

338.7

578.5

8.1

239.1

338.7

577.8

8.0

68 HONG KONG BUSINESS ANNUAL 2017

numbers | indicators

Mid-2013

End-2013

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

45 - 49

271.0

337.9

608.9

8.5

264.6

334.3

598.9

8.3

50 - 54

313.5

341.1

654.6

9.1

311.2

344.6

655.8

9.1

55 - 59

281.3

287.9

569.2

7.9

288.8

296.7

585.5

8.1

60 - 64

220.0

223.1

443.1

6.2

224.3

228.3

452.6

6.3

65 - 69

148.8

146.4

295.2

4.1

156.5

155.7

312.2

4.3

70 - 74

109.6

103.7

213.3

3.0

108.7

101.4

210.1

2.9

75 - 79

100.6

109.9

210.5

2.9

100.5

110.3

210.8

2.9

80 - 84

69.5

88.4

157.9

2.2

73.2

90.6

163.8

2.3

>= 85

47.4

97.2

144.6

2.0

50.2

101.5

151.7

2.1

All age groups

3 330.7

3 856.8

7 187.5

100.0

3 341.5

3 880.3

7 221.8

100.0

Mid-2014

End-2014

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

137.7

128.5

266.2

3.7

140.8

131.2

272.0

3.7

5-9

136.0

126.8

262.8

3.6

139.4

129.2

268.6

3.7

10 - 14

141.5

133.9

275.4

3.8

138.6

131.8

270.4

3.7

15 - 19

197.7

186.8

384.5

5.3

191.3

180.4

371.7

5.1

20 - 24

223.7

227.0

450.7

6.2

223.0

226.3

449.3

6.2

25 - 29

224.2

291.7

515.9

7.1

224.6

288.6

513.2

7.1

30 - 34

233.0

348.1

581.1

8.0

232.8

347.0

579.8

8.0

35 - 39

226.9

333.1

560.0

7.7

225.3

333.5

558.8

7.7

40 - 44

239.6

339.9

579.5

8.0

239.5

341.1

580.6

8.0

45 - 49

258.3

330.8

589.1

8.1

250.7

326.9

577.6

7.9

50 - 54

310.2

348.8

659.0

9.1

308.2

352.1

660.3

9.1

55 - 59

291.6

299.3

590.9

8.2

295.5

303.5

599.0

8.2

60 - 64

227.7

233.0

460.7

6.4

230.5

236.5

467.0

6.4

65 - 69

163.1

163.4

326.5

4.5

172.8

174.4

347.2

4.8

70 - 74

109.8

102.0

211.8

2.9

110.9

103.0

213.9

2.9

75 - 79

100.1

109.4

209.5

2.9

101.2

109.0

210.2

2.9

80 - 84

73.5

91.6

165.1

2.3

75.2

93.0

168.2

2.3

>= 85

50.5

102.5

153.0

2.1

52.9

105.8

158.7

2.2

All age groups

3 345.1

3 896.6

7 241.7

100.0

3 353.2

3 913.3

7 266.5

100.0

HONG KONG BUSINESS ANNUAL 2017 69

numbers | indicators Population by Age Group and Sex Mid-2015

End-2015

Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

146.8

136.1

282.9

3.9

145.4

134.8

280.2

3.8

5-9

145.1

134.4

279.5

3.8

150.2

139.3

289.5

4.0

10 - 14

136.1

129.6

265.7

3.6

131.5

125.7

257.2

3.5

15 - 19

185.9

175.0

360.9

4.9

179.5

168.7

348.2

4.8

20 - 24

221.9

226.0

447.9

6.1

219.6

224.0

443.6

6.1

25 - 29

226.1

287.9

514.0

7.0

227.9

286.4

514.3

7.0

30 - 34

233.9

348.2

582.1

8.0

232.2

346.7

578.9

7.9

35 - 39

225.4

337.2

562.6

7.7

227.1

341.6

568.7

7.8

40 - 44

239.1

340.4

579.5

7.9

235.6

336.4

572.0

7.8

45 - 49

246.3

326.0

572.3

7.8

243.3

327.6

570.9

7.8

50 - 54

303.7

352.0

655.7

9.0

296.2

350.6

646.8

8.8

55 - 59

300.9

309.7

610.6

8.4

306.2

315.6

621.8

8.5

60 - 64

234.5

240.2

474.7

6.5

238.5

245.0

483.5

6.6

65 - 69

180.3

183.1

363.4

5.0

190.5

193.1

383.6

5.2

70 - 74

110.5

103.6

214.1

2.9

110.6

105.3

215.9

2.9

75 - 79

101.6

108.3

209.9

2.9

102.9

107.8

210.7

2.9

80 - 84

74.0

92.7

166.7

2.3

73.8

92.4

166.2

2.3

>= 85

54.9

108.3

163.2

2.2

59.2

113.6

172.8

2.4

All age groups

3 367.0

3 938.7

7 305.7

100.0

3 370.2

3 954.6

7 324.8

100.0

Mid-2016 Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

0-4

145.1

134.9

280.0

3.8

5-9

150.4

139.6

290.0

3.9

10 - 14

131.1

126.0

257.1

3.5

15 - 19

172.7

161.6

334.3

4.6

20 - 24

210.4

216.6

427.0

5.8

25 - 29

227.6

284.0

511.6

7.0

30 - 34

234.4

348.1

582.5

7.9

35 - 39

229.3

347.0

576.3

7.8

40 - 44

235.8

338.0

573.8

7.8

45 - 49

241.4

329.1

570.5

7.8

70 HONG KONG BUSINESS ANNUAL 2017

numbers | indicators

Mid-2016 Age group Male ('000)

Female ('000)

Both sexes ('000)

Both Sexes (% of total population)

50 - 54

294.7

352.6

647.3

8.8

55 - 59

308.4

317.9

626.3

8.5

60 - 64

245.7

252.0

497.7

6.8

65 - 69

197.0

199.6

396.6

5.4

70 - 74

112.4

108.5

220.9

3.0

75 - 79

101.9

105.4

207.3

2.8

80 - 84

74.9

93.7

168.6

2.3

>= 85

50.5

102.5

153.0

2.1

All age groups

3 345.1

3 896.6

7 241.7

100.0

Notes : # Provisional figures.

The Population Census conducted from June to August 2011 provided a benchmark for revising the population estimates compiled since the 2006 Population By-census. Population figures from end2006 to mid-2011 have been revised accordingly.

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

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

Year

Manufacturing, Electricity and Gas Supply

Building and Construction and Related Trades

Transportation, Storage, Communications and Travel Agencies

Import/Export, Wholesale and Retail Trades

Financing and Insurance

All Selected Industry Sections

Index

YoY % change

Index

YoY % change

Index

YoY % change

Index

YoY % change

Index

YoY % change

Index

YoY % change

2012

102.1

-0.6

108.1

+1.5

118.1

+1.1

109.3

+0.9

130.2

-0.9

117.7

+0.5

2013

100.7

-1.4

110.2

+1.9

118.8

+0.5

108.5

-0.8

128.7

-1.2

117.7

0.0

2014

101.1

+0.4

113.0

+2.6

119.5

+0.6

110.3

+1.6

129.0

+0.3

118.8

+0.9

2015

103.1

+2.0

117.4

+3.9

122.5

+2.5

113.4

+2.8

132.8

+2.9

122.2

+2.8

2016

105.2

+2.0

121.1

+3.1

124.1

+1.4

116.1

+2.5

134.2

+1.1

124.2

+1.7

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

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

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

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

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

HONG KONG BUSINESS ANNUAL 2017 71

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

​HSBC Insurance (Asia) Limited 74 | Able Mobile Limited 78 | Athena Best Financial Group 80 | British Airways 82 | Canadian International School of Hong Kong 84 | Elite Concepts 86 | F ​ TLife Insurance Company Limited 88 | GODIVA Chocolatier (Asia) Ltd. 90 | Hang Seng Insurance Company Limited 92 | ​​InterContinental Grand Stanford Hong Kong 96 | MassMutual Asia Ltd. 98 | Mercedes-Benz Hong Kong Limited 100 | Platinum Financial Services Limited 102 | Rhombus Group 104 | Standard Chartered Bank (Hong Kong) Limited 106 | Suncity Group 108 | Towngas Telecommunications Co. Ltd. 110 | Faculty of Business, The Hong Kong Polytechnic University 112 | TMA 114 | Wharf T&T 116 | Zchron Design 118

CONTRIBUTING WRITERS: Andrew Ng, Nicole Russo, Jennifer Hiu Wai Chan

​HSBC Insurance (Asia) Limited

G

reat things happen when one has focus. “As an insurer, we aim to help our customers grow and protect their wealth,” says Candy Yuen, CEO of HSBC Insurance (Asia) Limited in Hong Kong (“HSBC Insurance”).

HSBC Insurance carries the HSBC brand to customers who seek protection, savings for education, retirement solutions, or even legacy planning through insurance.

The strength of HSBC’s brand is based on its heritage of over 150 years of continuing success. HSBC is one of the world’s largest banking and financial services organisations serving more than 45 million customers through four global businesses with a network that covers 73 countries and territories around the globe.

“As Hong Kong’s bank, HSBC has grown as one of the first financial institutions in the city. HSBC Insurance connects with our customers and grows this special relationship, providing easy-to-access and relevant insurance products,” adds Yuen. HSBC Insurance in Hong Kong is ranked first in MPF based on total asset under management and is a leading player in the Life Insurance sector.

This success is based on the firm’s focus on understanding its customers and delivering products they appreciate.

The focus on contributing insights HSBC Insurance enjoys a long and strong relationship based on customer-centric services, product offerings, and extensive in-branch and digital touch points. “We need to be aware of the limitations of protection plans offered by employers, if any, as they usually only provide a basic level of protection. At HSBC, we excel at consumer insights, and we are dedicated to research and producing consumer surveys, reports, and tools such as the Future of Retirement, the Value of Education, the Power of Protection, and the HSBC Retirement Monitor. One of our surveys shows that people who plan most actively are more confident in their future than those who do not. It is important to have your own plan and a regular financial ‘check-up’ with your trusted advisor – a sound financial plan with insurance as the foundation should help secure your financial well-being and bring peace of mind, allowing you to look to the future with confidence, and achieve your hopes and dreams,” continues Yuen.

HSBC Insurance has led the way as the first and only firm to release retirement spend indicators. The HSBC Retirement Monitor is not a survey but a benchmark based on real data and statistics to provide estimated costs required for three different kinds of retirement lifestyles.

ENTERPRISE AWARD

hsbc exhibits The power of focus

HONG KONG BUSINESS ANNUAL 2017 75

​HSBC Insurance (Asia) Limited

First released in December 2015, this information is publicly available and updated quarterly to reflect the latest changes in price and consumer behaviours. The Monitor was recognised by the Hong Kong Federation of Insurers in October 2016 where HSBC Insurance garnered the Most Innovative Product/Service Award in the Life Insurance (Wealth) category.

Creating greater awareness of retirement and protection planning whilst enabling customers to easily take action is at the heart of HSBC Insurance’s customer-centric strategies.

For over a decade, the company has successfully led efforts to generate public awareness on their protection and retirement needs. The award-winning HSBC Retirement Monitor report joins reference publications: HSBC Power of Protection, HSBC Future of Retirement, and HSBC Value of Education in creating a comprehensive and authoritative source of information that is regularly updated and expanded in the continuous study of customer needs and insights. Currently there are over eight surveys and eleven reports available. The most recent updates have focused on raising awareness of potential coverage needs for significant sectors of the insurance coverage market in Hong Kong: that of healthcare costs in retirement for women and critical illness coverage gaps for families.

The focus on evolving digital needs Digitisation is a key focus for the group. Advances in digital technology are revolutionising the way people find, choose, and pay for goods and services. A recent HSBC report on evolving consumer behaviour shows internet penetration is as high as 79% of the population in Hong Kong, online banking is the commercial

76 HONG KONG BUSINESS ANNUAL 2017

service Hong Kong consumers are most likely to use, and onethird of respondents made a purchase via a mobile device in the past month. HSBC Insurance in its role as the thought leader on retirement seizes this opportunity to make information on retirement and coverage needs freely available through the group’s ever expanding digital platforms to speed up customer financial need analysis and simplify the journey to understand their own needs. “We believe that public education is crucial to the desired outcome of closing the protection and savings gap,” states Yuen.

The average working person with dependents in Hong Kong has a mortality protection gap of around HK$2.2 million. This information is based on the Asia Pacific 2015 Mortality Protection Gap research report published in 2015 by Swiss Reinsurance Company Ltd. HSBC Insurance is vigilant in filling the protection gap in society by providing an option to answer this fundamental protection need for customers. The company recently launched an innovative pure online term life policy coverage product. The HSBC Term Protector is a simple term life policy where the customer can complete the entire purchase journey in a swift and easy manner online in less than five minutes without the need of a medical examination.

The focus on social responsibility HSBC Insurance believes that a true industry leader also has a duty to the society as a whole. It strives to be a corporate citizen as well as a role model employer. In 2016, HSBC Insurance recorded high employee participation rate for corporate sustainability projects in support causes such as the Community Chest Green Day and Dress Casual Day, as well as the International Day of Disabled Persons,

Outstanding Enterprise Award INSIGHT

FAST FACTS

“Insurance is traditionally considered by many as a protection product, however, insurance actually helps accumulate wealth to meet customers’ different life goals and requirements,” says Candy Yuen, CEO, HSBC Insurance.

•

•

Founded since 1866, HSBC serves around 46 million customers worldwide from over 4,400 offices in 71 countries and territories.

HSBC Insurance was established in 1977. It is one of the top players in the Hong Kong insurance industry.

This page: HSBC Insurance received the Most Innovative Product/Service Award – Life Insurance (Wealth) at the HKFI Hong Kong Insurance Awards 2016; HSBC Insurance Volunteering Team at the 2016 Ocean Park Fun Day hosted by the Hong Kong Joint Council for People with Disabilities/Hong Kong Council of Social Service during the International Day of Disabled Persons 2016 Opposite page: Protecting your loved one is simple, With HSBC Term Protector, Now’s Good; HSBC Retirement Monitor, the first and only retirement spend benchmark based on real data and statistics, provides estimated costs required for different kinds of retirement lifestyle. and their very own HSBC Community Festival.

Another notable example is their Healthy Living Education Programme conducted in partnership with a local charity. The programme saw HSBC Insurance staff reach out to over 1,700 lowincome primary school and community-college students around Hong Kong through a series of workshops, fun days, and seminars to provide education as a means to improve physical and mental health. As a group, permanent staff are encouraged to give back to society with a two-day paid volunteer leave.

“As part of HSBC values, the group is committed to creating an inclusive working environment where employees are supported to achieve their potential, regardless of any aspect of personal difference. Our employee benefits are designed to be inclusive and non-discriminatory. This means that, wherever feasible, our benefits

apply to domiciled partners, same-sex partners, spouses, domiciled children, and all employees regardless of age,” says Yuen.

“We have come a long way since the founding of HSBC Insurance. The company strives to bring out the values of HSBC group in our business activities. We aim to set the highest standards of behaviour so our employees and customers can be proud of our business,” concludes Yuen.

