Hong Kong Business by Charlton Media Group

Contents Annual 2012

2012 outlook 8

Time for a rethink on soft infrastructure

12 Cash Registers Still Ringing For Hong Kong retail 14 Gloomy outlook for the economy in 2012 16 Hong Kong to stays on top of IPO leagues 18 Hong Kong property market to enter a downcycle in 2012 20 Salary inflation to burden Hong Kong employers in 2012 22 Mediation Bill set for 2012

MOST READ IN 2011 24 A month-by-month review of Hong Kong’s top stories in 2011

COMPANIES AND INDUSTRIES 30 Catering to Hong Kong’s aging population 32 Striking gold 34 3D is the future of Information Technology 36 Evolution into wiring appliances 38 Challenging Hong Kong’s trading industry 40 Developing Hong Kong’s local brands 42 What brand are you wearing? 44 The rise of the smartphone 46 Giving Hong Kong’s export a boost 48 Climbing to new heights in 2011 50 Constantly innovating production techniques 52 Offering a taste of Western culture 54 Fancy wheel for the young ones 56 Hong Kong as the trading centre for machinery 58 Hong Kong’s building boom 60 Travel in comfort and style

BY THE NUMBERS 64 A month-by-month review of Hong Kong’s top stories in 2011, in numbers 132 Index of tables and featured companies 2 | HONG KONG BUSINESS ANNUAL 2012

HONG KONG BUSINESS ANNUAL 2012 | 3

Contents Annual 2012

High-Flyers 2011

74 AIA Pension & Trustee Co. Ltd.

106 Jia International Ltd

78 ABN AMRO Private Banking

108 PrimeCredit

80 AGEAS Insurance Company

110 Rhombus International Hotel Group

82 Air Pacific 84 Altruist Financial Group Limited 86 Bose 88 Canadian International School of Hong Kong 90 Bao Gallery by Crystallizeâ&#x20AC;˘Me 92 DHL Global Forwarding (HK) Ltd 94 Dormirest 96 Frey Wille GmbH & CoKG 98 Fuji Xerox (Hong Kong) Limited 100 Godiva Chocolatier 102 Henderson Real Estate Agency Ltd 104 HSBC Insurance (Asia-Pacific) Holdings Limited

114

126

112 RIMOWA 114 SA SA International Holdings Limited 116 Standard Chartered Bank (Hong Kong) Limited

118 Starworld Hotel & Casino 120 Sound Concept Ltd 122 The Cityview 124 The Mercer 126 Thomas, Mayer & Associes 128 Universal Audio & Video Centre 130 Zchron Design

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HONG KONG BUSINESS ANNUAL 2012 | 7

opinion

Timothy CHARLTON

Time for a rethink on soft infrastructure

timOTHY CHARLTON Publisher & Editor-in-Chief, Hong Kong Business Magazine

The outlook for Hong Kong’s economy is not so good for 2012, but something else definitely needs more attention this year.

redictions are always a messy business, but a part and parcel of the magazine editing business. Last year, your editor predicted that 2011 would be the year of living poorly with rising tensions on lack of available housing for the least well-off. This at least has proven mainly right, and property prices did indeed rise. But I also predicted that the flood of liquidity rushing into Asia would see Hong Kong stocks rise higher by year end. On this I was wrong, as the Hang Seng Index opened 2011 at 23,757 but ended the year down 22 % at 18,434. On the economic growth front, the forecast for 2011 was 4.7 % but it’s likely that it performed even better, with full year’s figures likely to show it topped 5 %. The outlook for 2012, though, is not so good, with dire predictions emanating from the government that the economy could grow by as little as 2 %. All of these are not exactly bright, but it’s not too bad either given the global circumstances. On the employment front, Hong Kong should continue to provide jobs and unemployment will likely remain low. In 2011, there was much consternation that the minimum wage would stifle employment prospects, but so far, that has shown not to be the case and all those security guards are still happily employed across the island. As expected, although employment growth is no longer as strong as it was in early 2011, employers are still kept staffing levels steady despite slower new business inflows. HSBC reported in January that over 90% of all businesses surveyed reported no changes to their headcount. Donna Kwok, an economist with the bank, noted that “The fact that wages have risen continuously now for almost 2.5 years attests to the fact that underlying demand 8 | HONG KONG BUSINESS ANNUAL 2012

-10

-10 -20

-20 Dec 07 Source: HSBC, Market

Dec 08

Dec 09 US ISM: New orders minus inventory HK: New orders minus inventory

Dec 10

Dec 11

China PMI: New orders minus inventory

in job markets remains strong (December’s staff costs index rose to 52.5 from 51.4 previously). Given that part of December’s wage growth is related to year-end bonuses however, it will be interesting to see how much longer wage costs can continue to increase without a revival of new business volumes.”

on the street looking for help to see just how helpful the locals were. Out of 30 countries, guess again which one came out the worst with the least helpful residents? Again, it was Hong Kong, where 60% of passers-by did not seek to help the tourist, “without even showing the least concern for him.”

The good news in this is that the cooldown in the private sector in Hong Kong is slowly coming to an end, and that this slowdown should not be as bad as the last downturn of 2008-2009. Perhaps now is the time the Hong Kong government should look a little closer at improving the quality of life through infrastructure developments that involve more green space and aesthetics for people rather than more tunnels and harbourfront hi-rises.

Now, we can all sympathise that Hong Kong is a busy place with crowded streets and no one has any time. But perhaps it is time to stop taking the mainland tourists for granted and start to focus on what makes a better living environment for residents. These are not figures that will show up in hard GDP numbers, but they do show up in other surveys such as the one just cited, and the hard infrastructure needed to support a softer, more caring society in Hong Kong has not been developed.

A recent survey by international research company Presence International found that among 400 retail shops and 30 main shopping districts surveyed worldwide, Hong Kong ranked with Mumbai as the bottom of the pack. At the top was Singapore, with its newly revamped and widened Orchard Road. But it gets even worse. The research firm put a ‘lost tourist’

Hopefully, when a new policy is made for public housing, one can also be made to improve, rather than develop, all our major public spaces to put Hong Kong back on the map for international tourists, not just mainland ones. Here is wishing you a prosperous, and caring 2012. HONG KONG BUSINESS ANNUAL 2012 | 9

ABR AD:Daniella

2012 OUTLOOK

Beat the market with long-term investments in 2012 Staying invested through the peaks and troughs will expand your opportunities and mitigate further risks.

hort-termism has driven markets at the expense of long-term investment thinking during a markedly volatile 2011. However, there is potential for a strong set of investment opportunities for 2012 for those with a longer-term perspective, says HSBC. “To date, frequent rotations in sentiment in markets reflect the fact that officials have been applying a ‘sticking plaster’ approach to addressing fundamental problems – acting only when faced with severe market pressure, and only then delivering just enough to stem the tide in the short run. With this context, at the forefront of investors’ minds is concern around European policymakers being able to deliver a comprehensive long term solution to deal with the Eurozone crisis,” added HSBC. Because of the rising headwinds to the economic outlook, HSBC noted that most investors have flocked to ‘safe havens’ this year. “This has forced government bond yields to the lowest levels for a generation, putting some in a position where returns are negative when inflation is taken into account. Combined with the negative fundamentals such as high debt levels, government bonds of developed markets do not represent good value on a medium term basis.” However, the opposite is true of corporate bonds, which have been sold off during the downturn. “Many companies are in solid financial shape, having applied their own austerity measures, thus reducing the probability of a default. These factors support the positive outlook for corporate bonds, especially at the high-yield end of the spectrum, and in Asia where fundamentals are relatively stronger,” HSBC’s report added. Eric Fu, HSBC’s Head of Wealth Development in Hong Kong, capitalizes on using the long-term approach in investing. “In a period of prolonged volatility, as investors continue to search for yield and value, diversification and long-term investing have become all the more relevant. Before the crisis, people tended to park their assets in investments without doing anything further with their portfolios. However, a passive approach may not be appropriate in the current 10 | HONG KONG BUSINESS ANNUAL 2012

market situation. Today, a long-term approach means staying invested through the peaks and troughs by reviewing and rebalancing your portfolio regularly to capture market opportunities and mitigate further risks,” Fu added. In the export-heavy Asian countries, the global slowdown has clearly had an impact but HSBC still views the backdrop favourably, with economies offering stronger growth than the West. “Inflation is showing signs of moderating and supportive fiscal policies are likely to have a bearing in 2012, which would be positive for the region’s economies and equity markets.” Within Asia, Chinese equities are currently attractive, with the market trading on about eight times 2012 earnings, noted HSBC. Rapid rises in residential real estate prices could reverse and become destabilising to parts of the economy, but HSBC believes that a soft landing is the most likely outcome. The Chinese government recently cut the Reserve Ratio Requirement by 50 basis points to 21% effective 5 December 2011, says HSBC notes that the recent cut in the Reserve Ratio Requirement could have a positive impact on China’s market sentiment. “The Chinese Government recently cut the Reserve Ratio Requirement by 50 basis points to 21% effective 5 December 2011. “As global growth cools and inflation recedes, authorities have the latitude to further ease monetary policy, and further reductions in the RRR are quite likely. This could have a positive impact on market sentiment. We reiterate our preference to Chinese equities over other

Asian markets because of the attractive valuation and robust growth profile.” Policy easing has also provided opportunities for select Asian highyield credits that had suffered from general credit tightening in 2H11, says UBS. In China, the central bank has signaled targeted credit loosening in sectors including SMEs, services, and some industrials. Across Asia, UBS sees promise in select credits in retail, services, telecom, and textiles, as well as some cyclical credits in energy, machinery, and materials. However, UBS remains cautious on Chinese property credits as it expects policy curbs in this segment to continue for an extended period. China will likely be focusing on the key policy areas in its 12th Five Year Plan. UBS expects the focus areas to be domestic consumption, agricultural infrastructure, energy efficiency and manufacturingindustry upgrade. Furthermore, UBS likes wireless telecom stocks as it believes government policy has given enormous support to W-CDMA wireless services.

HONG KONG BUSINESS ANNUAL 2012 | 11

2012 OUTLOOK

Cash registers still ringing for Hong Kong retail Retail is one sector that still holds up in Hong Kong as the robust growth in tourist arrivals ensures another double-digit growth rate for 2012.

etail sales hit another all-time record high in seasonally adjusted value terms. That said, growth momentum continues to decline on an annualized sequential basis, pointing to a slower growth rate for 2012, notes HSBC. But, provided mainland visitor inflows hold up and local job market conditions stay firm, the pace of moderation should be gradual - ensuring growth rate for 2012 of around 16-17%. Cash registers have yet to skip a beat in Hong Kong, recording another strong double digit growth print for November. According to HSBC, retail sales rose faster than expected, accelerating to a pace of 23.5% YoY in November, compared to 23% in October. “On a 3m/3m seasonally adjusted basis, November retail sales decelerated for the sixth consecutive month, rising by 0.7% in volume terms vs. 1.2% previously. Annualized, real sales growth eased to 3% 3m/3m, saar from 4.9% previously by our estimate.” In value terms, retail sales hit a new record high seasonally adjusted, adds HSBC. “By category, real sales of mis-

12 | HONG KONG BUSINESS ANNUAL 2012

“For the first eleven months of 2011, nominal and real retail sales increased 25% yo-y and 18.6% respectively.”

cellaneous consumer durable goods jumped the most, leaping by 149.1% YoY, vs. 117.7% in October. Real sales of wearing apparel rose at a healthy but more modest pace of 14.9% YoY, vs. 14.2% in October, while those of footwear, allied products and other clothing accessories increased by 13.4%, vs. 11.3% in October. Volume sales of motor vehicles and parts grew by 10.7%, vs. 7.0% in October.” HSBC adds that for the first eleven months of 2011, nominal and real retail sales increased 25% YoY and 18.6% respectively. “Implications “Hong Kong retailers have had a solid run this year, seeing both nominal and real retail sales activity rise at a strong double digit pace for every single month bar February, despite increasingly challenging external financial and economic conditions.” But will the market’s strong performance continue in 2012? It seems likely as the outlook for the retail market is still fairly positive primarily due to robust growth in mainland tourist arrivals and tourist spending in general, says Aaron