Great things are achieved when one has focus, and HSBC Insurance’s customer-centric focus provides the means for customers to easily focus on wealth goals to achieve an abundance of remittances not only for their future but for generations to come.

Informed, empowered, insured, and endowed. HSBC Insurance (Asia) Limited. The Hong Kong Business Magazine 2016 Grand Award winner – Enterprise Award.

HONG KONG BUSINESS ANNUAL 2017 77

Able Mobile Limited

Able mobile promotes a new way of retailing

H

ong Kong’s current retail market is highly competitive and challenging, and that’s putting it mildly. Faced with tough adversaries and a tougher environment, retailers have been employing various strategies and utilising an array of solutions to ensure they get ahead.

ABLE MOBILE is a company based in Hong Kong that has been aiming to make retailers’ processes easier, therefore helping them grow. Founded 10 years ago, ABLE MOBILE has been providing professional and reliable mobile solution services, system, and application development to over 5,000 enterprises globally, including listed companies, bank, retailers, securities companies, and government units.

Last year, it came out with a one-stop O2O retail cloud platform, EaseSales, integrating online store, POS retail system, and mobile apps for determining the growth of retail business in the Asia Pacific region.

Ease of business EaseSales is the first open O2O platform with a full range of online and offline sales, marketing, analysis, communication, and automation tools. It unifies the consumer experience across channels and devices, streamlining retail operations from purchase to fulfillment to post-sales service, and enabling retailers to keep up with the fast changing pace in retail.

78 HONG KONG BUSINESS ANNUAL 2017

“Being retail experts, we have provided an integrated retail solution to corporations and retailers. It’s cloud-based with a responsive design,” says Sandy Li, Strategic Marketing Director, ABLE MOBILE. She adds that it enables retailers to capture business growth and enjoy timely big data effects without extra cost.

With EaseSales, users can easily deploy and launch multilingual content to sell globally, integrate with social media networks, and manage customer inquiries and orders anytime, anywhere. This helps big and small retailers alike to engage in online business much easier but at a lower cost. “We aim to provide all-rounded e-commerce, digital marketing, communication, application, and development services to different types of business and corporations,” reckons Li, noting that ABLE MOBILE strives to become a leading IT service provider in Asia Pacific, and then globally. “Ultimately, we hope to share knowledge with industry experts to develop good industry practices and uplift e-commerce in Hong Kong and Asia Pacific.”

Novel solutions EaseSales’ platform is definitely flexible, shares Li, allowing retailers to use modules easily. API is provided for enterprises to integrate EaseSales to their existing solutions or use EaseSales modules to extend the function in their applications.

Professional & Reliable Mobile Solution & Messaging Services PHILOSOPHY

FAST FACTS

Engaging. Always. ABLE MOBILE brings together strategies, technologies and social contents to help your business thrive. Powered by our One-Stop O2O Retail Cloud Solution - EaseSales, we enhance retailers’ ability to achieve business success with advanced big data analytics, marketing automation and successful CRM.

About Able Mobile Limited • A licensed Hong Kong Telecommunication Operator (OFCA SBO License Number: 1709) • Achieves ISO 27001 Information Security Certification in 2015 • Provides professional and reliable mobile solution services to over 5,000 enterprises globally, including listed companies, banks, retailers, securities companies, government units and more

As Able Mobile’s Strategic Marketing Director, Sandy Li is reinventing the future of retailing with EaseSales.

The EaseSales app can also be pre-installed on POS, workstation, and handheld devices in the market. It can be integrated to existing solutions in order to increase players’ competitive power in the retail market.

As a strategic partner with our customers, ABLE MOBILE fully understands retailers’ business issues and challenges. For instance, Li notes that in 2016, it has been observed that mobile would play a bigger role in click-and-collect initiatives. Retailers would also unify their online and offline data collection. Since frictionless shopping has always been an objective of the future of retailing, retailers would have to leverage technology in order to stay ahead.

Having a single-view system across multiple channels is essential to any modern retail strategy. ABLE MOBILE sharpens the current market landscape in providing big data and marketing promotion automation. Retailers can deliver different promotion tactics to target segments instantly and without any difficulties. “Gaining sales, inventory, and customer visibility across different channels allows merchants to execute their omni-channel initiatives more effectively, so we can expect retailers to adopt more of these systems going forward,” Li notes.

“Social media has been playing a big role in the shopping

journey for a while now, and it will continue to do so in 2016 and beyond,” continues Li. ABLE MOBILE is committed to improve business performance for retailers by providing an innovative and brand new experience, which it’s currently doing through EaseSales.

Propelling to new heights In the near future, ABLE MOBILE is focussing on propelling EaseSales to a much larger platform. The company will officially launch EaseSales in 2017 and deliver its Cloud Partner Program to other regions in Asia Pacific. Based in Hong Kong, ABLE MOBILE is expanding its team with eight offices and 200 experts situated in Macau, Shenzhen, Shanghai, Taipei, Singapore, Korea, and Australia by 2017.

ABLE MOBILE will also participate in leading retail exhibitions such as the Retail Asia Expo and other overseas events to share the latest developments regarding EaseSales. As EaseSales aims to expand beyond Hong Kong, the company is set on making the platform a game-changer. “From a DIY eShop, POS system, and social media integration, our retail solution ushers a new era of retailing,” concludes Li.

HONG KONG BUSINESS ANNUAL 2017 79

Athena Best Financial Group

Athena Best delivers topnotch innovation in 2017

A

sia’s financial companies are driving the innovation in today’s financial transactions, from providing an integrated IT platform to diversify their products across all life stages.

For Athena Best, these innovations will not be completed without the clients at the focus of their firm’s vision.

In the past years, Athena Best has transformed itself from a traditional financial advisory company to a comprehensive financial group that offers a wide variety of solutions to the clients around the Asia region. Athena Best has comprehensive and topof-the-line solutions in response to the uniqueness of their every client’s needs.

Using Hong Kong as a hub, Athena Best provides services and solutions to both institutions and individual clients across the region, including Hong Kong, Mainland China, Taiwan, Japan, Korea and Malaysia. Athena Best’s reputation for being a pioneering and client-centric firm has been recognised in all of these countries and in the company’s business partners and clients wherever they may be found.

360° coverage Athena Best continues to evolve amidst the speed of technological growth and the geographical expansion of financial services in the Asia region. Its business not only covers traditional financial areas such as insurance brokerage and financial advisory, but also

80 HONG KONG BUSINESS ANNUAL 2017

expanding to trust services, fund management, and B2B platform services.

To address the various needs and customer preferences across all age brackets, Athena Best has come up with a full suite of products that recognises the uniqueness of each generation and the ways clients at each life stage look at their financial situation. Athena Best offers life protection solutions, investments solutions, capital preservation solutions, tax planning solutions, and inheritance planning, to name a few. These products may vary for each of the customers they serve.

Not only does Athena Best look into the generational differences, it also takes into account the varied perspectives of clients across various income brackets.

For high net worth clients, Athena Best houses a professional private wealth management team that works closely with global reputable private banks to provide customised and best-in-class wealth management solutions. Athena Best also maintains accessible and varied solutions for its day to day retail customers, who form a bulk of its client base and remain as the company’s benchmark for new solutions.

Athena Best also provides IT solutions to other financial companies while developing its own products. It has established a fund company which focuses on developing, building and sourcing innovative investment strategies and models to help clients to

Wealth Management & Financial advisory PHILOSOPHY

FAST FACTS

With our clients’ and partners’ interests at heart, Athena Best Financial Group is committed to be “Your Partner for SUCCESS”.

• Our services cover a wider array of retail and B2B Brokerage Services, Financial Platform Services, Financial Planning Consultancy Services and Asset Management Service.

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

• We expanded into other areas of business including Fund Management, Information Technology and Education Development.

This page (clockwise): Little Picasso Drawing Event: Athena Best partnered with The HUB Hong Kong Children and Youth Centre; Athena Best joined the “Hong Kong & Kowloon Walk for Millions 2016”; Athena Best has been honored as “Caring Company” since 2012 Opposite page: Mr. Danny Tse, Managing Director, Athena Best Financial Group tackle an increasingly complicated financial market environment.

Above everything, Athena Best believes in developing a longterm relationship with its customer. Because it offers almost every financial product available, a customer need not look to other companies for every transition stage they enter.

Forward-looking Today’s clients most certainly need companies which can provide credible insight into the uncertainties surrounding the financial market. Rate hikes in the US Federal Bank, Brexit, the Chinese economic slowdown, and other recent disruptions have been making the task of financial companies more challenging and important.

This is evident in the continuous growth of demand for quality financial services across Asia and in the more conservative approaches that today’s customers are taking.

With the global and regional economies still volatile amidst these recent shocks, Athena Best is sure to weather the changes

and continue to deliver innovation to its client base. The company’s knack for innovation will definitely enable it to identify and foresee market demands, while its trust services and IT solutions push it to satisfy new and emerging challenges.

The regulatory environment is tightening in Hong Kong and financial institutions are finding it hard to survive. However, Athena Best believes that regulations are not totally undeserved, as it is important to embrace the best practices in order to provide the best services. Stepping into it’s 10th anniversary, Athena Best’s regional experience and global financial knowledge will surely prove beneficial in it goals to grow and expands it’s footprints across asia.

Athena Best Financial Group is always committed to provide to its clients, both locally and regionally, the best quality of services and products. With its experience and expertise in the international financial industry, it will continue to enrich its service and product platform,while expanding its business to more areas in the region and the world to ensure that all its clients’ needs can be satisfied.

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British Airways

The sky is the limit for british airways

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ritish Airways, the flagship carrier and the largest airline in the United Kingdom based on fleet size, is celebrating 80 years of flights to Hong Kong in 2016. One would think that the carrier wouldn’t have any more surprises up its sleeves, but happily, British Airways has more in store.

“British Airways has been serving the Hong Kong-London route for 80 years. We are constantly thinking of ways to develop our products and services to serve our customers in Hong Kong better,” says Noella Ferns, British Airways’ regional general manager, Greater China, and the Philippines.

British Airways’ route network currently serves more than 190 cities in 80 countries. It has been flying to Hong Kong for 80 years and currently operates 14 non-stop flights a week between Hong Kong and London. British Airways is the only carrier to operate an Airbus A380 on the route.

To understand why Hong Kong (and also Asia) is very near to British Airways’ hearts, here’s a bit of history: On 24 March 1936, British Airways’ predecessor Imperial Airways became the first commercial airliner to land at Kai Tak Airport. Back in 1936, a trip from London to Hong Kong would take eight days and a one-way ticket would cost £175, which is equivalent to £11,113 (HK$127,800) in 2016. The entire trip from London to Hong Kong 80 years ago involved 21 stops to change aircraft and refuel.

Passengers would stay overnight in hotels in Alexandria (Egypt),

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Baghdad (Iraq), Sharjah (UAE), Jodhpur and Calcutta (India), and Bangkok (Thailand).

In Asia, apart from Hong Kong, British Airways is also flying to eight other markets namely Sydney in Australia, Beijing and Shanghai in China, Bengaluru, Chennai, Hyderabad, Mumbai, and New Delhi in India, Tokyo’s Haneda and Narita in Japan, Seoul in South Korea, Kuala Lumpur in Malaysia, Singapore, and Bangkok in Thailand. “Our airline has a long tradition of connecting people and businesses between Asia and the U.K. and Europe,” says Ferns.

New offerings in store British Airways will continue to deliver quality offerings to its customers as the years go by, and has already announced a couple of initiatives. In terms of technology, for instance, British Airways will be offering high-quality Wi-Fi connectivity on selected flights starting in 2017. Customers will be able to enjoy broadband internet access on their own mobile devices for emails, web browsing, social media, and video streaming. Passengers will have the bandwidth capacity to use multiple devices at the same time, and connection speeds will be similar to what they have at home.

Furthermore, British Airways’ mobile app also offers new features which allow customers to book flights using Apple Pay and to receive promotional upgrade offers. This gives customers the simplicity and flexibility to pay how they want with absolute

Airlines PHILOSOPHY

FAST FACTS

In 2016, British Airways celebrated flying to Hong Kong for 80 years. On 24 March 1936, British Airways’ predecessor Imperial Airways became the first commercial airliner to land at Hong Kong Kai Tak Airport.

• The carrier has its home base at London Heathrow, the world’s busiest international airport, and flies to more than 190 destinations in 80 countries.

• British Airways has a fleet of more than 280 aircraft, including the Airbus A380 and Boeing 787.

• British Airways carries over 40 million customers a year. On average, the airline serves 35 million cups of tea, 36.5 million set of meals and 3.7 million bottles of wine per year.

This page (clockwise): Airbus A380 Club World business class; Noella Ferns, British Airways’ regional general manager, Greater China and the Philippines; British Airways celebrates 80 years of flying to Hong Kong with a vintage cabin crew uniform photoshoot in Mongkok.

Opposite page: British Airways Airbus A380 peace of mind. It also puts Apple and Android smartphone users in the best possible position to take advantage of any promotional upgrade offers.

In terms of travel, meanwhile, British Airways has teamed up with the London-based developers of the AirPortr app, to provide a new luggage service for passengers travelling to or from London Heathrow, Gatwick, and London City airports. British Airways has become the first airline in the world to offer the “AirPortr + Bag Check-In” service. “Passengers who have booked the service check-in online with British Airways before the AirPortr driver arrives to collect their bags,” says Ferns. “The luggage will then be taken to the airport and checked-in for the flight. Passengers will then collect their bags at their destination.”

And on a more exciting note, British Airways will be opening new routes to several destinations in Europe. “We are thrilled to announce that seven new European routes will begin operating in the summer of 2017,” says Ferns. “This includes Brindisi and Nates in Italy, Montpellier in France, Murcia in Spain, Pula in Croatia, Tallinn in Estonia, and Zakynthos in Greece. We encourage travellers from Hong Kong to be the first to explore these exciting cities in 2017.”

Furthermore, British Airways has been serving the China market for more than 35 years. “We strive to make our product and service

offerings more appealing to Chinese travellers by adding more local cultural flavours to our service,” says Ferns.

In July, British Airways opened one of the first Chinese cabin crew bases to offer more bespoke services to Chinese customers.

Also, 66 Chinese cabin crews are now serving on our flights departing from both Beijing and Shanghai. “Our customers from China can enjoy the Chinese version of the airline’s in-flight magazine— High Life in-flight magazine— with content that is genuinely tailored to Chinese customers. We also offer an extensive choice of Chinese-language movies and TV shows through our inflight entertainment system,” notes Ferns.

Aside from its future offerings, British Airways is also in the process of developing a bespoke corporate social responsibility programme for Hong Kong with a credible partner that’s tailored to benefit Hong Kong youth by harnessing their core skills and developing their interest in aviation.

This is still an ongoing development, but the carrier will have more to share when it is ready to make the announcement in 2017, according to Ferns.

As a carrier with a distinct footprint in Hong Kong and in Asia, British Airways upcoming plans will surely not disappoint. With a rich history here in the region, British Airways knows the sky’s the limit with regard to what it still has to give its customers.

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CANADIAN INTERNATIONAL SCHOOL OF HONG KONG

cdnis community unites for school’s 25th anniversary

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o inspire excellence, cultivate character, and empower engagement locally and globally: An ambitious statement, but one thatthe Canadian International School of Hong Kong remains highly focused on in providing to its 1,800-strong student body that hails from over 40 countries. There’s cause for celebration as the school, now in its 25th year, is taking a retrospective look back at its academic and extracurricular achievements, as well as contributions to society.

The commendable achievements are the by-product of a school that is maturing and ever evolving. Plans for the 25th Anniversary celebrations are already well underway, with CDNIS having hosted a visit by world-renowned primatologist and environmentalist Jane Goodall, and stepped up production on an upcoming commemorative publication.

A benchmark for excellence Founded in 1991, the non-profit school has become a benchmark for education excellence and enjoys strong support from the Chinese-Canadian Association of Hong Kong, the Canadian Chamber of Commerce in Hong Kong, the Hong Kong Jockey Club, and the Canadian Consulate General of Hong Kong.

Set along the picturesque Nam Long Shan Road in Aberdeen, CDNIS occupies an eye-catching 40,710 square metre campus that has been its home since 1999. Recent infrastructural developments

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have not only helped the school keep up with the times, but also highlight its continued investment in the support of cultural proficiency and social awareness.

The Chinese Cultural Centre and Green Roof are two such projects. Situated above the library, the former features a Chinesethemed décor and consists of four classrooms as well as a large multifunctional space that houses the Chinese Library. “[CDNIS has long been] recognised for the strength of its Chinese programme, [and we] continue to invest in cultural proficiency as a competitive strength. Our new CCC brings this initiative to life and expands the exposure of our students to the Chinese language and culture,” notes the school’s Interim Head of School David Baird.

Meanwhile, the latter is comprised of two gathering areas: a Zen garden and an organic growing area that is maintained by both students and teachers. These additions will go a long way in helping CDNIS achieve its aim of reducing school-wide energy consumption by 10%.

Recognised as a Pre-K to Grade 12 IB World School, CDNIS boasts one of the largest IB cohorts in Hong Kong and the students of this leading institution continue to impress academically. In 2016, 98% of students received their IB Diploma, with an average score of 36.4 — significantly higher than the global average of 30 points. In addition, three students achieved the maximum score

INTERNATIONAL SCHOOL PHILOSOPHY

FAST FACTS

CDNIS is a school united by the joy of learning, excellence in achievement and development of character. We will inspire academic and personal growth in our students by encouraging inquiry, stimulating creativity and innovation, embracing cross-cultural and global perspectives, and fostering meaningful participation and service.

• CDNIS runs a dual-diploma programme with students graduating with the Ontario Secondary School Diploma and International Baccalaureate Diploma • Student to faculty ratio in the Upper School is 11:1 • Active and extensive extracurricular programme of more than 70 activities including Habitat for Humanity and MUN • Three students gained the maximum 45 points for the IB Diploma and the average points score per student was 36.4 • Commitment to sustainability

This page (clockwise): Interim Head of School David Baird; Upper School Principal Tim Kaiser; Lower School Principal Helen Kelly; The new Green Roof helps foster environmental consciousness and responsibility; Jane Goodall visits CDNIS for the Roots & Shoot Summit Opposite page: Lower School Playground of 45, an impressive figure gained by only 146 students, or 0.1%, worldwide.

The school’s growing success has not gone unnoticed by the wider community. Last November, the Jane Goodall Institute (Hong Kong) selected CDNIS to host its annual Roots & Shoots Youth Summit, which was graced by the primatologist and environmentalist herself.

Well known for her life-long study of the social and family interactions of wild chimpanzees, Goodall’s impressive findings not only challenged the beliefs by the greater scientific community, but also raised awareness on environmental conservation and animal welfare.

“Isn’t it weird that humans — the most intellectual creatures to walk on this planet — are destroying their only home,” questioned Goodall during her keynote address at CDNIS. “You know what I mean. Living here in Hong Kong and being so close to China, you know about the pollution problem in the air and the sea.

We’re harming nature but I don’t believe that it’s too late to do something about it. That’s what Roots & Shoots is all about.”

A leader in her field, Goodall’s admirable contributions to the

community complements CDNIS’ ongoing support to help those in need. The school’s long-standing partnership with the world’s largest non-profit homebuilder, Habitat for Humanity, saw a team of students and teachers embark on a three-day goodwill trip last September to Rayong, Thailand to assist the group’s home-building efforts.

Baird said: “Aside from the sweat, blisters, and soreness they experienced, our students had the chance to give sweat equity and to be exposed to the disparity of wealth that exists today. Our students’ and teachers’ continued contribution to this mission is one of the many ways we demonstrate a commitment to service, and our students inevitably gain even more than they give.”

Looking back, the Interim Head of School concedes that there have been ups and downs throughout CDNIS’ 25 years. However, the school has always emerged stronger than ever, with staff and students alike united by the same goal. “Irrespective of the challenges that we’ve faced throughout the years, CDNIS’ commitment to inspire academic and personal growth in our students has never wavered, and that has become the very foundation of our growing success.”

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Elite Concepts

elite concepts savours The taste of success

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ood connoisseurs in Hong Kong know that to enjoy a quality dining experience, a restaurant from Elite Concepts is their best bet. With a diverse menu of Japanese, Italian, French, Chinese, and American cuisines, the group behind Michelin star restaurants Yè Shanghai and Nanhai no.1 has been giving Hong Kong a taste of the world over the past two decades. Under usual circumstances, 10 to 15 years seems to be a life span for restaurants in big cities, let alone in Hong Kong— a place that has billed itself as a gastronomy hub. Yet, the 25-year-old Elite Concepts still thrives today, drawing epicures and partygoers.

With an ambition to “open up a new dining world conceiving new concepts which can delight food lovers,” Paul Hsu, founder and executive director of Elite Concepts, diverged from the norm of securing high-traffic locations in favour of quiet alleys such as Lan Kwai Fong and Knutsford back in the day. The group began life at Lan Kwai Fong in 1991 with The American Pie, a dessert joint offering apple crumbles as well as cream cakes and pies at a time when American desserts had limited supply in Hong Kong.

It snowballed quickly. The group opened some 12 more outlets throughout the 1990s. Now with seven brands on its plate, Elite Concepts has gained a significant foothold in the local culinary scene with Yè Shanghai at Pacific Place, as well as Nanhai no.1 and Eyebar for elite dining at iSQUARE. The group added two brands to its roster in 2016 with the

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arrival of QMO and Deng G Classic Sichuan & Baijiu Bar in Wan Chai. Another brand that the customers love is the unique taste of chakeli tea infused ganache and chocolate bonbons. “It’s an era of sharing,” says the entrepreneur. “We are simply sharing what we think is good by transforming concepts into something physical.”

The group’s longevity is dictated largely by filling the culinary gap with new elements. “Good food is just the fundamental, many other elements count,” he says. “We know we are going far and beyond, and we keep working on new chemistries, surprising our customers with something from time to time.”

Going global To gain a foothold in the global food universe, the group has grabbed a slice of the mushrooming restaurant scene on the mainland with a Shanghai branch of its Yè Shanghai brand, as well as the Duck de Chine which opened in Beijing in 2011. “It’s what we keep working on, demographically and geographically,” says the restaurateur.

“Above all, we think globally. We have a clear idea of our position in the market and who our customers are.With this in mind, we have product diversification riding on our target market, giving us another clear direction of development. You can now find an Elite Concept far beyond Hong Kong, and our offerings cater to people all over the world,” explains Hsu.

Innovative F&B Concepts PHILOSOPHY

FAST FACTS

Elite Concepts believes that every hospitality concept must show an understanding of local tastes and maintain a strong connection with the people and their culture.

With both a firm footing in the soil and a limitless capacity for innovation, Elite Concepts will continue to set the course for hospitality trends in Asia.

• Elite Concepts was founded in 1991 to bring high-quality free-standing restaurants to Hong Kong.

It has evolved into a dynamic enterprise which transforms visionary ideas into commercial successes.

• Elite Concepts continues to forge new trends in Beijing with the 1949 series. The first 1949 complex — 1949 The Hidden City — opened in Beijing in 2008.

• Ye Shanghai gained the 10th Michelin star in 2017 since Year 2010.

This page clockwise: 1949 The Hidden City; Duck de Chine interior; King prawn served in bang sauce; Deng G interior Opposite page: Paul Hsu, Founder, Elite Concepts The success of a restaurant chain hinges on keeping the springs of existing brands wound up, while building the gears for the upcoming ones. With eight brands under its belt across Greater China, having each outfit operate cohesively under the same umbrella whilst keeping their own charisma is crucial. “The outlets in our group are playing the game together very well, helping each other, resulting in an excellent synergy,” he says.

“We never try to set customers into segments. Each of our brands has its fans. Time will tell and you will know where your potential customers are and deploy accordingly.” As the number of Chinese tourists shrinks, he admits economic downturn in retail and F&B may be one of the biggest changes in 2016. “It could be

a very big blow, but good that it sets an alarm for us for careful precautions ahead of time.”

A short supply of labour in the F&B market may be another challenge, he continues. “We are grateful our staff are rather stable in a time of a labour shortage.”

If there’s one crucial component that keeps the group chugging along in this F&B market, it’s the vision to gravitate towards a globally oriented company. “When all the elements are ready to build a brand, sustainability may be the key to decide whether the brand can be a success,” he says. “We will have a bigger family with newer brands and branches, covering more cities, and across the continent.”

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​FTLife Insurance Company Limited

New insurance brand FTLife redefining customer service

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ast autumn saw the launch of FTLife, a new brand in the insurance market complete with a colourful hummingbird logo.

But this seemingly new company is no “new kid on the block” because it draws on a 30-year heritage of service to Hong Kong and was formerly known as Ageas Insurance Company (Asia) Limited.

FTLife is a wholly-owned subsidiary of Tongchuangjiuding Investment Management Group Co Ltd (JD Group) and pursues a vision to become a leading insurance group in Asia, based in Hong Kong, with roots in mainland China.

The new brand belongs to one of Hong Kong’s largest life insurance companies and serves individual and institutional clients with a portfolio brimming with innovative financial protection and wealth management products. And an extensive and colourful advertising campaign has kept FTLife in the spotlight following launch of the brand and its eye-catching logo in September.

Our brand story FTLife provides customers with comprehensive insurance and financial planning services to help them achieve their aspirations.

We have chosen the hummingbird as our logo because of the bird’s amazing manoeuverability, extraordinary adaptability, and incomparable vitality, which mirrors FTLife’s core attributes. The

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hummingbird also projects the agility, innovation, and ambition we apply to serving customers in an ever-changing market.

Mega-event sponsorship FTLife hit the headlines again when it announced sponsorship of the “Jacky Cheung — A CLASSIC TOUR Live in Hong Kong” blockbuster concert featuring Jacky Cheung. The demand for tickets was instantly overwhelming because this will be the pop legend’s first concert in nearly five years.

No stranger to mega-events, FTLife’s forerunner was title sponsor for the HKPGA golf tournament for eight years running.

Regional CEO & CEO of FTLife Lennard Yong said: “FTLife often acts as title sponsor of mega-events such as golf tournaments, concerts, and talk shows. This deepens our penetration of the highnet-worth market, while promoting the importance of protection and financial planning.”

Serving high-net-worth customers Last October saw the opening of FTL Prestige Centre, a HK$60 million customer service centre and the first facility of its kind to be established by a Hong Kong insurance company.

Located in the heart of Kowloon’s business district, the highend centre covers 14,000 square feet and combines wealth and health management with the latest technologies and a superlative

LIFE INSURANCE PHILOSOPHY

FAST FACTS

Capitalising on a heritage of professionalism and excellence in serving clients, FTLife seeks to become a leading insurance group in Asia, based in Hong Kong, with roots in mainland China.

• Its financial status is confirmed by global rating agencies (A- by Fitch Ratings, and Baa1 by Moody’s).

• It has a wealth of professionally trained and highly skilled consultants.

Seven percent of them have so far received the honour of the Million Dollar Round Table (MDRT).

This page: FTLife is the only insurance company in Hong Kong with twin neon signs overlooking Victoria Harbour; The four-colour hummingbird logo conveys FTLife’s commitment to helping customers lead fulfilling lives.

Opposite page: Regional CEO & CEO of FTLife Lennard Yong approach to customer service — all in luxury lifestyle surroundings.

Yong said: “This state-of-the-art facility amounts to a one-stop service that includes a medical unit for check-ups, meeting room facilities, a children’s play zone and tea corner, free refreshments, and massage chairs all under one roof. Everything is housed in the kind of wonderfully spacious and comfortable environment that appeals to those who lead prestige lifestyles.”

Comprehensive products Citizens looking for insurance protection now have high expectations, while demonstrating a preference for sophistication and innovation. All these expectations were in mind when FTLife developed the new MediGold and MediPro products.

MediGold Worldwide Medical Insurance Plan provides first-class all-around medical protection for those who travel frequently to mainland China and other parts of the world. The plan’s annual limit is CNY25 million, while the lifetime limit is CNY100 million*, and provides life cover up to 100 years of age.

Meanwhile, MediPro Medical Insurance Plan is designed for employees and provides a lifetime’s protection of HK$60 million to plug inadequacies in group or personal insurance schemes.

The Wealth Achiever Universal Life Protection Plan offers comprehensive life protection with optional top-up premiums.

A minimum crediting interest rate of 2% per annum for the first basic account layers is guaranteed, while customers can enjoy a privileged interest rate of 4.5% per annum for the first two layer

effective years — available on a first-come-first-served basis.

Award-winning brand FTLife has scooped a clutch of industry honours that include the “Outstanding Integrated Marketing Strategies Award” at the Hong Kong Insurance Awards 2016, organised by the Hong Kong Federation of Insurers (HKFI), and was a top-3 finalist in the “Outstanding Training & Development Award” stakes. The company also won the “Agency Training Team of the Year” accolade in the BENCHMARK Wealth Management Awards 2016. Lennard Yong believes this is a testament to the company’s firm commitment to achieving genuine customer satisfaction.

He said: “Our determination to serve customers to the very best of our ability is captured by the company’s guiding principle: Your Future Our Promise.”

A keen sense of social responsibility FTLife is well known for maintaining a keen sense of social responsibility. Its forerunner had been identified as a caring company every year by the Hong Kong Council of Social Service since the inception of the caring company scheme in 2002.

Yong said: “We believe commercial success is directly linked to sound corporate citizenship. This philosophy has therefore become a core element of our marketing strategies to develop long-term relationships with customers.” *For details, please refer to the product brochure and client incentive leaflet.

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GODIVA Chocolatier (Asia) Ltd.

GODIVA unwraps delectable 2017 Chinese New Year Collection

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obed in a red box and adorned with an elegant golden rooster, GODIVA’s 2017 Limited Edition New Year chocolate collection aims to deliver a rich New Year blessing. This year, GODIVA came up with a match made in heaven by infusing the goodness of Asian fruits into its rich chocolates. The flavours and textures all emit fragrant sweet scents that fill the room with a New Year flair.

GODIVA’s carefully curated collection embodies the energetic rooster that symbolises the awakening and refreshing of the senses. The collection introduces a range of handpicked Asian fruits that arouse the taste buds. Well-selected energizing fruits such as tangy Mandarin oranges, starfruit, mangosteen, and spirit-reviving ginger, symbolise the well-being of the receiver. These Asian fruits aim to revitalise the body and the mind. The tropical fruit-inspired

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chocolate delights will deliver beautiful aromas to start off your new year with a refreshing start.