Fischer, regional head of consumer & gaming research at CLSA. “I think that’s really going to support a lot of growth in 2012. In terms of domestic spending, we expect it to be much weaker in 2012 than 2011, given the worsening outlook for the property market and equity market, and also general economic conditions in Hong Kong. In terms of consumer staples like food, alcohold, and tobacco will hold up pretty well. Consumer staples will be fairly stable, but some of the higher end categories, particularly luxury goods, will probably be a bit softer in 2012. The penetration rate of luxury goods in Hong Kong is actually very high already, so it means that segment becomes much more cyclical as we see a slowdown; and economic activity and bonuses in the finance sector will probably start to soften,” said Fischer. Credit Suisse, on the other hand, expects slower growth in Hong Kong retail sales compared to last year. “We expect Hong Kong retail sales to grow about 15% YoY in 2012, compared to about 24-25% YoY in 2011. The deceleration, in our view,

will be driven by: first, the weakening consumer sentiment in both Hong Kong and China; second, the higherbased comparison; third, the slower RMB appreciation; fourth, the slower GDP growth in China; and lastly, the continuous down-trading by locals,” said Gabriel Chan, a Credit Suisse analyst. RBS also expects further moderation in growth, given the spillover effects from external macro weakness, softening economic growth in China, and further weakening in China and Hong Kong’s physical property markets. “We are forecasting ‘mid-teens’ growth in 2012, to be continuously supported by the influx of mainland tourists consumption in Hong Kong, particularly among the luxury items. We see a very high base comparison in 1H11 before potentially seeing the inflection point in 2H12. The potential more relaxed supply of liquidity in China may also provide upside surprise to the sector in 2H12. Overall, we are still cautiously optimistic on the outlook of Hong Kong’s retail sector in 2012,” said Larry Cho, head of mid-cap research at RBS Global Banking & Markets. HSBC says 2012 will pose a bigger challenge for retailers in Hong Kong. “The continued global financial market volatility will cast a longer shadow over household/investor confidence in early 2012, posing a bigger chal-

lenge for retailers in Hong Kong. That said, provided financial market turbulence related to the European debt crisis abates in 1Q12 or 2Q12, and the recent stabilization of US manufacturing activity and recovery of US consumer/business sentiment surveys continues, retail sales in Hong Kong should cool to a still strong double-digit annual growth rate of around 16-17% in 2012.” But HSBC believes this won’t last for long. “This moderation will continue for at least another few quarters, but with inflationary pressures finally starting to normalize, and both mainland visitor inflows and the household employment/income outlook holding up, Hong Kong’s retail sector should manage to score a soft landing in 2012.” High-end apparel retailers at risk Credit Suisse studied the financial track record of 22 Hong Kong retail companies for the past 11 years and found that mid- to high-end apparel retailers in general have the highest rental expense-to-revenue ratios, making them more vulnerable to rental hike pressure. According to Credit Suisse’s research, the apparels & accessories segment has the highest rental expenses-to-revenue ratio among all sub-segments, followed by food & beverages, cosmetics, others and hard

“retail sales in Hong Kong should cool to a still strong double-digit annual growth rate of around 16-17% in 2012.”

luxury segments. Secondly, both the apparel & accessories and hard luxury segments have recorded consistent rises in rental expense-to-revenue ratios. Third, the cosmetics segment has been the most resilient in terms of retail sales growth, while the hardluxury segment has been the most volatile. On the other hand, the food & beverage segment has consistently underperformed other sub-segments. And lastly, among the sub-segments, apparel & accessories and hard luxury sales growth is still outpacing that of rental rate growth. On the other hand, rental rate growth started catching up with retail sales growth for the cosmetic segment in 3Q11, while food & beverage sales revenue growth has been outpaced by rental rate growth since 1Q10. While the hard luxury segment has historically been more cyclical in terms of sales performance, Credit Suisse believes this cycle is different due to the much increased revenue contribution from mainland Chinese shoppers in Hong Kong who take advantage of lower retail prices here due to the absence of VAT and consumption tax. Besides, hard luxury retailers normally have a very low rental-to-turnover ratio of less than 5%, making them less vulnerable to rental pressure.

HONG KONG BUSINESS ANNUAL 2012 | 13

2012 OUTLOOK

2012 OUTLOOK to be negative in 2012 as most of the positive drivers—supply shortage, record low mortgage rates; an improving labour market; rising household income—have already turned the corner. This, plus the government’s macro prudential measures, suggests the pressures on property prices are likely on the downsides in 2012.

Gloomy outlook for the economy in 2012 Even if Hong Kong narrowly missed a technical recession in 3Q11, threats remain.

protracted slowdown usually lasts about four quarters, and therefore 1Q12 is expected to mark the cyclical bottom. However, with Europe likely hitting a recession in 1H2012, and with the lingering effects of the worsening European debt crisis, Hong Kong’s economic slump will be prolonged. UBS expects real GDP to slow to 1.6%YoY this year—which is below consensus and below trend—from an estimated 4.5% in 2011. “Hong Kong has already endured two quarters of growth disappointment as GDP contracted 0.4%q/qsa in 2Q11 followed by almost no growth in 3Q11, driven predominately by a sharp export slowdown as the European sovereign debt crisis weighed on the external sector. The domestic economy remained resilient, for now, albeit slowing at the margin. But as the export downturn deepens and persists, it will eventually trickle down to domestic demand. A moderate easing in inflation 2011 was the year when inflation surprised on the upsides and captured most of the headlines. “Though pressures are now easing, headline

14 | HONG KONG BUSINESS ANNUAL 2012

“The main contributors to inflation trends are the strong labour market and upward wage pressures.”

inflation remains high in annualized terms, at 5.7% as of November, due to rising food prices and high housing costs. Rents alone have a weight of almost 30% in Hong Kong’s CPI basket”, says Stephen Schwartz, chief economist at BBVA Research. According to Schwartz, the main contributors to inflation trends are the strong labour market and upward wage pressures. “The unemployment rate has been relatively stable in recent months at 3.4%, well below the longterm average of 4.5%. Importantly, the pegged exchange rate system contributes to high inflation during periods of appreciation pressures,” he added. UBS expects inflation to ease, but to a still high 4%YoY. “The good news is imported inflation has already peaked, reflecting the moderation in global commodity prices and Chinese inflation, though it is unlikely to collapse. The not so good news is housing inflation, which is 32% of the CPI basket, probably won’t peak until 4Q11, as the lagged impacts of rising property prices continue to filter through. Even beyond the peak, housing CPI could continue to linger above 5% until 2H12,” said Silvia Liu,

an economist at UBS. Downward pressures on property prices Property prices have been moderating in recent months, after a rapid rise beginning in 2009 that brought prices to above their previous historic peaks of 1997. Schwartz noted that in addition to creating financial stability risks, the housing bubble has become a social concern by stretching affordability ratios. In response, a series of macro-prudential measures were implemented which, together with the dimming growth outlook and falling financial asset prices have worked to slow the appreciation momentum in the property market. “Key measures to cool the market include imposition of higher down payment requirements and stamp duties on speculative transactions. The authorities have also stepped efforts to increase land supply and a resumption of the Housing Ownership Scheme for low and middle-income families, along with plans to construct more than 17,000 low-income flats over four years from 2016/17 onwards,” he added. UBS expects property price growth

A cloudy GDP outlook Hong Kong’s GDP growth has been moderating since the second quarter of 2011 amidst the escalation of the European debt crisis, economic slowdown in US, and moderating momentum in China, according to BBVA Research. “Until now, Hong Kong’s growth moderation has been healthy by helping to ease overheating pressures. The slowdown, together with the implementation of various macro-prudential measures over the past year, has helped ease inflationary pressures and contain rising property prices, both of which have been key policy challenges for the past two years,” said Mr. Schwartz. After stronger-than-expected GDP growth in the 1Q2011, growth momentum has slowed since Q2 due to slowing exports on weaker external demand, noted Mr. Schwartz. “Growth contracted by -0.4% QoQ, seasonally adjusted in the 2Q, and narrowly avoided a technical recession by expanding by 0.1% QoQ in the 3Q. Nevertheless, domestic demand has been resilient, especially private consumption and retail sales, buoyed by low unemployment and

strong tourism inflows. This has helped offset weakening external demand,” he added. Hong Kong narrowly escaped a technical recession in 2011, but it may not be so lucky in 2012. UBS warns that the country’s growth outlook is increasingly clouded by the global financial market turmoil and the continued deterioration in external demand. UBS projects full-year GDP growth of 3.9% in 2012. However, there is considerable downside risk to the projection for 2012, given Hong Kong’s exposure to global growth and developments in China. Under a scenario of persisting financial strains in Europe and slower global growth, Hong’s Kong’s GDP could easily contract, by 2-3%. This had led UBS to revise down its 2012 GDP projection further to well below consensus at 1.6%YoY. The consumer remained the bright spot for now, says UBS. Private consumption rose 8.8%YoY in 3Q11, albeit slowing at the margin. While monthly retail sales, driven predominately by increased tourist spending, have started to come off an elevated pace. “Private consumption accounts for 61% of Hong Kong’s gross domestic product and thus the economy tracks very closely with consumption. In particular, monthly retail sales often provide very important clues about the strength of GDP,” said Ms. Liu of UBS. Liu emphasizes on the significance

“Under a scenario of persisting financial strains in Europe and slower global growth, Hong’s Kong’s GDP could easily contract by 2-3%.”

of the cash handouts from this year’s budget, at an estimated HK$30-36 billion. “If it is assumed that half of the handouts will be spent domestically, the boosts to domestic consumption could be as high as 1.0 to 1.3 percentage points. But cyclically, consumption had probably peaked in 2Q11. Recent stock market correction could weigh on consumer confidence. This, plus a weaker labour market going forward, should slow consumption growth,” she added. Another strong point for Hong Kong is its seemingly endless inflow of investments. BBVA Research says that Hong Kong’s position as the main offshore RMB centre has been strengthened through additional support initiatives from China, designed to enhance the usefulness of holding offshore RMB. “In July 2011, steps were announced to allow foreign enterprises in Hong Kong to remit offshore RMB to the mainland in the form of FDI on a more regular basis, and to invest in mainland securities on a limited basis. The authorities also recently approved the pilot program of R-QFII, allowing offshore RMB to be invested in China’s domestic stock market subject to a quota of RMB 20 billion,” said Mr. Schwartz. Schwartz added that the bilateral swap arrangement between the PBoC and HKMA was doubled to RMB 400 billion ($56.6 billion), and should reduce the risk of insufficient RMB liquidity, and ensure a smooth functioning of the offshore RMB market.

HONG KONG BUSINESS ANNUAL 2012 | 15

2012 OUTLOOK

Hong Kong to stay on top of IPO leagues Global worries won’t trip up HK as it will remain the pre-eminent capital market globally.

rnst & Young’s Keith Pogson, Managing Partner of AsiaPacific Financial Services, says that despite a cooling of the global capital markets, the market expects a slower flow of IPO’s from particularly mainland China into the HK marketplace. “However HK will maintain its place as the pre-eminent capital market globally in terms of liquidity. We shall continue to see deals flowing from mining companies in northern and central Asia, potential insurance companies and central Asia, potential Insurance Companies in the region, and the continual flow of business with a China focus trying to raise money in Hong Kong.” What does this mean for the accounting profession? “Good on going IPO-related work on top of our usual roles in the business community (auditing, tax advice, advisory work etc.), but maybe not quite as active as the prior year? One area that might be much more active though is the M&A space. With the heavy financial challenges occurring in Europe, it is quite possible that we will see European and American businesses looking to re-align their investments and resize their balance sheets, this of itself, should create good value 16 | HONG KONG BUSINESS ANNUAL 2012

The market expects a slower flow of IPO’s from particularly mainland China into the HK marketplace

based deal flow for both strategic and financially motivated investors having opportunities to acquire businesses that would not usually be up for sale. This also gives opportunities for the professional services community to help with both the transactions themselves as well as the organizational change work that both the carve out and integration of the business may entail,” notes Pogson. “For regulated industries, we continue to see a substantial amount of new regulations continuing to be enacted around the world as well as a very welcome focus on enhancing corporate governance. Accountants are very well positioned to help organisations achieve compliance with such new legislation as well as helping with enhancements in organisational design whether there goes be enhanced process and service, or more productivity or efficiency driven,” Pogson added. Moody’s, a ratings agency, notes that the government’s balance sheet is one of the strongest of its rated governments, with very small gross debt of around 2% of GDP and large fiscal reserves. Furthermore, the government has unquestioned access to financing, should it choose to issue

further debt, which is not expected in the near term on a net basis. Adding to the government’s financial strength are government-owned assets that could be privatized should the government choose to do so. The main constraint on Hong Kong’s ratings has been event risk. Because the SAR is part of China, Moody’s believes that Hong Kong’s rating should be linked to, although not always the same as, China’s rating, which is Aa3. Hong Kong is currently two notches above the Chinese government’s rating, reflecting the strong institutions, the separate currency, and the high degree of autonomy enjoyed by the SAR. Nonetheless, exposure to economic and/or political developments in the mainland remains, meaning that Hong Kong has a certain degree of event risk reflected in the government’s rating.