Special rooster chocolates Official Chocolatier of Belgian’s Royal Courts, GODIVA is delighted to bring its rooster chocolates to your table. The Coq Noir Mandarine Baie de Goji is a decadent dark chocolate Rooster layered with a sweet goji berry mousse, blanketing a crunchy layer of roasted hazelnuts. Combined with a citrusy Mandarin orange and Venezuela milk ganache, this treat is simply the warmest welcome for the Year of the Rooster.

For a chocolate enjoyed by most ages, GODIVA presents its Coq Lait Mangoustan Gingembre. The intense fragrance of milk chocolate encases an invigorating unique ginger mousse with

Premium Chocolatier PHILOSOPHY

FAST FACTS

For nearly 90 years, GODIVA has created the world’s most elegant, hand-crafted chocolate to please and delight customers, from royalty to workers, adults and children. Only the finest quality Belgian chocolate is used, along with high-quality ingredients for fillings and decorations. The company strives to be a business whose goal is customer satisfction and delight.

• With exquisite taste, premium quality, seasonal packaging, exclusive boutiques and innovative products, GODIVA Chocolatier is dedicated to over 89 years of excellence and innovation in the Belgian tradition.

• GODIVA Chocolatier produces many different chocolate pieces that fall into different categories and are often mixed and matched to create a wide range of collections for personal, sharing, holiday and special occasion use.

This page: Chinese New Year Decadence Hamper Opposite page: 2017 GODIVA Chinese New Year Collection macadamia nuts, perfectly paired with mangosteen and Venezuela milk chocolate ganache, creating a mouthful of an experience. The ginger warms the body as well as the soul, bringing energy to the new year. Finally, the Coq Blanc Carambole Pamplemousse has the silkiness of white chocolate mixed with the refreshing flavours of pomelo, sprinkled with the flavours of cinnamon and walnuts. The blending of starfruit into this white chocolate rooster creates a chemistry of flavours as it touches your lips.

Elegantly joyful gift boxes Especially for this new year, GODIVA selected a red packaging to represent the joyous occasion. A touch of gold was painted on the feathers of the rooster to give the gift boxes a touch of elegance and highlight the rooster’s energetic nature. This box filled with mouthwatering chocolates hopes to bring good cheer to families during a festive and colourful time.

GODIVA’s Chinese New Year Carré Gift Box incorporates two delicious flavours, including crunchy Dark Chocolate Almond and Milk Chocolate Apple. The Chinese New Year Luxury Gift Box features limited edition chocolates and a handpicked collection, bringing even greater excitement as it is opened.

Adorned with an energetic rooster, the Chinese New Year Truffle Tin Box contains GODIVA’s well-loved truffle chocolates, designed for sharing with friends and family during intimate gatherings. This

box comes in a beautiful 10-piece packaging that is also perfect for gift-giving.

A perfect way to welcome family members into your homes, GODIVA’s Chinese New Year Biscuit Boxes contain chocolate biscuits and sablés which are the best pairs for a cup of tea. This beautiful box collection is also an ideal gift when you visit their homes. Wrapped with a bright red ribbon in a Chinese bow, with a beautiful red flower keepsake, GODIVA’s Chinese New Year Gold Collection is elegant and graceful at the same time. These gift boxes contain a must-have and endearing collection in celebrating this season.

The 2017 GODIVA Chinese New Year Deluxe Gift Set and 2017 GODIVA New Year Hampers are like a treasure trove, filled with all the best-kept secrets from GODIVA. These elegant hampers include GODIVA’s most popular selections, simply perfect to give to friends or family— a blessing that will bring all smiles.

This bountiful hamper includes Chinese New Year Chocolate Gift Box (18 pcs), Chinese New Year Chodolate Carré Gift Box (28 pcs), GODIVA Limited Hot Drink Mug, Signature Chocolate Truffle Collection (12 pcs), Biscuits Box (36 pcs), Milk Chocolate Truffle (5 pcs), Dark Chocolate Pretzels and Breakfast Blend Coffee. This makes a wonderful treat for the receiver to share with their closest to embrace the new year with, bringing warmth and excitement to this momentous occasion.

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Wilson Tang Chief Executive Hang Seng Insurance Company Limited 92 HONG KONG BUSINESS ANNUAL 2017

Hang Seng Insurance Company Limited Hang Seng Insurance Company Limited

Hang Seng Insurance brings innovation to the next level

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owadays, it is nearly impossible to separate one’s financial situation with that of the world’s. Thanks to the rise of globalisation, the two have already blended seamlessly. But thanks to the volatility of global markets coupled with the ever present threat of inflation, important expenses and asset values are unsecured and constantly fluctuating.

Medical expenses, for instance, are one such necessity that is always benchmarked against the global economy given medical cost inflation and the demand for quality healthcare.

While advances in science and technology have paved the way for effective methods to cure critical illnesses, these are often expensive and beyond the reach of middle-class consumers, and public medical services are often depleted. Hence, customers are now constantly seeking a “total insurance solution”—a reliable and one-stop service insurance provider to save time and cost on searching for comprehensive coverage.

Hang Seng Insurance Company Limited (“Hang Seng Insurance”), a long-time player in the Hong Kong insurance industry, is one such insurer that aims to cater to the above needs.

With its core value of “customer-centric”, Hang Seng Insurance offers a wide array of products and services that serve as wealthand-health total solution which emphasise synergy among different insurance plans, accumulate capital for future plans, and protect customers against unexpected events by easing their financial pressures.

New Focus: Wealth and Health Talking about the new proposition of putting insurance in living

by Hang Seng Insurance: wealth and health. On one hand, the company has a range of life insurance products for wealth accumulation, such as its newest annuity product dubbed FutureEnrich Life Insurance Plan (“FutureEnrich”) which consists of elements combating inflation and annual dividends that bolster potential returns. It guarantees a 3% annual increment of Guaranteed Monthly Income during Income Period1 that safeguard against inflation while providing annual and terminal dividends.

In addition, FutureEnrich provides free supplementary benefits such as terminal illness benefit, accidental death benefit, and unemployment benefit that aim to safeguard the customer and the customer’s family, as well as optional supplemental benefits such as the waiver of premium benefit, payor’s benefit and cancer benefit that offer enhanced protections.

In addition, Hang Seng Insurance also offers universal life insurance products targeting different segments that the sum insured can be flexibly adjusted according to different needs of customers at different stages of their lives, creating an integrated solution covering life protection, wealth accumulation and legacy planning altogether.

For health, Hang Seng Insurance provides enhanced protection products with different levels of protection to cater for different customer needs. PreciousLife Critical Illness Life Insurance Plan,

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Hang Seng Insurance Company Limited In addition to meeting and addressing its local customers’ needs, Hang Seng Insurance also pays attention to economic cues abroad and the needs of its customers in the region. For instance, seizing the opportunity of the renminbi market, Hang Seng Insurance launched in 2012 its first-ever renminbi-denominated insurance product ProsperDragon (RMB) Life Insurance Plan, and its first renminbi annuity product HarvestLife (RMB) Life Insurance Plan two years later. In 2015, SavourLife II (RMB) Life Insurance Plan was added to its roster of renminbi products.

Leveraging on Strengths How is Hang Seng Insurance able to provide these? As a whollyowned subsidiary of Hang Seng Bank Limited (“Hang Seng Bank”), Hang Seng Insurance is able to leverage on its parent’s competitive edge to serve its customers.

With the highest rated banking services in Hong Kong for 11 consecutive years3, Hang Seng Bank brings not only comprehensive services to customers, but also convenient channels for quick and easy bank access. Customers are confident of the bank’s credibility and competence in its long history of outstanding service for over 80 years in Hong Kong. As a testament to this, Hang Seng Bank has been named “Best Bank-Domestic (Hong Kong)” by The Asset for 17 consecutive years. Hang Seng Bank was also perceived as the Most Recommended Bank by customers in Hong Kong according

Hang Seng Bank is the parent company of Hang Seng Insurance

for example, provides coverage for 128 early to late-stage critical illnesses that safeguard against the strike of critical illness. It also offers Severe Child Illness Benefit2 providing critical illness protection for customers under 18 years of age, and allowing parents to provide care to their children.

At present, Hang Seng Insurance offers various products ranging from education funds, retirement planning, mortgage protection, legacy planning, and critical illness protection to provide a wealth-and-health total solution for customers who have different insurance needs.

A Diverse Product Portfolio In its first year, Hang Seng Insurance’s products focused on savings plans. But with the evolution of customer lifestyles and in consideration of the uncertainty of the investment market and global economy, customers were requesting products that suits their goals in different life stages. For such, Hang Seng Insurance went on to launch annuity and endowment insurance products which provide guaranteed interest and life insurance coverage with flexible payment terms. Its product launches over the years mirror the company’s keen attention to the needs of its customers, as well as market demand.

In 2006, in response to the public concern about health and medical protection due to the attack of SARS and swine influenza, Hang Seng Insurance launched a series of protection plans that provide critical illness protection, followed by a corporate term life plan in 2008. Meanwhile, to cater to the insurance needs of the elderly, the company launched SavourLife II Annuity Life Insurance Series and Exquisite Universal Life Insurance Series for retirement and legacy planning.

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Hang Seng Bank’s Prestige and Preferred Banking Centre

Hang Seng Bank’s iPoint Sales & Service Centre

Outstanding Insurance Company INSIGHT

FAST FACTS

The future is filled with uncertainty but Hang Seng Insurance helps customers to eliminate it by providing a total solution with both wealth and health-related products.

• In December 2016, Hang Seng Insurance launched FutureEnrich for the proposition of wealth accumulation, which consists of elements combating inflation and annual dividends that bolster potential returns.

• Hang Seng Insurance ranked number 2 in RMB life insurance market and number 4 in bancassurance market in the Q1 – Q3 2016 (source from the Office of the Commissioner of Insurance, Quarterly release of provisional statistics for Long Term Business January – September 2016).

Hang Seng Insurance provides a wide range of product solutions that suits different customer needs

to the Added Value Banking Study 20153, and as a Trusted Banking Partner of over half of Hong Kong’s population4.

Taking advantage of Hang Seng Bank’s extensive branch network, Hang Seng Insurance is able to provide insurance services to customers in a more convenient manner. A capable and competent team of professional relationship managers stationed throughout the branch network are readily available to formulate tailor-made insurance solutions based on different customer needs. Further, iPoint Sales & Service Centres located in convenient locations allows customer representatives to serve customers who are only available outside office hours, specifically until 7:30 p.m., with some locations even operating on Sundays.

What’s Next for Hang Seng Insurance?

As a true innovator, Hang Seng Insurance is working hard in the area of product innovation: developing products in response to customers’ changing needs and market trends. It is also able to offer customers a wide range of products with premium services before and after the application of plans.

In the next few years, in order to keep up with advances in today’s technology, Hang Seng Insurance will place products and offers in the digital space. These future plans for digital include an overhaul of the company’s website to increase need-based content as well as the launch of Insurance Needs Calculators via a mobile platform sometime in the first quarter of 2017.

Finally, Hang Seng Insurance expects to be busy developing and executing several expansion and growth plans. For mainland customers applying for policies in Hong Kong, Hang Seng Insurance plans to roll out product and service enhancements to meet the uptrend market coming from one of the world’s economic powerhouses. In particular, the focus will be put on legacy planning products to cater to the rising demand due to the boom after the economic reform, and to address the concern about the uncertainty of succession planning policy in mainland China. For Hong Kong’s own high-net-worth market, meanwhile, the company will continue

to develop tailor-made services and products.

At the end of the day, Hang Seng Insurance aims to be a total solutions provider— providing an integrated insurance package that best serves its customers. Through its products and services, Hang Seng Insurance hopes to help customers arrive at the right product to suit their concerns, with the goal of achieving peace of mind and better living. For Hang Seng Insurance, this means minimising interruption brought by the unexpected, and maximising future possibilities, all for a better future for its customers.

Notes: 1 During the Income Period, the Policyholder will receive Guaranteed Monthly Income on each monthiversary until the end of Income Period. For details, please refer to product materials and policy provision.

2 Claims for Severe Child Illness Benefit must fulfil respective definitions together with the terms and conditions as stated in the Plan’s policy schedule. For details, please refer to policy provision.

3 According to Added Value Banking Study 2005-2015, among personal banking customers of the eight major banks in Hong Kong.

4 Based on the provisional estimate of Hong Kong Population aged 18 or above in end 2015 released by Census and Statistics Department and the number of Hang Seng Bank Customers aged 18 or above holding HKID card of the same period.

Remarks: The above information is a product summary of information for reference only. Please refer to the product leaflet/flyer and contract for the detailed coverage, exact terms and conditions and exclusions of the relevant life insurance plans.

The above designated Life Insurance Plans are underwritten by Hang Seng Insurance Company Limited (“Hang Seng Insurance”). Hang Seng Insurance is authorised and regulated by the Commission of Insurance of the HKSAR. Hang Seng Bank Limited is an insurance agent authorised by Hang Seng Insurance.

HONG KONG BUSINESS ANNUAL 2017 95

​​InterContinental Grand Stanford Hong Kong

The Great Hotel that Guests Love

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roperty and business people all say the same thing when it comes to values: it’s “location, location, location.” In the luxury hotel industry in Hong Kong, location is very important for the discerning business travellers. Five star luxury hotels with panoramic harbour views, opulent grandeur, and expansive facilities ring Victoria Harbour in Hong Kong. But none has more to offer than the award-winning InterContinental Grand Stanford Hong Kong located on the waterfront in Tsim Sha Tsui East.

It is the location of a hotel that has served clients for over 35 years. “What makes us the World’s Leading Luxury Business Hotel as recognised by World Travel Awards is our ability to retain over 30% of our staff, many of whom have been here for over 25 years in key positions especially in front of the house, the club lounge, food and beverage outlets, and, most importantly, our key managers. Business travellers who stay in one of our rooms always say that once they arrive, they are greeted by their name, and everything they need is already prepared. They love that our staff knows what they need because they don’t get that anywhere else.

That is the feedback we get from our loyal and regular guests, and I think that is priceless,” says Alexander O. Wassermann, General Manager of the InterContinental Grand Stanford Hong Kong, a three-time winner of the World Travel Awards as Hong Kong’s Leading Business Hotel (2014-2016) and most recently winner of Asia’s Leading Business Hotel and World’s Leading Luxury Business

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Hotel 2016. In addition to its prime location, the InterContinental Grand Stanford Hong Kong is the hub for maximising the efficiency of a business traveller’s time.

“Hong Kong is a business location with strong advantages over other cities. For travellers with businesses in China, the Hung Hom rail station is easily accessible. We are also minutes away from the MTR and along the waterfront to the Star Ferry.

We also offer award-winning Cantonese delicacies at Hoi King Heen, passionately Italian cuisine at Mistral, and contemporary international buffet at Café on M. Tiffany’s New York Bar is ranked as one of the top ten hotel bars in Hong Kong and is home to the first ever Whisky Festival,” he continues.