is subject to occasional shocks, but its ability to regain economic momentum has been demonstrated. Hong Kong’s economy declined sharply at the time of the global financial crisis, but rebounded quickly without significant financial effects. While the SAR and its government has the wherewithal to face shocks, its external vulnerability results in rather volatile GDP growth. At the time of the Asian financial crisis, real GDP fell 6% in 1998, but thereafter accelerated to an 8% growth rate in 2000, before falling back to 0.5% the following year as exports declined. During the four years before 2008, the economy grew at a strong 7.2% annual rate, bringing nominal GDP per capita to over US$30,000. On a purchasing-power-parity basis, per capita GDP is considerably higher, at $46,000 in 2010, one of the highest levels in the world. Hong Kong possesses a number of characteristics that enable it to face external shocks such as the recent global downturn and financial instability. The SAR’s external position is very strong, with large current account surpluses during the past decade leading to a considerable build-up of external assets. This trend reflects the high domestic saving rate, which has been in the neighborhood of 30% of GDP for a long period. The net international investment position as a percentage of GDP, at 309% at the end of 2010, is the highest of all countries rated by Moody’s that publish such data. Thus, not only the government, but also the banking and corporate sectors, have substantial resources with which to deal with any external crisis. In addition, the Hong Kong banking system is overall sound, as

indicated by Moody’s average bank financial strength rating of B, making it the strongest banking system in Asia. While banks in almost all countries experienced stress because of the global crisis, Hong Kong’s banks are in a relatively strong position. A government guarantee of bank deposits and the creation of a facility to inject capital into banks that might require it were put in place in October 2008. This was done in order not to put the banks at a disadvantage in comparison to banks in other countries whose government took such measures and not because the banks were weak. The guarantee expired without having been used, but in the current context of renewed stress in global financial markets the successful weathering of the 2008-09 period indicates Hong Kong’s readiness to face such stress. Another characteristic that assists in facing shocks is that the government has almost no debt and large fiscal reserves, supporting its ability to implement measures to support the economy when necessary without issuing debt. Therefore, Hong Kong’s vulnerability to external shocks is somewhat offset by the government’s fiscal flexibility as well as by the strong external position of the SAR and its relatively strong banking system. Finally, Hong Kong’s large and increasing economic and financial integration with China is, on balance, a positive factor. China continues to grow more rapidly than the rest of the world, despite somewhat slower projected growth than during the past decade. Demand for Hong Kong’s financial services coming from its role as the most important Chinese international financial center will likely continue to increase over the

Hong Kong’s role as a financial center will continue to grow in the coming several years.

medium term. Recently, the central government’s encouragement of the development of a renminbi financial market in Hong Kong has reinforced this position. Near-term outlook faces some uncertainties The development of a renminbi market in Hong Kong is providing some impetus to the financial sector. Deposits in Chinese currency have risen from 1% of total deposits two years ago to about 10% as of September 2011. The authorities have gradually expanded the types of transactions that are allowable, and RMB bond issues and loans have also grown. In November 2011, the swap agreement between the People’s Bank of China and the HKMA was doubled in amount to RMB 400 billion. The raising of funds in the Hong Kong market by mainland companies indicates that Hong Kong’s role as a financial center will continue to grow in the coming several years. In the near term, a risk to the outlook for Hong Kong’s economy and financial markets comes from the situation in European financial markets. While direct exposure to Europe is not large enough to be destabilizing, Hong Kong is an important international financial center. Total bank deposits are equivalent to about four times GDP, and the financial services sector as a whole is a significant contributor to the economy. As a result, should global banking markets experience major instability, Hong Kong would feel the effects. During the global financial crisis of 20082009, the macroeconomic effects were significant, but in general the banking sector fared better than in many other countries.

Economic resilience Hong Kong’s very high economic strength is based on its high per capita income, its relative economic diversity for an economy of its size, and its demonstrated resilience to external shocks. As a very open economy that has important international trade and financial services industries, the SAR HONG KONG BUSINESS ANNUAL 2012 | 17

Property

HONG KONG PROPERTY MARKET TO ENTER A DOWN CYCLE IN 2012 Office demand is expected to plunge in early 2012 as companies remain cautious towards expansion.

he slowdown in office space take-up began to show in 2011, as overall net take-up of commercial Grade A office space in the first 11 months amounted to 1.9 million sq ft, a marked decline from the 3.5 million sq ft in 2010. Colliers International warns that all properties – with the exception of ground-floor retail properties in traditional shopping districts - will enter a down cycle in 2012. “Over positive buyer sentiments, coupled with a dire lack of supply across all sectors have catapulted the local property market - with the exception of luxury residential which saw no change from end 2010 due to the correction in late 2011 – into a booming core with the retail sector taking the lead,” said Richard Kirke, managing director, Colliers International-Hong Kong. “Without substantial economic fundamentals, all that goes up will eventually come down. We are already seeing noticeable weakening signs since the second half of 2011, hence we expect subdued outlook for rents and prices in Grade A office, luxury residential and industrial property sectors in 2012,” 18 | HONG KONG BUSINESS ANNUAL 2012

“We expect subdued outlook for rents and prices in Grade A office, luxury residential and industrial property sectors in 2012.“

he adds. Kirke is also of the belief that ground-floor retail properties in core areas will be the only sector to see continued increase albeit at a slower growth. Property firm Jones Lang LaSalle has an equally dismal view for property in 2012. According to Jones Lang LaSalle’s Hong Kong Real Estate Market Review 2011, the Grade A office market started strongly with buoyant demand in the first half of 2011; however, concerns over the growing global economic uncertainties softened expansion demand since mid-year and, together with a lowvacancy environment, resulted in a relative slowdown in net absorption. Overall net take-up of commercial Grade A office space in the first 11 months amounted to 1.9 million sq ft, a marked decline from the 3.5 million sq ft in 2010. “Rents continued to grow in the first three quarters of 2011 before experiencing some pressures in 4Q11. The fourth quarter saw average rents in Central softening and pulling rents in the overall market down marginally by 1.1%. The first eleven months saw rents in the overall market rising

by 16.4%, while those in Central increased by 12.2%. The strongest rental growth was seen in Hong Kong East (25.2%) and Kowloon East (23.1%), where landlords continued to benefit from the strong cost-saving relocation demand throughout the year,” noted Jones Lang LaSalle. High rents also pushed many tenants out of Central, noted Wendy Lau, Colliers’ executive director of office services. “As Central office rents have seen continued rise from the period after financial tsunami till 2Q 2011, some tenants in Central have come to the realisation that rents have exceeded their affordability and are now seeking alternatives in the sub-market or other districts.” “In view of the substantial rental premium of Central over individual office districts, the pressure of centralisation is expected to continue in 2012. Considering a general deterioration of business conditions that affects business expansion plans which subsequently slows occupational demand, Grade A office rents and prices are projected to fall 8% and 16% respectively, in 2012,” forecasted Lau.

Similar to the leasing market, the Grade A office sales market was active in 1H11 before slowing down more noticeably going into the second half. “The slowdown in the more recent months was due to a number of reasons, including the rising difficulty in obtaining bank credits, higher borrowing costs and signs of rental pressure in some sub-markets. The year 2011 saw Grade A office capital values rising by an average of 19.8%, with the strongest growth witnessed in Wanchai/Causeway Bay, which went up by 24%,” said Jones Lang LaSalle. Gavin Morgan, deputy managing director and head of leasing of Jones Lang LaSalle Hong Kong, remarked, “Given the gloomy economic outlook, companies remain cautious towards expansion, which will curb office demand in the short term and put temporary pressure on the rental in core business districts. However, given the tight supply pipeline and low vacancy environment, the rental correction is likely to be short-lived. In fact, we expect the correction to stabilise in the second half of next year, and Hong Kong will likely be included in the first batch of cities to see a rebound.” Retail Market According to Jones Lang LaSalle, the burgeoning tourism industry continued to provide support to Hong Kong’s retail property sector as 2011 recorded another strong year of growth in visitor arrivals, which jumped 16.2% to 34.2 million from January to October. “Apart from the robust tourism sector, local consumption also posted sustained growth as private consumption expenditure grew by 8.9% in the first three quarters of the year. As a result, retail sales

surged 25.2% in the year to October, surpassing the 18.3% growth in 2010,” added Jones Lang LaSalle. “The sustained leasing demand drove rents for high street shops and prime shopping malls to grow by 18.7% and 12.0% respectively in the first 11 months of 2011. This was in spite of the fact that some localoriented retailers had started to adopt a more cautious approach entering the fourth quarter,” added Jones Lang LaSalle. Tom Gaffney, head of retail at Jones Lang LaSalle Hong Kong, said, “The growing uncertainties in the global economy may affect local consumption confidence in the near term, but the impact on luxury brands and other tourist-oriented trades should be minimal. Indeed, international retailers remained optimistic on Hong Kong and many of them are still looking for new set-up opportunities here. However, with a higher base of comparison and some local-oriented retailers possibly adopting a more cautious approach, rental growth is expected to slow in 2012. In general, we expect that retail will continue to outperform the other property sectors in 2012, with rents holding relatively firm.” The retail leasing demand is predominately led by retailers of jewellery, cosmetics/skincare, electrical appliances and fashion, which are especially favoured by tourists from mainland China, said Simon Lo, Colliers’ executive director of research & advisory in Asia. Residential Market Despite the reduced pool of buyers after the launch of Special Stamp Duty, Jones Lang La Salle noted that sales volume of the residential market

Hong Kong Prime Office Indicator – % Change Sub-Market

“The sustained leasing demand drove rents for high street shops and prime shopping malls to grow by 18.7% and 12.0% respectively in the first 11 months of 2011. “

Capital Values (Jan–Nov 2011)

Rents (Jan–Nov 2011)

Vacancy Rates (Nov 2011)

Central

+20.7%

+12.2%

3.6%

Wanchai/ Causeway Bay

+24.0%

+21.6%

2.0%

Hong Kong East

+15.5%

+25.2%

3.2%

Tsimshatsui

+10.8%

+19.2%

2.2%

Kowloon East

+20.4%

+23.1%

9.3%

Overall

+19.8%

+16.4%

4.2%

remained robust as it recorded an average of about 9,200 units a month in 1H11, compared with the 11,300 units a month average witnessed last year. However, transaction volume fell to just about 5,000 units a month in 2H11, with a slowdown in purchase demand more noticeable in the secondary market. The first eleven months of 2011 saw the number of residential sales and purchase agreements fall by 37% y-o-y to a total of 80,161. “The slowdown was attributable to a combination of factors, including the higher loan-to-value requirements for homebuyers, higher interest rates for new mortgages and the rising uncertainties in the global economy which led to weaker buyers’ confidence. The low holding costs for existing property owners also helped to postpone selling decisions, thus leaving the sales market with fewer transactions,” added Jones Lang LaSalle. Indeed, the slowing demand was seen across all price segments and thus luxury properties were of no exception. In the first 11 months of the year, a total of 2,480 residential properties worth over HKD 20 million were sold, 16% lower than that in 2010. Joseph Tsang, managing director of Jones Lang LaSalle Hong Kong, said, “We expect the slow momentum will extend into 2012. Buying interest will remain soft on the back of global economic uncertainties, and market activity will stay slow as buyers and sellers continue to take a wait-and-see approach. Residential capital values will inevitably soften as demand continues to fall, and the leasing market will also be affected as companies hold back expansion plans.”

Colliers International: 2012 Forecast for Hong Kong’s Property Sectors Property Sector

Rental Change

Capital Value Change

Grade A Office

-8%

-16%

Luxury Residential

-6%

-13%

Industrial

-4%

-6%

Retail

12%*

8%#

(end 2011 vs. end 2012 year-on-year (YoY) change) * Ground-floor shops in traditional districts; # Based on the price index of the overall retail market

HONG KONG BUSINESS ANNUAL 2012 | 19

HIRING

Hong Kong employers to face pressures in salary cost Employers will have to deal with paying higher salaries to retain their best talents.

aintaining competitive levels of salary will continue to be a key concern for many multinationals in Hong Kong in 2012 in order to retain their best talent and offset the impact of rising inflation. Mercer’s Total Remuneration Survey 2011 says that salary increases are forecast to rise to an average of 4.6% in 2012 from an average of 4.2% in 2011. “Almost half of the companies surveyed indicated that they will offer a pay increase in the order of 5% in 2012,” said Hong Kong business leader for Mercer’s information products and solution Connie Leung. Recruitment consultancy firm Robert Walters also anticipates increments for senior professionals in organisational development, since they are most in demand. These individuals should have at least 6-10 years’ experience and could possibly have a higher base salary, starting from HKD750k in 2012, up from 2011’s

20 | HONG KONG BUSINESS ANNUAL 2012

“Salary increases are forecast to rise to an average of 4.6% in 2012 from an average of 4.2% in 2011.”