Moving with its clients’ needs Last year, the hotel started a shuttle bus service to assist its guests whose business has moved from Canton Road, the Tsim Sha Tsui district, and the Hong Kong side to Kowloon Bay. “We anticipate our customers’ needs as Kowloon Bay is still developing as a business district. This service has also given our tourist clients easy access to the numerous factory outlet shops in this area. Keeping our clients connected is also important. Our customers rave about the Handy Phone which is another reason we got the awards we did. It is an amazing service. We also have an online system that can print out around 1,000 newspapers from around the world.

Luxury Hotel PHILOSOPHY

FAST FACTS

At InterContinental Grand Stanford Hong Kong we have a distinctive culture where our colleagues live our core values and branded service behaviours, both of which help us build pride and commitment in our brand.

Awards received in 2016: • World Travel Awards: World’s Leading Luxury Business Hotel 2016, Asia’s Leading Business Hotel 2016 & Hong Kong’s Leading Business Hotel 2016 • World Luxury Hotel Awards: Luxury City Hotel 2016 • Golden-Pillow Award of China’s Hotels: China’s Top 10 Most Popular Business Hotels 2016 • Caring Company by The Hong Kong Council of Social Service

This page (clockwise): Club InterContinental Lounge; InterContinental Club Floor Premier Harbour View Suite (King Room) - Bedroom and Lounge; InterContinental Grand Stanford Hong Kong Exterior (Day); InterContinental Grand Stanford Hong Kong - Exterior (Magic Hour); Sun Court Pool Opposite page: Alexander O. Wassermann, General Manager of the InterContinental Grand Stanford Hong Kong We have other hotels that are very famous in Hong Kong ordering newspapers from us,” says Wassermann.

Going beyond what a traveller expects of the InterContinental Brand, the hotel attracts repeat customers through a very simple philosophy: “We are committed to providing memorable and exceptional experiences to every customer no matter where they come from. We have really achieved that, measured by social reviews on surveys from guests around the globe. We have created an environment that values each and every customer. In fact, our Facebook page has surpassed a number of international branded hotels or even hotel groups,” adds Wassermann. Some might call it personal service, but at the InterContinental Grand Stanford Hong Kong, it is this dedication to a high level of service that brings customers back.

“It is people like Celebrity Master Chef Leung Fai Hung, who is President of the Chinese Chef Association of Hong Kong, overseeing the continuing excellence at Hoi King Heen for more than 20 years, that make the InterContinental Grand Stanford Hong Kong the choice of discerning locals. Also, there are a few restaurants that belong to Hong Kong for over 30 years such as Hoi King Heen and Mistral that are legendary, iconic, and are located here.”

“Over the years we have put a lot of emphasis on the little details. Every day we try to get better. We may not have the largest facilities but what we do within our premises is unique and spectacular, and it is also humble and friendly. We are providing our guests with a homecoming experience all the time. We are the great hotel that guests love,” concludes Wassermann.

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MassMutual Asia Ltd.

MassMutual Asia dares its customers to dream

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nown for its customer-centric and innovative brand philosophy, MassMutual Asia gears for a trailblazing year ahead in Hong Kong’s insurance industry as it takes on the challenge to make its financial planning solutions more dynamic and accessible. Living the corporate vision of “MassMutual – Where Dreams Are Made”, the company is committed to helping customers realize their life goals and dreams.

Ms Jeanne Sau, Chief Marketing Officer at MassMutual Asia, said, “We place great emphasis on innovation and developing flexible solutions in protection, investment, and retirement products and services, to deliver value-added benefits to our customers.” Thanks to this commitment, the company has been able to achieve an impressive average annual double-digit growth in new individual business and has become one of the top ten life insurance companies in Hong Kong.

Retirement leader Hong Kong is facing the challenges posed by a rapidly ageing population. Back in 2002, MassMutual Asia identified the unfulfilled retirement planning need and launched the first-ever annuity plan in Hong Kong, offering a market-unique guaranteed lifetime annuity to help customers hedge the financial impact of longevity risk. Over the past years, MassMutual has been commissioning survey by the Public Opinion Programme of the

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University of Hong Kong in order to understand the expectations and planning for retirement life of Hong Kong people. The 2016 survey findings revealed that respondents’ confidence level in realizing their dream retirement life hit a record low, at 5.4 out of 10, a further drop from the rating in the past few years. The results also indicated that not only had 70% of respondents underestimated the funds they would actually require for retirement, but also that 30% of respondents had seriously underestimated this, with their projected retirement savings amounting to only 50% or less of the actual amount required.

“Mapping out one’s retirement with an annuity plan that offers a guaranteed lifetime annuity payout as the core income component is instrumental in securing sustainable retirement funds, effectively hedges against the risk of ‘living too long’ and avoids hitting the retirement tipping point,” Sau said.

In addition to the market-unique feature of guaranteed lifetime annuity income, MassMutual Asia offers a comprehensive suite of retirement solutions to fully cater for customers’ varying risk appetites and retirement needs. There are also seven annuity options for customers to choose from, the widest range available in the market. Thanks to these innovative and market-unique retirement solutions, MassMutual Asia is the market leader with over 50% market share based on annuity in-force policies in Hong Kong.

Innovative Insurance Company PHILOSOPHY

FAST FACTS

Living the vision of “MassMutual – where dreams are made”, MassMutual Asia has developed one of the most innovative product and service platforms in the Hong Kong insurance industry, offering a suite of award-winning financial planning solutions in protection, retirement and investment. In addition, MassMutual Asia strives to uphold its commitment to serving the community and enthusiastically supports charity events.

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Established in 1851, MassMutual has 165 years of experience in risk- and wealth-management services Ranked in the renowned FORTUNE as one of the “Five Largest US Life Insurance Companies” Enjoys exceptionally high financial ratings from A.M. Best Company (A++), Fitch Ratings (AA+) and Standard & Poor’s (AA+)

This page (clockwise): MassMutual Asia’s branding campaign in the Tsim Sha Tsui station platform; MassMutual’s new customer service center; Target Lifetime Annuity Saver offers lifetime guaranteed annuity to hedge the financial impact of longevity risk; PrimeHealth Extra Saver fully answers customers’ needs for health, wealth and life protections 目標必達終身年金保 Target Lifetime Annuity Saver

2014

2014 Retirement Product

Universal Life Insurance Product

《指標》2012-2014年財富管理大獎

退休產品 - 最佳表現獎

資本卓越銀行及金融大獎2012-2014

資本卓越保險服務大獎

Relevant and pressing solutions With the intense competition in the local insurance market, MassMutual Asia adopts a blue-ocean strategy by identifying unfulfilled risk- and wealth-management needs and develops innovative solutions to meet customers’ needs. The company took a “breadth and depth” approach when designing PrimeHealth Extra Saver as an innovative solution by bundling critical-illness protection, wealth accumulation and life protection into a single policy that fully answers customers’ needs for health, wealth and life protections. The plan offers not only comprehensive coverage with multiple protections and a maximum benefit up to 700% of the sum insured, but also guarantees refund of premiums upon policy surrender if total benefit paid has not reached 100% of the sum insured. Best of all, the plan offers “Extension of Life Protection”, a market-unique feature with guaranteed acceptance that enables any insured being diagnosed with a covered critical illness to take out a permanent life insurance plan without the need to provide satisfactory proof of insurability.

The power of the dream Sau said, “We always put our customers at the center of everything we do. Continuous product and service innovation is one of the most important strategies for our company. We keep on innovating because we firmly believe that ‘MassMutual is where dreams are

Opposite page: Jeanne Sau, Chief Marketing Officer, MassMutual Asia Ltd. made’.” This unique market positioning and distinct branding strategy are extremely important in helping MassMutual Asia meet the competitive challenges of and make itself stand out in the highly competitive market environment.

To firmly establish its advocacy, MassMutual Asia invited Rex Tso, Hong Kong’s first professional boxer unbeaten in 20 fights, to be its brand ambassador. The company launched its new branding campaign by giving the Tsim Sha Tsui MTR Station a makeover, covering the station platform with the positive message of ‘MassMutual - Where Dreams Are Made’ and featuring Rex Tso who speaks out Hong Kong people’s dreams for retirement, health and protection in the campaign. Sau added, “We have also produced the micro movie ‘From Where Dreams are Made – Rex Tso’ directed by the renowned film director, Mr Larry Lau, on the ‘dare to dream’ story of Rex.” The micro movie has gained wide applause since launch and drawn over 800,000 views.

Commenting on MassMutual Asia being named “Innovative Insurance Company” in the Hong Kong Business High Flyers Awards 2016, Sau said, “It is a great honor for us to receive this award for three years running. The award means that we have taken the right direction in terms of product design and positioning, and is a great compliment to our product innovation capabilities and a tremendous endorsement of our businessdevelopment strategy.”

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Mercedes-Benz Hong Kong Limited

On the road towards new mobility concepts

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ercedes-Benz’ iconic logo featuring a three-pointed star within a perfect circle is a symbol synonymous with the brand’s timeless excellence and a testament to the company’s pioneering spirit, passion, and commitment to continue creating innovative and cutting-edge models. The New Generation EQ concept car is one example of an electric vehicle that proves that sexy, cool, and classy cars can still be practical and environmental-friendly.

2016 was a big year for Mercedes-Benz Plug-in Hybrid models with the C-Class, E-Class, GLE, and S-Class launched in Hong Kong in November. These models operate with either a combustion engine or electric motor and are interchangeable. As the pioneer in automotive technology, Mercedes-Benz continues to put research, development, and innovation at the core of their future. In 2013, Mercedes-Benz was the first to explore autonomous driving with their S-Class research vehicle, driving 125 kilometres from Mannheim to Pforzheim in Germany.

Whilst Mercedes-Benz is pushing the technological frontier in various markets, the brand is also pragmatic and consciously aware of the practical difficulties faced by Hong Kong’s motorists. Andreas Binder, President and CEO of Mercedes-Benz Hong Kong Limited, explains that despite technological advances over the years, the infrastructure for electric cars is still very much in its infancy in Hong Kong. Whilst other manufacturers may cash in early on the

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evolving demands of the market, Mercedes-Benz has a little more class and a little pinch of patience to achieve perfection.

The Mercedes-Benz Plug-in Hybrid Binder suggests that the Plug-in Hybrid vehicles might be a better option for Hong Kong given that more than 50% of electricity is generated from coal in Hong Kong, negating concerted efforts to reduce carbon emissions and attempts to be environmental friendly. This can also play an important role in dictating the demand from the more eco-aware customers.

“The biggest challenge, in my view, and this is for every country, is the question of the energy mix or where the energy comes from.

Hong Kong is not an ideal platform at this moment. More than 50% of our electricity is Coal-Fueled Electricity. When you look at the overall consumption of electricity and what an electric vehicle brings, then the energy mix is not in big favor of that technology yet. So we have challenges here in Hong Kong that need to be addressed. Of course much of these is not in the hands of the manufacturers but rests with the government,” says Binder.

Despite the policy and operational challenges in the market adoption of electric vehicles, Mercedes-Benz introduced several Plug-in Hybrid models with higher state battery recharging, safety features, and machine flexibility that continue to give us a glimpse of an exciting future. Thanks to the combination of combustion

Automobile FAST FACTS • Mercedes-Benz is maintaining its strong pace globally in the last quarter of 2016, achieving double-digit growth in unit sales in November. 182,602 automobiles with the three-pointed star were delivered to customers worldwide (+12.7%).

• For the three consecutive years (2014 – 2016), Mercedes-Benz was the best-selling European brand in Hong Kong.

• In Hong Kong, MercedesBenz is offering its most advanced hybrid technology in the C-Class, E-Class, GLE and S-Class.

This page: Mr. Andreas Binder, President and CEO of Mercedes-Benz Hong Kong Limited; Thanks to the combination of combustion engine and electric drive, hybrid system deliver impressive low consumption, but with high performance.

Opposite page: Mercedes-Benz C 350 e plug-in hybrid engine and electric drive, the Mercedes-Benz hybrid drive systems deliver impressively low consumption, but with high performance.

The combination of these two technologies is ideal for Hong Kong given the current challenges by many electric vehicle owners such as the limited number of charging stations (currently at 1,300 in Hong Kong) which has created a supply-demand mismatch.

Therefore a dramatic improvement in the infrastructure for electric vehicles is needed in all areas, and this is something Binder believes the Plug-in Hybrid vehicles will be able to bridge before the e-mobility stage.

“Now it’s getting exciting. I personally think that the characteristics of a city like Hong Kong definitely can offer a good platform for green mobility concepts. The strong efforts the government is showing here towards the electric mobility is not a surprise. We all know that electric mobility will come in the future not only in Hong Kong but the whole world. We are already on that road towards a new mobility concept,” says Binder. With the new Mercedes-Benz Plug-in Hybrid series, Mercedes-Benz is surely one

step ahead on the road towards new mobility concepts.

Another major success factor for Mercedes-Benz is their enhanced customer service which is a component of the company mandate they consider to be of the highest priority. Mercedes-Benz is constantly enhancing its service through the “Best Customer Experience” programme. Binder says, “Our excellent partner, Zung Fu Company, is instrumental in bringing these enhancements to our customers. The feedback is positive. Hong Kong and Macau are established and mature markets which means the brand has to be creative to attract new customers, so we are trying to stay one step ahead of the market.”

Mercedes-Benz continues to steal hearts with their tradition, elegance, and technology with the huge success of the recent release of their advanced E-Class. Binder says, “This is the most intelligent car Mercedes-Benz has ever built. It also enhances efficiency, safety and comfort, reduces the stress level when driving and intensifies the motoring pleasure. From a technological advancement standpoint, it is far ahead of all of our competitors.”

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Platinum Financial Services Limited

Bringing Safety and Trust to HK Pensioners

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hen Platinum Financial Services was narrowing down the brand name for its pensions schemes in Hong Kong, it drew inspiration from a Greek goddess who wore a victorious laurel wreath and in whose honour sanctuaries were built. “Soteria was the goddess of safety which we believe is an extremely important theme when it comes to planning your retirement,” says Mark Kirkham, chief executive of Platinum Financial Services.

Soteria Pensions (www.soteriapensions.com) was subsequently born, serving two Occupational Retirement Schemes Ordinance (ORSO) schemes in Hong Kong that were designed to improve the financial security of clients.

Two ORSO schemes The first scheme is specifically tailored to HK nationals and permanent residents (PR), and is recognized by the United Kingdom (UK) tax authorities as a bonafide international pension into which clients can transfer their UK pension funds. Kirkham says the scheme is “extremely popular” with people of any nationality who have previously lived and worked in the UK. The second scheme is geared towards non-PR’s and nonresidents, enabling them to build up a highly flexible and tax efficient retirement fund from their earned income.

These two schemes are part of the suite of new offerings that

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Platinum Financial Services has brought to the HK market in the face of growing demand for retirement plans in the territory. “Our latest initiatives relate to retirement, taxation, estate, and legacy planning — all of which are financial planning fundamentals,” says Kirkham. “Our number one objective is to make sure that our clients are appropriately advised, aware of and prepared for, the financial planning journey on which they embark with us.”

Retirement savvy He reckons that this trend is not only confined to Hong Kong. As more governments become insolvent and raise taxes to balance the books, people around the world are becoming more retirement savvy and aware of the necessity to have a robust pension plan.