HKD700k. The total salary range was HKD700k-1.2mil in 2011 and now HKD750k-1.2mil in 2012. Ms Leung noted that rising inflation raises employees’ expectations of pay increases. “Balancing this expectation by maintaining competitive compensation levels to retain the best talent to drive business growth with the need for prudent financial planning will be employers’ key challenge in 2012. Employers in Hong Kong will face a lot of pressure when it comes to salary cost in 2012,” she added. So which sectors will be hit the most by salary increases? Doctor, come quick. Among different sectors covered in Mercer’s survey, the healthcare services industry is expected to see the biggest pay increase at 5% in 2012. The expected salary increases for other industries are relatively lower,

specifically 4.3% for hi-tech industry and 4.4% for chemical industry. “Many companies are grappling with uncertain business conditions and the current world economy, so they tend to be relatively conservative when budgeting for employee salary increases next year. It is critical that companies do not raise their fixed costs to an unsustainable level,” said Ms Leung. According to a report by Robert Walters, salary levels in the HR& Business Support sector are set to remain the same in 2012 as 2011 and there will be no significant increments. In the legal sector, salary levels are also set to continue with their year-on-year increase for 2012. ISDA negotiators are likely to command the most increment since they are highly sought-after. An ISDA negotiator with at least 5 years experience can potentially receive HKD750-810k in 2012, up from HKD710-800k.

“Within the IT & telecommunications, FMCG, retail and entertainment sectors, professionals will expect increments of at least 7-15% to attract them to a new role since salaries are continuing to rise year-on-year,” it added. Salary levels in accounting and finance are also set to continue with their year-on-year increase for 2012. Brien Keegan, director of Randstad Hong Kong, said the banking and financial sector is indeed one of the most pertinent sectors in Hong Kong when it comes to hiring. “Undoubtedly, the sector is being affected by the global uncertainty and there is a connectedness that affects Hong Kong. Some organisations are using the end of year, a traditional slowdown in the market, to put hiring intentions on hold until 2012,” he added. But despite the hiring slowdown in the sector, Robert Walters noted that accounting and finance professionals with more experience are likely to see higher base salaries and earning brackets. As an illustrative example, we anticipate a senior internal auditor with 4-6 years’ experience to earn HKD550-850k+ in 2012, up from HKD480-600k in 2011. “In demand roles, such as financial controllers of large organisations could potentially earn HKD1.2-1.8mil in 2012, up from HKD1.0-1.5mil in 2011,” it added. Within other sectors, Mr Keegan noted that there is still a high degree of positivity, especially within the consumer sector, with retail and

luxury brands being fueled by a record number of tourists that have visited the region in 2011. “This is having a positive effect on organisations across the supply chain and is requiring a greater demand for talent for either expansion or establishing a Hong Kong presence,” he added. According to Mercer’s survey, 95% of surveyed companies pay variable bonus to employees. The bonus payout is generally based on overall company and individual performance. The average bonus amount across different staff levels and industries is approximately 20% of annual base salary in 2011 and similar figures are expected for 2012. Inflation to nullify salary increase Yes, Hong Kong employees may well be receiving their much awaited salary increases in 2012, but unfortunately, they won’t be enjoying the increase that much as inflation will continue to offset the impact of the salary increase in real terms. With the annual rate of inflation in Hong Kong also predicted to be 4.5% for 2012, any effect on the purchasing power of Hong Kong employees is likely to be wiped out, noted Lee Quane, regional director for ECA International, Asia. “On the plus side, this is better than the real wage decrease of 1.7% that we saw this year.” Quane also noted that the gap between the salaries of Chinese and Hong Kong employees are set to be narrow in 2012 due to better inflation

“Randstad’s report reveals 93% of employers surveyed are looking to increase or retain current staff numbers within the next 12 months. “

figures in China. Though Chinese employees have lower wages than their Hong Kong counterparts, with inflation currently forecast to be 3.3% next year, employees in China are set to experience real wage increases of 5.2% in 2012 – the largest in the region. “ While employees in China receive lower salaries than their Hong Kong counterparts, their salary increases in recent years has caused the gap to narrow, and the data from our survey suggests that is likely to continue to narrow. Companies are forecasting 8.5% increases, up from this year’s 8%, and last year’s 6.5%,” Quane added. Employers to increase headcount Placing current jitters on the global market aside, Mr Keegan believes the labour market in Hong Kong still looks positive. “Randstad’s report reveals 93% of employers surveyed are looking to increase or retain current staff numbers within the next 12 months. Whilst hiring intentions are likely to slow further as the year draws to an end, one eye needs to be on the future, with savvy business leaders looking to retain and attract the best talent moving forward to set the scene for a prosperous 2012,” Keegan added. Likewise, Mercer’s survey revealed that 52% of multinational companies in Hong Kong plan to increase headcount in the coming year and 46% of companies are looking at maintaining the same level of headcount. Only 2% of companies indicated that they may reduce headcount.

HONG KONG BUSINESS ANNUAL 2012 SINGAPORE BUSINESS REVIEW | DECEMBER 2011 | 21

Legal

NEGOTIATION OUSTS LITIGATION: MEDIATION BILL SETS FOR 2012 The Mediation Bill is being pushed forward by the Government, but confidentiality of mediation communications remains a major concern.

ccording to Gary Seib, a partner at Baker & McKenzie, a major concern that often arises in any dispute is the degree of protection given to legal and party/ party communications. All communications during the mediation process are ‘without prejudice.’ “This means that if a settlement cannot be reached, the parties cannot disclose to the court any of the matters discussed during mediation,” he added. Despite this concern, the government continues to push for the Mediation Bill and actions were carried out since 2010. In early 2010, a Working Group on Mediation chaired by Hong Kong’s Secretary for Justice, launched a consultation on the application of mediation in commercial disputes and at the community level. Following the Working Group’s recommendations, the Mediation Bill was developed and gazetted on 18 November 2011. On 30 November 2011, the Government introduced the Mediation Bill into the Legislative Council. Menachem Hasofer, a partner at Mayer

22 | HONG KONG BUSINESS ANNUAL 2012

“The PRC is one of the most committed nations to use mediation to resolve disputes”

Brown, says that unlike draft versions of the Mediation Bill, no provision is made for creating a single accreditation body for mediators. However, the Mediation Bill does seek to define “mediation” and implement a regulatory framework with respect to the protection of anything said, done, or prepared for the purpose of, or in the course of mediation or “mediation communications”. Hasofer points out that the meaning of mediation is defined in clause 4 of the Mediation Bill: “A structured process comprising one or more sessions in which one or more impartial individuals, without adjudicating a dispute or any aspect of it, assist the parties to the dispute to do any or all of the following: identify the issues in dispute; explore and generate options; communicate with one another; or reach an agreement regarding the resolution of the whole, or part, of the dispute.” According to Hasofer, the definition is consistent with the facilitative model of mediation provided for in PD31, namely, the mediator is there to assist the parties to reach their

own resolution of the dispute rather than imposing their own views or decisions on them. But what does the Mediation Bill really achieve? Mediation Bill in Hong Kong Seib says that the Bill’s objective is to promote, encourage and facilitate the resolution of disputes by mediation and to protect the confidential nature of mediation communications. Seib explains the Mediation Bill as a structured process in which a mediator, without adjudicating a dispute, assists parties to identify the issues in dispute, explore and generate options and communicate with one another with a view to reaching a resolution of the dispute. In practical terms, the mediator, who is an independent third party, would assist by providing an objective appraisal of the dispute. “The process can be flexible with control remaining with the parties. Participation is voluntary and if the parties do not reach an agreement, they may end the process. If the parties agree on a settlement, this will take the form of a binding and enforceable agreement,” he added.