Many are also looking for the best place to retire, and a growing number are trooping to HK, which has among the best pension laws in the world. “Its favourable income tax regime, and the increasing number of double taxation agreements that it has with trade partners, makes it an extremely popular and efficient pension jurisdiction,” says Kirkham of HK’s rising reputation as a pension haven.

The HK pension industry benefits from the exemption of CRS reporting on ORSO & MPF (Mandatory Provident Fund) schemes.

This has led to a breadth of attractive pension options in HK, and it can prove overwhelming for clients, which is where Platinum

Insurance Brokers & Investment PHILOSOPHY

FAST FACTS

Our guiding principles are Independence, Competence, Client Support & Innovation combined with a holistic product range that enables us to offer the most appropriate solutions for our clients’ needs.

Business Class Group Core values • Committed, loyal, client focused team • Staff have a depth of specialist experience coupled with ongoing training and mentoring to strive for continuous improvement • Led by Directors with a passion for perfection & drive for success • PFS is well respected by clients for it’s core values of honesty & integrity

Opposite page: Mark Kirkham, chief executive of Platinum Financial Services Financial Services comes in to provide sound advice. “The role that Platinum plays in that is to make sure that everybody it touches are fully aware of the excellent pension options that Hong Kong offers,” says Kirkham.

Solution-oriented Platinum consultants provide clients with a breadth of services and expert guidance on the most optimal solution for their pensions and other financial services requirements. Many of these clients are expatriates in HK and across Southeast Asia, as well as high net worth local and international clients. Kirkham says Platinum clients rely on the firm’s global knowledge to help plan plan for their own and their families’ futures. Even though clients come from all over the word and have differing personal circumstances — some are very simple individual cases while others are very complex family and corporate requirements — each Platinum advisor is trained to present exceptional solutions.

“Our attention to detail and being solution- rather than productoriented helps us to stay focused on both ours and our client’s objectives,” says Kirkham. “We build from the ground up and leave no stone unturned when exploring which solutions are best suited to our client’s needs.” He adds that unlike some other financial services companies in HK, Platinum Financial Services treats clients

with utmost consideration, building a relationship grounded on trust and respect. “Simply put, our honesty, transparency, knowledge, product innovation, and ethics are just some of the differentiating factors that influence clients and subsequently lead them to choose Platinum over others,” says Kirkham.

2017 challenges and opportunities Looking towards 2017, Platinum Financial Services is determined to ride out the growing regulatory challenges in HK, and expand their distribution network to complement the recent launch of new offerings. “Our biggest challenges are definitely the ones we have no input, influence, or control over. Outside of the normal economic and political challenges that all businesses face, by far the next biggest ones are brought about by regulation and compliance regimes which, on the face of it, don’t appear to do much for clients, brokers, or product providers,” says Kirkham.

He believes that the cost of doing business in HK is escalating and there is a growing concern that the authorities are stifling businesses, as well as endangering the territory’s popularity as a pension destination and competitiveness in the region. “Despite that, we hold a view that from crisis there comes opportunity and we look forward to returning to the vibrant ‘let’s do business’ mentality that, for now at least, is sadly lacking,” says Kirkham.

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Rhombus group

Rhombus – the crème de la crème

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ounded in North America, the owner-operated hotel is recognised for its style-conscious and tech-savvy metropolitan vibes with a leaning towards elegance in a space curated with business travellers in mind. Retaining the Leading Hospitality & Hotel Management honour for the sixth consecutive year, the 30-year-old company continues to set its sights high on the global market, operating a versatile range of hotel assets gearing towards globetrotting dignitaries who shun the cookie-cutter hospitality experience in favour of sensational stays.

The launch of Hotel LKF by Rhombus in 2006 marked the beginning of the group’s significant expansion spree into Greater China, adding four hospitality assets to its roster over the past decade. Today, Rhombus represents some of the crème de la crème of business and boutique hotels in town, including Hotel LKF, Hotel Panorama, Hotel Pennington, and Hotel Bonaparte in Hong Kong, and Rhombus Park Aura Chengdu Hotel in China. Amongst them, Hotel Panorama and Hotel LKF, completed in 2008 and 2006 respectively, are two rising stars.

Hotel Panorama by Rhombus Prominently situated in the heart of the bustling entertainment and retail hub of Tsim Sha Tsui, Hotel Panorama by Rhombus stands out from the bulk of star-studded hotels in a distinctive geometric edifice that takes pride in its close proximity to a dynamic range

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of shopping destinations, including K11 Art Mall, iSQUARE, DFS Galleria, and The ONE. But as you transport to the Sky Garden on the rooftop, you are taken away from the freneticism into a realm of serenity and elegance on the 40th floor with an incredible panorama overlooking the Victoria Harbour. Featuring 324 rooms with 12 suites themed in silver, gold, and platinum, the four-star business hotel goes beyond standard facilities, with a fitness centre and complimentary smartphone in each room, babysitting services, and in-room amenities such as a baby cot, bathtub, and stroller.

Hotel Panorama by Rhombus is also known for its culinary offerings, most prominently the award-winning AVA Restaurant Slash Bar, a European fusion eatery that has become a restaurant to be reckoned with, amongst its two other eateries — Café Express and Sweet Corner. Sitting high on the 38th floor, AVA offers unimpeded views over the harbour with fantastic food.

Facilities aside, corporate social responsibility is also a considerable part of Panorama’s ethos. The hotel has stepped up its CSR efforts in recent years with an undertaking consisting of three pillars — “Caring for the community,” “Caring for the environment,” and “Caring for the employees.”

The past few years has seen the hotel take part in environmental protection by donating surplus food to low-income residents via the charity Foodlink to reduce food wastage starting in 2011, donating used soaps to Soap Cycling since 2013, as well as

Leading Hospitality & Hotel Management PHILOSOPHY

FAST FACTS

Rhombus cares and is committed to continuously delivering excellence combined with versatile services and products to its owners/investors and guests while providing vast opportunities to its employees.

• Founded in Canada, Rhombus Group has more than 30 years of experience in hospitality.

• Regardless of the size or scope of a project, Rhombus makes a commitment to service excellence, while maximizing profits and asset values.

• Rhombus offers consolidated, realistic and practical turn-key packages for various development projects.

This page: Hotel Panorama by Rhombus - AVA Restaurant Slash Bar; Hotel LKF by Rhombus - G500 Superior Room Opposite page: Hotel Panorama by Rhombus Executive Club Harbourview Room participating in the renowned Earth Hour by WWF starting 2013.

Its pledge to care for the community has also seen Rhombus’ employees volunteer in meal box packaging for the elderly via St. James’ Settlement since 2014.

Hotel LKF by Rhombus Looming above the party hotspot at Lan Kwai Fong, Hotel LKF by Rhombus, on 33 Wyndham Street, is a five-star boutique hotel outfitted with 95 guest rooms ranging in size from 500 to 950 square feet, a gym, a dedicated business centre, stunning metro views, and a plethora of bars and restaurants, retail stores, and galleries on the doorstep.

The 30-storey building is a magnet for partygoers as it houses the restaurant/bar Azure for guests to pamper themselves with guilt-free drinks at night. Its premium deluxe rooms and suites

have a bewildering range of services and facilities on offer, including 42-inch LCD TVs, mini-bars, foot massage machines, and four-in-one business assistants to make sure business travellers can unwind whilst staying connected with work on-the-go.

To cater to today’s digitally savvy travellers, the group has stepped up its digital efforts in 2016 with the launch of a free smartphone service for Hotel LKF by Rhombus, amongst all the Rhombus brands, enabling unlimited local and international calls as well as 3G mobile internet access for each room. The gadgets are also equipped with digital city guides and interactive maps to enhance the personalised travelling experience for guests.

Charmed by a modern chic interior design with an elegant accent, the hospitality abode is perfect for city slickers to catch a breath of fresh air and enjoy a personalised five-star hotel service.

If you ever leave the club that is.

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Standard Chartered Bank (Hong Kong) Limited

Living the future of retail banking

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he past years have been challenging for Hong Kong’s retail banks. Factors such as heightened competition, regulatory attempts and global regulations, and rapid salary and infrastructure cost increases have been identified as concerns.

When it comes to consumers, particularly, they have been empowered with improved mobility and access to information.

They are now demanding further improvements in banking services, which has been seen as a concern for retail banks.

For Standard Chartered Bank (Hong Kong) Limited (“Standard Chartered Hong Kong”), however, consumers’ increasing expectations from retail banks isn’t a cause for concern. Focusing on their consumers has led them to come out with new products and services that are of value, highlighting the bank’s pride in its innovative approaches.

“In retail we are known for bringing products and solutions for our clients that are innovative and of tremendous value. We also focus on client experience and make that a differentiator,” says Samir Subberwal, Managing Director & Head, Retail Banking, Standard Chartered Hong Kong.

Achieving wins despite headwinds Samir says it’s been a challenging year with an uncertain global outlook, a slowing local economy, and slower corporate activities.

“We feel that going forward, the global political uncertainty is

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one of the biggest risks,” he says. “We have already seen that with Brexit and the U.S.presidential elections, and could potentially see that inthe rest of Europe.”

He also notes that Brexit raises concerns for the EU, and there are increasing risks of protectionism and trade barriers that could impact international trade, GDP, and wealth creation in emerging markets. Further, Samir shares that the diverging monetary policy of the U.S. and the rest of the world is creating an uncertain environment for investments. “Despite the headwinds, with our focus on our clients, Standard Chartered has achieved good results and further built on our strong franchise in Hong Kong,” he says.

Equipped for digitisation This is because Standard Chartered strives to be the world’s best bank for our chosen client segments, according to Samir. “We bank the people and companies driving investment, trade, and wealth creation across Asia, Africa, and the Middle East,” he says. In retail banking, for instance, Standard Chartered manifests its position as a leading bank through its efforts regarding digitisation, which Samir notes is the leading trend shaping the retail banking sector.

In 2013, for instance, in response to changes in its clients’ lifestyles, and with the aim of continuing to offer state-of-the-art banking experiences, Standard Chartered Hong Kong expanded and renovated its 4-4A Des Voeux Road Branch, transforming it into the

retail banking PHILOSOPHY

FAST FACTS

We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East. Our heritage and values are expressed in our brand promise, Here for good.

• Standard Chartered has around 84,000 employees and a 150-year history in some of the world’s most dynamic markets.

• Standard Chartered PLC is listed on the London and Hong Kong Stock Exchanges as well asthe Bombay and National Stock Exchanges in India.

• Standard Chartered incorporated its Hong Kong business on 1 July 2004, and now operates as a licensed bank in Hong Kong under the name of Standard Chartered Bank (Hong Kong) Limited, a wholly owned subsidiary of Standard Chartered PLC.

This page (clockwise): Standard Chartered Asia Miles MasterCard Launch Ceremony; Octopus O!epay Launch Press Conference; Mr. Samir Subberwal, Managing Director & Head, Retail Banking, Hong Kong Opposite page: Exchange Square Branch, The Forum bank’s first digital branch in Hong Kong. This was followed by the first Digital Tellers in HK in the Exchange Square branch.

Standard Chartered is leading the way in digital banking, with Global Finance awarding it as the Best Consumer Digital Bank in Hong Kong in 2015 and 2016. It is one of the most renowned digital bank awards worldwide.

“Standard Chartered Hong Kong also rolled out the Touch Login service, a biometric technology for clients to securely access all the banking services available in Standard Chartered Mobile app, including checking their bank account balances and cards transactions, transferring funds, and making bill payments using their unique fingerprint as authentication,” says Samir.

Further, Standard Chartered Hong Kong is the only bank that jointly launched the P2P payment platform powered by Octopus, making it easy for our clients to apply and transfer money to Octopus O! ePay account via Online Banking. “With Octopus O! ePay, clients can enjoy spending and receiving money among friends and top up their Octopus with their mobile phone anytime,” he notes. Standard Chartered Hong Kong also introduced its clients to Apple Pay and Android Pay, transforming mobile payments with an intuitive and secure way to pay conveniently.

The bank has also signaled its ongoing commitment to encouraging innovation and entrepreneurship by sponsoring the SuperCharger FinTech Accelerator Programme, with the aim of helping local and international early-stage and more established FinTech companies grow in Asia’s vibrant markets.

Always customer-centric Samir says Standard Chartered will continue to acquire new-tobank clients through alliances and internal ecosystems, pursue its digital main bank strategy, and leverage the opportunities coming from RMB internationalisation and the Belt and Road initiative.

“Our success is a result of being obsessed with the basics of banking — balancing the pursuit of growth with a disciplined management of costs and risks,while keeping a firm grip on liquidity and capital,” he notes. Through the bank’s international network and expertise, it enables multinational clients to conduct complex business transactions and services the needs of an increasingly international consumer base. “Our brand promise is here for good,which is the essence of who we are. It’s about being there for our clients through good times and bad, and always trying to do the right thing,” he says.

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SUNCITY GROUP

Suncity Group launches unparalleled and customised

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one are the days of the traditional booking company where customers purchase travel tickets and head out on their own. In recent months, Suncity Group has been brewing a new travel flavour with real-time, curated, and experienceled services that are sure to surpass customer satisfaction and expectations. In an effort to enhance its global entertainment and VIP services, Suncity Group has been providing meticulous services to guests for all travel-related enquiries and scheduling arrangements.

Approaching its 10th anniversary, Suncity Group has created a new blueprint featuring the reinforcement of its global tourism business with new travel products and privileges. In 2017, Suncity Group will be launching Sun Travel, its tourism business aimed at gathering the world’s finest entertainment services and providing global VIPs with diversified travel information, reservations at world-class hotels and feature restaurants, VIP tickets to concerts, fashion shows and sports events, and exclusive privileges in entertainment venues, spas, night clubs, and private clubs.

Satisfy your wanderlust A city of tourism and leisure, Macau is Suncity Group’s focus as it promotes its global tourism business. The city has experienced diversified economic development in recent years and will surely win the hearts of tourists with new and improved 5-star facilities,

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entertainment venues, and rest and recreation hubs and parks.

The dedication and commitment of Suncity Group also contributes largely to what makes the magic of the Macau Grand Prix happen.

Officially named the Suncity Group 63rd Macau Grand Prix, the event was sponsored by Suncity Group for the third time in a row, and was held in November 2016.

To provide customers with the best information and unique travel packages, Suncity Group will launch the “Suncity Global Premium Entertainment Platform” a one-stop global tourism and entertainment booking system. Clients can make reservations by simply logging onto the Suncity website: www.suncity-group. com. Clients can soon expect the booking system to feature customised trip planning, with personalised travel advice and trip arrangements, by simply entering the client’s needs and preferences. Clients can check all their reservation records using the “My Moment” feature and upload photos to their private photo album during and after their trip, capturing unforgettable moments.

Beyond Macau and Hong Kong, the Group is also proud of other popular travel products such as a one-stop, high-end travel platform called “The World of Unrivalled Suncity Experiences” which has been organised in popular travel destinations since 2015, including Melbourne, Seoul, and Las Vegas. It features famous Hong Kong celebrities including Stephy Tang, Wilfred

Leisure Entertainment & Gaming PHILOSOPHY

FAST FACTS

Suncity Group is one of Asia’s leading VIP service and entertainment conglomerates. Adhering to the spirit of “Innovation with diversity, strive for success”, the Group keeps improving over the years and serves the guests with a range of high-end entertainments.

Scope of business: • tourism • film production • concert and event planning • luxury goods • auction • finance • real estate development • natural resource development • horse breeding • education • food and beverage

This page: The upcoming one-stop global tourism and entertainment booking system“Suncity Global Premium Entertainment Platform”can satisfy all needs of customers; Suncity Group participated in HK ITE Opposite page: Alvin Chau, Chief Executive Officer and Director, Suncity Group Lau, Anita Chui, and As One. Wilfred Lau, in particular, shared his experience on the trip with Suncity, saying it was a once-in-alifetime experience that is full of excitement as he flew in a fighter jet and drove in a car race, while relaxing in the most advanced, luxurious spa.

A new era of luxury travel According to Alvin Chau, Chief Executive Officer and Director of Suncity Group, the market has entered a new era of luxury travel, where luxury is curated, real-time, and experience-led. He adds that the needs of customers can be clearly identified, ranging from five-star quality and service standards to exclusive VIP privacy and security. With Suncity Group’s focus on customer satisfaction and customised solutions, clients can expect creative, innovative travel products that are beyond imagination, combining excitement, luxury, and novelty. Chau says that Suncity Group is also set to expand its entertainment business and target the market of

mainland China with the announcement of Alibaba Pictures’ partnership with Sun Entertainment Culture to produce two films.

According to Chau, this is a huge move as the Chinese film and television entertainment industry has entered a new era due to the rapid growth of online media.

More than the ordinary production of films, music, and concerts, new elements need to be applied to the business model to implement diversified development, such as bringing film characters and themes to people’s daily lives and commercial activities.

Network dramas and films will be the main focus of Sun Entertainment Culture’s future development. In addition, the company is now cooperating with many online media platforms to further develop the growing market. Huge business expansion is expected, with an expanding audience base, and it will be an excellent chance to promote more talented filmmakers and actors while providing quality entertainment globally.

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Towngas Telecommunications Co. Ltd.

Towngas Telecom Delivers the Right World Class Capacity

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hinese culture has traditionally encouraged sharing and the regular gathering of business partners, friends, and family. Chinese banquets to commemorate memorable occasions and success in business are no strangers to Chinese people. Bringing people together to share food, to catch up with old friends, and to meet new friends allows the sharing of communication and information. New opportunities are also discovered to help solve current problems and give rise to new business ventures.

This is a testament to the power of culture and nourishment.

For 153 years, Towngas Telecommunications Company Limited (TGT) has provided the platform for this flow of socialisation, information, and communication in what might be considered a pre-digital era data centre.

Towngas is bringing digitisation to the banquet “By leveraging Glass-In-Gas (GIG) and Glass-Along-Gas (GAG) technology, we have created a fibre network within the existing gas piping network to provide high-end telecommunication infrastructure services and quality network solutions for telecom carriers, service providers, and large corporations,” states Joseph Lai, general manager of TGT and presently head of emerging business of the Towngas Group. TGT is a wholly owned subsidiary of The Hong Kong and China Gas Company Limited, and is one of

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Hong Kong’s premier fixed telecommunications network operators.

TGT provides up to 100Gbps point-to-point fibre links and dedicated bandwidth services including T3/DS3, STM-1, STM-64, GE, and 10GE. “We have a tremendous resource in over 1.8 million gas customers and an extensive pipeline network in Hong Kong alone,” continues Lai. TGT focuses on three core businesses: network connectivity, carrier neutral data centres, and cloud computing.

The latest jewel in the crown of achievements for TGT as an unparalleled infrastructure service provider is TGT Hong Kong Data Centre 2 (TGT HKDC2), a purpose built five-floor stand-alone building with a gross area of 22,000 square metres and a 3,000 server rack capacity. TGT HKDC2 is a recognised world-class data centre for hosting mission critical operations. This data centre has been awarded with numerous ISO certificates (ISO/IEC 27001,ISO/ IEC 20000, ISO/IEC 14001), the CSA STAR Certification for Cloud Computing, HKSAR Level II Security Guidelines issued by the HKSAR Government, and LEED Gold Certification issued by the U.S. Green Building Council.

TGT HKDC2 is the ideal host partner for global clients who have a green mandate as the facility is built and equipped with environmental friendliness in mind. Located in Tseung Kwan O Industrial Estate, the facility features a durable self-cleaning terracotta insulated facade, uses renewable energy through

Leading Data Centre Solutions PHILOSOPHY

FAST FACTS

Towngas Telecom is a wholly owned subsidiary of The Hong Kong and China Gas Company Limited (Towngas). Adopting the company’s pragmatic approach to quality services, TGT is a carrier neutral telecommunication service provider with a number of world-class data centres and network infrastructures operating in Hong Kong and Mainland. Riding on the advantage of the colossal gas pipe network and synergising it with the advanced Glass-In-Gas European technology. TGT has also been able to provide fibre links and dedicated bandwidth services to reputable corporations, international network service providers and professional clients.

• Founded in 2004 in Hong Kong • Currently operates two large scale data centres in Hong Kong and five in China • Recognised as Caring Company since 2011 • Awarded with numerous world-class international recognitions such as ISO 27001:2005, ISO 14001:2004, 20000-1:2005, CSA STAR Certification for Cloud Security, Level II Security Guidelines issued

by HKSAR Government and LEED Gold Certification issued by the USGBC

This page (clockwise): Tailored business solutions; TGT HKDC2 is constructed on dedicated purpose built data halls and can afford approximately 3,000 racks of server space; Data centre exterior;

incorporation of numerous skylights and solar panels, an oil-free chiller, and the use of Novec 1230 in the fire suppression system in all data halls. TGT HKDC2 joins TGT HKDC1 in Hong Kong and carrier neutral world class data centres in Jinan, Dalian, Dongguan, Harbin, and Shanghai to provide TGT a total capacity that exceeds 14,000 server racks in Hong Kong and China.

Working with partners The banquet just got bigger. “We are a relatively new player in the telecom industry, but we have a lot of old friends. We hope to capitalise on all the resources provided by the HK and China Gas group, and our joint venture partners throughout China,” states Lai. Hong Kong and China Gas Company has over 130 joint venture partners with whom they have help built a gas pipeline network that connects to 20 million customers and is growing rapidly due to urbanisation.

TGT is currently bringing their expertise in GIG and GAG technologies to their long established partners to meet the rapidly growing demand in China for network connectivity. The tapping of a new source of revenue and opportunities to grow business with old friends has been well received. “The upside potential is great in China, TGT along with Hong Kong and China Gas JV partners are moving fast to provide the fibre optic backbone in support of this growth.”

Opposite page:Mr. Joseph Lai, General Manager of Towngas Telecommunications Company Limited (TGT) TGT adopts a proactive approach in developing the fibre optic backbone network with Hong Kong and China Gas’ JVs and partners. This approach not only enables a shortened implementation timeframe but also uncovers new opportunities for all stakeholders. One such opportunity is “Fog Computing”.

It is typical to take up to 3 years to build a world class cloud data centre from inception to operation. TGT is undertaking a feasibility study on placing self-contained fog computing units on a wide geographical region serving respective local enterprises.

“Being carrier neutral is both a strength and a weakness,” adds Lai. “Carrier-operated data centres may employ financial bundling packages to make their services appear more cost effective.

TGT’s carrier neutral status appeals to customers who need to be carrier independent or those large global enterprises who need to remain with their corporate carrier.” TGT data centres are currently the infrastructure platform of choice for premium European, U.S., and Asian regional businesses.

The banquet is about to begin. Chinese cuisine is always better when cooked with gas no matter what you cook or what style you cook. It is the right amount of flame at the right time. And consistent with Hong Kong and China Gas Company Limited, TGT provides the data centre and infrastructure that delivers the right world class computing capacity to the right customer at the right time—all the time.

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Faculty of Business, The Hong Kong Polytechnic University

IDEAS that Light Up the Catwalk to Global Business

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f one was to mention New York, London, Paris, and Milan in the same sentence, it would mean the whole world to some.

But to others, they are just major cities in the global market.

Those in the fashion industry live from season to season while those in international business do so from quarter to quarter. From inception to implementation, the planning calendar becomes a complex matrix of decisions as interlinked events make up a whole.

Pressure? When your work is on the catwalk under the brightest of lights, every decision made for the last nine months is illuminated for the world to see. It’s time to sizzle or fizzle. And if you sizzle, then it’s time to do it again for the next season or the next financial quarter. The skill set to sustain management success in fashion or international business in the long run is hard-earned.

But for aspiring mid-level managers and future entrepreneurs, one of the best routes is through professional education with the right accredited MBA programme in a resource rich environment. It’s time to LEAP up onto the catwalk!

The Hong Kong Polytechnic University’s MBA programme meets all of these. “We have been developing general managers since 1990,” states Dr June Cheng, PolyU MBA Programme Director. “Starting from September 2017 Intake, we will launch a consolidated curriculum with specialised study streams in International Business, Fashion, and Business Research, allowing students to develop in depth professional skills related to their

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industries.”

Accredited by both the Association to Advance Collegiate Schools of Business (AACSB International) and EFMD Quality Improvement System (EQUIS), PolyU was ranked #6 in the world by QS Top 50 under 50 2016 (for universities under 50 years old).

“Our community is dedicated to the pursuit of IDEAS (Innovation-driven Education and Scholarship) with a 3D focus on Discovery, Design, and Delivery. We realise knowledge and technology transfer through high-quality educational programmes, as well as partnership and close links with industry and the professional community,” continues Dr Cheng.

PolyU is situated in the heart of the most dynamic business city in the world and has cultivated experience rich partnerships with the global industries present in Hong Kong. Where better to earn an MBA in International Business, Fashion, or Business Research than at PolyU. Financial services, trading, textiles, fashion, ICT, and hospitality all have major regional presence in Hong Kong and the nearby Asian manufacturing base gives rise to the opportunity to learn from the best global players. “Our MBA students have an average of more than 10 years of rich working experience in the real world which they bring to the classroom to share with their classmates and professors,” adds Dr Cheng.

But it’s not all about classroom learning. The best experience is gained in the field and PolyU enables this through field study

MBA PHILOSOPHY

FAST FACTS

Our community is dedicated to the pursuit of IDEAS (Innovation-driven Education and Scholarship) with a 3D focus on Discovery, Design and Delivery. We realize knowledge and technology transfer through high-quality educational programmes, as well as partnership and close links with industry and the professional community.

• Providing applicationoriented education since 1937 • Collaborating with 650 institutions spanning 45 countries and regions • Offering 86 taught postgraduate programmes • Working on 2,800 research projects

This page (clockwise): Dr June Cheng, PolyU MBA Programme Director; Field study in Perth, Australia; Field study in Milan, Italy; Management Orientation Workshop courses. Recently, their MBA students went to Frankfurt to visit Audi AG, Leica Camera AG, Mercedes-Benz Museum, and Sirona Dental Systems GmbH. Students also went to Perth and visited a harbour operator, a winery, and Curtin University, and to Milan to visit the companies of Moreschi, LoroPiana, BrancaMenta, Giorgio Armani, Cartier, and Visionnaire. They also attended the Milan World Expo 2015 to gain a further understanding of real-life business issues in an international perspective.

Take a LEAP Application for PolyU’s MBA in International Business, Fashion, and Business Research streams has begun and it is time to take the LEAP. Leadership with responsibility; Empowerment through intellectual growth and networking; Agility to face challenges in a complex and fast-moving world; Pragmatic knowledge for Fashion, International Business, and Business Research is the catch phrase that guides the PolyU MBA programme with world-renowned and industry experienced faculty providing a solid foundation in Fashion, International Business, and Business Research streams.

Haute Couture or prêt-à-porter? The MBA in Fashion stream draws upon PolyU’s own Institute of Textiles & Clothing to provide close to 60 years of knowledge at all levels, from textile manufacturing to fashion design, with an established industry network throughout the world from which candidates can learn from and network with. PolyU’s Asian Centre for Branding & Marketing, meanwhile, provides a powerful research resource for

candidates to understand how best to build and promote their products, brands, and labels.

Business in Hong Kong is international and there is no better place for the MBA International Business candidate to gain insight into working across disciplines and build their network in all aspects of trade, sourcing, supply chain management, project management, and financial services. PolyU has a network of over 43,000 alumni across all disciplines.

PolyU’s MBA programme is designed for mid-level managers to learn at their convenience through evening and weekend classes, as well as field study. A Management Orientation Workshop provides students with the orientation to PolyU’s MBA programme as well as an opportunity to get better acquainted with their classmates.

PolyU’s promise of Opening Minds and Shaping the Future steers the University to excel in professional education through applied research and partnership for the betterment of Hong Kong, the nation, and the world. PolyU is constantly reviewing its curriculum to meet current and long-term needs to equip students with theoretical concepts and practical applications.

The PolyU MBA— with streams in Fashion, International Business, and Business Research— is a direct result of innovationdriven education built on a solid base of industry experienced faculty. “We aim at nurturing business leaders with practical wisdom,” concludes Dr Cheng.

For more information, visit www.fb.polyu.edu.hk/r/mba

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TMA

Re-structuring in Hong Kong

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wing to the bleak economic conditions in Europe over the last three years, investment and development projects were put on hold by European investors. However, times are changing, with European companies looking again towards Asia.

Headquarters are now willing to rationalise and restructure their assets in the region.

Groups of companies are increasingly restructuring their network in the region through holdings that they locate in Hong Kong without hesitation. The idea is to consolidate the different companies which have been randomly set up or purchased, optimise financial flows among the group of companies in the region, and take advantage of the developing network of double taxation agreements. Whereas traditionally the choice for the location of such a holding was between Hong Kong, Shanghai, and Singapore, today Hong Kong seems to be the winner.

Indeed, Hong Kong enjoys a great number of benefits— more than 40 double taxation agreements currently in force, coupled with numerous commercial treaties and agreements with China (CEPA, Trade Processing Agreements, etc.), and a unique role as the global hub of choice for RMB transaction. Besides, Hong Kong remains the largest financial centre in Asia with an easily readable tax system, a dynamic commercial legislation, and a grade A logistics hub, including the leading airport for commercial freight in the world.

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This trend is verified by the fact that FDI (foreign direct investment) in mainland China through Hong Kong is back to the level from 10 years ago. After the 2008 financial crisis, FDI from Hong Kong dropped to a low 30%. Currently, it is home to as much as 70% of total world FDI in mainland China.

Mainland China’s economic model is undergoing a profound change. Today, it’s more oriented towards consumption, new technologies, and services. The traditional model of an economy strictly based on production is rapidly disappearing. This transformation is attracting investors who, themselves, need to be organized and efficient in order to cope with the challenges ahead.

Hence, the need for a reorganisation of groups, which too often have grown without a rational policy as opportunities arose. It is now a necessity to be efficient and rationalise structures, flows, and decision making processes.

TMA is a key player Corporate lawyers are keys in this process because they advise on tax, contracts, and company restructuring. TMA is a key player in this restructuring process owing to its more than 20 years of experience and its efficient professional network throughout the region.

TMA implements efficient solutions based on experience and its thorough knowledge of the legal mechanisms aiming at

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 20 years ago and employs 35 staff Paris office is a subsidiary as TMA Hong Kong is the main office Practice areas: International business law, mergers and acquisitions, joint ventures, company and commercial law, international tax law, international arbitration, private international law, and immigration law, are its practice areas.

This page: TMA office at a glance; Two Partners at TMA 20th Birthday Celebration; TMA Christmas on 16 December 2016 Opposite page: TMA office is located in Lippo Centre rationalising and consolidating, taking into account tax and legal issues.

THOMAS, MAYER & ASSOCIES (TMA) is a French law firm established in Hong Kong in 1995. TMA specialises in the economic migration of companies from Europe to Asia. TMA provides its clients with the possibility to carry out their investment projects owing to technical solutions based on its in-depth knowledge of the economic and legal environments of these regions, together with its more than 20 years of experience in the commercial and legal practices of the relevant countries.

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Wharf T&T

Wharf T&T unveils a new era of growth

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t was Cole Porter who wrote the classic song “Anything Goes” whose famous opening lyrics “times have changed” captured the essence of a time gone by and the frivolity of modern living. However, in today’s fast paced modern world, things move rapidly, and so it takes a forward thinking innovative company to maintain their success. So, it seems, some things do stay the same.

As is the case for Wharf T&T, who continues to lead the way in telecommunications after over 20 years whilst being a leading ICT service provider, Wharf T&T strictly focuses on enabling customers’ businesses using best-of-breed technologies through top-class service.

Backed by the state-of-the-art “Fibre-to-the-Desk” (FTTD) ultra-high speed broadband network, Wharf T&T possesses strong system integration capabilities and offers a full suite of subscription-based public cloud solutions to cope with the evolving business demand of ICT adoption. We like having the security that comes with knowing a company has succeeded for so long, and Wharf T&T has been a trusted partner for business customers providing a rich ICT service portfolio for decades. Their services range from data connectivity, high speed internet access, IP-based voice telephony, public cloud services, to complex mission-critical system integration solutions to over 53,000 enterprises in Hong Kong — and it doesn’t look like they’re slowing down.

However, change is inevitable, and with the recent acquisition of

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Wharf T&T by MBK Partners and TPG, Wharf T&T continues to build on their current success while entering a new era.

MBK Partners and TPG announced the completion of the Wharf T&T Limited acquisition on 10 November 2016, a transaction worth $HK9.5b. MBK Partners and TPG have a long and reputable track record of investing in world-class companies such as Spotify, Uber, Gala TV, and Universal Studios Japan. With this new era of growth, the ever evolving Wharf T&T continues to build on their track record of excellence and innovation to bring even more products and services to their customers.

The CEO of Wharf T&T, Vincent Ma, stated at the recent press conference held in Central, Hong Kong, on 10 November 2016, “Wharf T&T experienced a challenging 20th anniversary as business customers were prudent on new ICT investments in a slowing economy. Undeterred by a stagnant market, Wharf T&T continued to make strides in its core business compared to a year ago, and reported its best half-year results ever, attributable to double-digit year-on-year growth in the local data and business broadband businesses. Backed by its proven credentials to be a trusted service provider to address mission critical needs, Wharf T&T continued to achieve significant results.”

With many awards under their belts, their list of services are impressive to say the least. While Wharf T&T provides not only nonnetwork infrastructure based business internet services, they also

​​Fixed Network, Broadband & Cloud Services - Telecommunications PHILOSOPHY

FAST FACTS

Wharf T&T strictly focuses on enabling customers’ businesses using best-of-breed technologies via top-class service. Backed by the state-of-the-art “Fibre-to-the-Desk” (FTTD) ultra-high speed broadband network, Wharf T&T possesses strong system integration capabilities and offers a full suite of subscription-based public cloud solutions to cope with the evolving business demand of ICT adoption.

• Wharf T&T is the first and only comprehensive ICT service provider in Hong Kong focusing on the business sector.

• The strategic alliance of MBK Partners and TPG in 2016 to acquire Wharf T&T unveils a formidable partnership and positions Wharf T&T to serve enterprises with more best-of-breed ICT solutions and deliver enhanced value to enable their businesses.

This page: Wharf T&T CEO Vincent Ma with representatives from TPG and MBK; Florence Cheung, Vice President, Human Resources of Wharf T&T received the LOOP Platinum Label from Peter Cornthwaite, CEO, WWF-Hong Kong at the presentation ceremony; Wharf T&T employees Opposite page: The Wharf T&T team enhance their business customers’ experience with the offer of real cloud applications and ICT services. Those innovations have won them two laureates at the 16th Capital Outstanding Enterprise Awards, being named the Outstanding Fibre Business Broadband Service Provider and the Outstanding Cloud Service Provider.

Apart from the “2015/16 Family-Friendly Employers Award,” Wharf T&T was also proud to attain the Low-Carbon Office Operation Program (LOOP) Platinum Label, which is the highest rank of the labelling scheme initiated by WWF-Hong Kong to recognise the efforts and contribution of companies in implementing green initiatives to combat climate change and reduce operation-related greenhouse gas emissions.

Forward thinking As a dynamic forerunner in the telecommunications industry, the forward thinking Wharf T&T has a full range of ICT services available. They offer a rich ICT service portfolio ranging from fibrebased high-speed business broadband, sophisticated local and international data networking, advanced IP-based voice telephony, best-of-breed public cloud services, and complex mission-critical systems integration solutions that aim at enabling the businesses of its customers.

With 90% and over 5,200 office buildings in Hong Kong being

covered by Wharf T&T’s broadband network, it is little surprise that their figures have been so impressive. The 2016 interim results of Wharf T&T has its total turnover increased to HK$1,005 million, and core fixed line revenue posting a robust 9% growth to HK$724 million. Wharf T&T’s EBITDA increased by 10% to HK$415 million, with margin improving to 41%. Operating profit increased by 24% to HK$214 million. Free cash flow increased by 7% to HK$237 million.

Ma said, “Wharf T&T benefits immensely from the visions and inspiration of the new owners, bringing further momentum to the companies’ growth. The extensive network of strategic alliance of MBK Partners and TPG also presents Wharf T&T with an abundance of innovative product and service opportunities. Wharf T&T is well positioned to build on our current success and excel in our next phase of growth and development.”

Ma also assured, “The team is committed to working closely together to build an even better company that our employees, customers, and partners will all be proud of. We are very confident that, with the support of MPK partners and TPG, the best is yet to come.” Wharf T&T continues to build on their success while providing a superb infrastructure and user-friendly and feature-rich customer portal. Wharf T&T is proud to cater to all enterprises’ needs, while redefining business-grade public cloud standards.

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Zchron Design

zchron continues Building for high society

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f you’ve been invited to a glamorous party at a glittering luxurious residential on the Mid-Levels, or passed a sumptuous condo and peeked into the stylish interior on the premium Oxford Road, chances are you’ve stumbled across one of Zchron’s works in Hong Kong. Founded in 2010 by interior design veteran Nison Chan, Zchron is no stranger to bigwig clients, having established a reputation in the affluent society after designing for a cache of business leaders and tycoons alike, with a concentration on luxury residential projects ranging from HK$1m to HK$10m.

Behind Chan’s frantic schedule — handling up to 15 largescale renovation projects at the same time — is a fairly small but dynamic office housing about 20 people to make sure everything goes without a hitch. Small in size, but big in ambition, Zchron has sought to present itself as the leading company in the luxury residential sector in town with three key principles — integrity, punctuality, and quality — which makes the firm stand out from the interior design pack and saw it snatch the coveted interior design award for the 11th year in a row.

Honouring the spirit of a contract One key focus Chan keeps underlining is the importance of maintaining professional integrity, and honouring the spirit of a contract. “Clients’ satisfaction is our first priority,” Chan says.

“We take pride in the quality of our projects and we honour the

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commitment to our clients on the contract. We’ve developed a solid base of repeat clients due in large part to our pledge to deliver on our commitments on the contract, mainly including the estimated project costs and completed times. “Also, we strictly follow the 3D renderings during the construction to make sure the end results are identical to the renderings. Some clients express their gratitude to us when projects are completed on time simply because this is rare in the industry.” All these combined, Chan says, is the winning strategy to building a trusted brand identity and forging long-term client relationships.

The robust referral business In this era of online search engines and user reviews, it is easy for companies to forget or to underestimate the power of customer referrals. Whilst people are constantly bombarded by loud advertising from laptops to smartphones, print to outdoor billboards, what they really trust is word-of-mouth recommendations from people who can vouch for the service themselves.

Although beefing up its advertising spending this year, Zchron’s business relies heavily on referral business, with former Gucci CEO Mimi Tang, S.A.S. group chairman Stanley Yim, and Sa Sa vicechairman Eleanor Kwok, amongst its clients from referrals. “Being able to deliver on our promises to clients is what keeps clients

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.

•

•

2010 -- Nison Chan starts Zchron Design Group to cater to clients in both the commercial and residential markets, providing design and project management to completion 2010 – 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

This page (clockwise): Modern classic living room and staircase design; Modern classic living room at Mount Beacon; Luxury living room at Oxford road; Classic dinning room at Hong Kong Park View Opposite page: Matthew Leung, General Manager of Zchron Design coming back and referring more clients to us. To make sure projects are on time, we follow up the schedule every day for all clients, regardless of size.”

Chan cites a project for a standalone house at Stanley about three to four years ago to which the owner later referred the company to his daughter who owns an apartment at The Harbourside at Tsim Sha Tsui, whom then referred the company to a friend living at Grand Austin. “Being honest and keeping our promises are the keys to forging long-lasting relationships with clients.” With a well-established network in an affluent circle, Zchron will stay focussed on luxury residential projects, which takes up some 70% of its business. “The interior design market is cluttered. Whilst every sector is dominated by certain market leaders, joining the fray means you’ll be expecting a price war. But cutting prices always compromises on quality, and that’s not the direction we are heading.”

A firm stand on quality The unregulated renovation industry in Hong Kong is notorious for scams such as overcharging for materials, asking for a large sum of the deposit upfront, underperforming frontline workers, and questionable craftsmanship.And when customers refuse to pay, the project often ends up shoddy or, worse, abandoned.

“Addressing these bad practices, at Zchron we make sure all

basic home supplies, including water mains and electrical tubing, meet international standards, plywood boards meet European Formaldehyde Class E1, and wall paint meets green standards.

“Materials for construction are mainly imported from Europe, and pricing is transparent to clients so they can make decisions depending on their financial capacity.” Most contracts guarantee a year of maintenance, but Zchron tends to offer three to five years of maintenance for free. “We treat our clients like friends.

When most businesses are competing with price, we compete with quality.” With a predominant focus on luxury residential properties, a career background in residential design is required for being a designer at Zchron. The company is now looking to expand the seven-people design team to cater to new business.

The extensive experience of Chan and his energetic team have done a good job in maintaining a competitive edge for the company to grab a sizeable share of the fierce residential design market, with a handful of commercial projects under its belt, including Carlsberg, DKNY, Dr. Reborn, Escada, Fortress, Poly Property Group Company, and Sa Sa International.

“Looking down the road, we’ll continue to step up efforts to brand the company as a leading name in the luxury residential sector with integrity, punctuality, and quality in mind. This is the one and only strategy to stand the test of time in the rapidly changing design landscape, and there’s no trick to it.”

HONG KONG BUSINESS ANNUAL 2017 119

Index STATISTICAL TABLES AND CHARTS

Following an alphabetical listing of the statistical tables and the pages where they appear

GDP and its main expenditure components at current market prices

61

Labour force, unemployment, and underemployment

60

Nominal Wage Indices for employees up to supervisory level

62

Number of Establishments, Persons Engaged and Vacancies Analysed by Industry Sectionl

63

Number of Regional Headquarters in Hong Kong by Country/Territory where the Parent Company was Located 66 Population by Age Group and Sex

69

Seasonally adjusted Consumer Price Indices

67

HONG KONG’S HIGH FLYERS Outstanding Enterprises 2016

74

​HSBC Insurance (Asia) Limited

102 Platinum Financial Services Limited

78

Able Mobile Limited

104 Rhombus Group

80

Athena Best Financial Group

106 Standard Chartered Bank (Hong Kong) Limited

82

British Airways

108 Suncity Group

84

Canadian International School of Hong Kong

110 Towngas Telecommunications Co. Ltd.

86

Elite Concepts

112 Faculty of Business, The Hong Kong

88 ​FTLife Insurance Company Limited

90

GODIVA Chocolatier (Asia) Ltd.

114 TMA

92

Hang Seng Insurance Company Limited

116 Wharf T&T

96

InterContinental Grand Stanford Hong Kong

118 Zchron Design

98

MassMutual Asia Ltd.

100 Mercedes-Benz Hong Kong Limited

120 HONG KONG BUSINESS ANNUAL 2017

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ATALE OF TWOTOURISTS

WHAT’S UP WITH

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NETFLIX AND KILL:

SINGAPORE’S PAY TV MAY BE LOSING THE WAR

CONVENIENCE STORES VS HAWKER STALLS

SLIM PICKINGS FOR PRIVATE EQUITYHOUSES

RANK 27 INGS

ENGIN LARGES EERIN T G FIR MS 35 ACCO LARGES UNTIN T G FIR MS

74 73

MICA(P) 244/07/2011 KDM No: PPS1645/3/2008

SINGAPORE BUSINESS REVIEW | JANUARY 2017 C1

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THE

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PROPERTY ISSUE

• Why the luxury market is the hottest right now • Will home prices fall by 30% in the next three years?

• What are the mainlanders buying in Hong Kong?

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HOODIES ARE THE BANKERS’

NEW BOWLERS DIM SUM BONDS

LOSE FLAVOUR

MARKETERS: HAVE YOU MAPPED OUT

YOUR CUSTOMER JOURNEY?

ICAC EYES RETAILERS 38

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DISPLAY TO DECEMBER 31, 2016

the

awards issue ABF RETAIL BANKING FORUM: THE HOTTEST ISSUES IN SINGAPORE, BANGKOK ATM FRAUD: LEARNING ABOUT JACKPOTTING ATTACKS WHICH BANK HAS ITS HEAD IN THE CLOUD? DCM REVIEW: WHY PANDAS ARE EATING DIMSUM BONDS FOR BREAKFAST BIOMETRICS VS PINS: WHICH IS BETTER? FOREX FINTECH: BANKS CAN RUN, BUT NOT HIDE

ASIA’S LEADING

Issue No. 78

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CEO OF THE YEAR

HOW KOMIPO’S CEO CHUNG CHANG-KIL TOOK CRISIS-STRICKEN FIRM TO CHURN OUT $25.4M IN POWER PLANT PROFITS

ARE DRONES TAKING OVER WIND AND SOLAR O&M?

ASIA IS GETTING SICK OF USING SUBCRITICAL PLANTS

HYBRID POWER SYSTEM NIGHTMARES CHINESE PV MAKERS ARE OVERSTOCKING

MICA(P) 248/07/2011

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ISSUE NO. 8

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Display to 28 February 2017

THE GREAT DIGIHEALTH LEAP WHAT YOU NEED TO KNOW ABOUT DIGITAL CHALLENGES AND ADVANCED HEALTHCARE IN ASIA

Healthcare Asia

BATTLE OF THE HOSPITALSp8 TAIWAN PRESSURED BY GROWING SILVER POPULATIONp10

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IS ASIA PACIFIC

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