Seib believes it won’t take long before Hong Kong has a fully operational Mediation Ordinance. “Mediation is already being used in many different jurisdictions around the world to resolve disputes. In the PRC, mediation is practised in four ways: first is by civil mediation by People’s Mediation Committees outside court; second is by judicial mediation - mediation performed by the same trial judge with agreement of the parties; third is by med-arb - mediation by the same arbitrators with the consent of the parties; and last is by administrative mediation - outside court mediation by government departments. The PRC is one of the most committed nations to use mediation to resolve disputes,” he said. In Hong Kong, mediation has been used as an alternative in certain industries for some time and is now an increasingly used option for disputes generally. In the realm of court proceedings, we are also seeing positive encouragement by the courts for parties to seriously consider mediation as a means of resolving disputes. Seib noted that mediation offers many advantages asarties may structure practical outcomes which may not otherwise be available in terms of strict legal rights and remedies. This facilitates a win-win solution as opposed to the traditional litigation route where there is usually a winner and a loser. “One benefit which cannot be underestimated is the opportunity to explore each side’s perspective and to hear each other in a non-confrontational setting. This process can assist with preserving relationships or even improving ties between disputing parties. This is very valuable in the business context so parties do not burn their bridges,” he added. The confidentiality issue A major concern that often arises in any dispute is the degree of protection

given to legal and party/party communications. All communications during the mediation process are ‘without prejudice.’ This means that if a settlement cannot be reached, the parties cannot disclose to the court any of the matters discussed during mediation, noted Seib. “Further, parties can be assured that during the mediation process and in exercising its discretion on costs, the court cannot compel the disclosure of or admit materials which are protected by the usual principles of legal professional privilege,” he said. This alert also examines some of the key features of the proposed legislation and reviews mediation in the context of court proceedings. Mediation Explained and Confidentiality of Communications. Fortunately, Hasofer revealed that confidentiality of mediation communications is already recognised by the Courts. Further, before commencing the mediation process, almost all parties who participate in mediation in Hong Kong execute a mediation agreement which usually includes standard confidentiality provisions. “The Mediation Bill confirms that subject to certain exceptions, all mediation communications are confidential. Accordingly, in the event the parties are unable to reach agreement and litigation or arbitration commences or continues, the parties cannot disclose the mediation communications in the proceedings,” he added. Communications generated for the purpose of or in the course of mediation are confidential save in certain circumstances, said Seib. “For example, they may only be disclosed with the consent of all parties or the mediator where the content is already in the public domain or subject to discovery in civil proceedings; or where there are reasonable grounds

“‘Without prejudice means that if a settlement cannot be reached, the parties cannot disclose to the court any of the matters discussed during mediation

to believe that the disclosure is necessary to prevent danger of injury to a person or of serious harm to the wellbeing of a child. A person seeking to adduce mediation communications in evidence in any proceedings must seek leave of the court or tribunal,” he added. Hasofer added that though all mediation communications are confidential, some are subject to certain exceptions. First, the Mediation Bill defines mediation communications so as to exclude an agreement to mediate and a settlement agreement. It follows that where parties wish to maintain confidentiality in respect of a settlement agreement made at the conclusion of a mediation, the settlement agreement must include a confidentiality clause. Secondly, Hasofer noted that mediation communications may be disclosed in some circumstances where the parties and the mediator agree, the information has been lawfully released into the public domain, they comprise documents which are otherwise discoverable in civil proceedings or where the communications are otherwise required by law to be disclosed. “The Mediation Bill also provides that mediation communications may be disclosed with prior leave of the Court or tribunal for the purpose of enforcing or challenging a mediated settlement agreement, establishing or disputing an allegation or complaint of professional misconduct made against any professional participating in the process (including the mediator) or for any other purpose that a Court or tribunal considers justifiable. Whilst the confidentiality provisions in the Mediation Bill are largely consistent with the common law position, they generally provide greater certainty to the confidential and without prejudice nature of mediation communications and clarify the circumstances in which disclosure may be made,” he added. Interestingly, the Bill does not deal with the formation of a single accreditation body for mediators. One concern is ensuring the quality and consistent standards of mediators. Along with a new Arbitration Ordinance based on the UNCITRAL Model Law which has been in force since 1 June 2011, having a statutory framework on mediation will promote Hong Kong as an international dispute resolution centre. HONG KONG BUSINESS ANNUAL 2012 | 23

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MARKETS AND INVESTING

91% of HK businessmen see a bleak 2011 According to Hong Kong Information Services Department, 26% of survey respondents expect their business situation to improve in the first quarter compared with the last quarter, while 9% expect it to worsen. These were the findings of the Census & Statistics Department’s latest Quarterly Business Tendency Survey released on January 24. Respondents in almost all surveyed sectors had a favourable business outlook for the first quarter, particularly those in the retail, and financing and insurance sectors. In the information and communications sector, however, the proportion of respondents with a favourable business outlook was broadly the same as that with an unfavourable outlook. Respondents in all surveyed sectors also expected a rise in business volume in this quarter over the last on balance, especially those in the retail, and financing and insurance sectors. MARKETS AND INVESTING

Hong Kong Exchanges open to international alliances Hong Kong Exchanges is open to international alliances as a 24 | HONG KONG BUSINESS ANNUAL 2012

wave of consolidation in the sector threw the spotlight on Asian bourses. However, the world’s most biggest exchange operator by market value said in a statement that it had not identified any opportunities.

TOP NEWS IN 2011 them came to Hong Kong due to the Individual Visit Scheme. This showed an increase of 42% compared to last year. AVIATION

MARKETS AND INVESTING

Hong Kong tops The Globalization Index Singapore was overtaken by Hong Kong as the most globalised economy in the world. According to The Globalization Index 2010 released by Ernst & Young in cooperation with the Economist Intelligence Unit, Hong Kong embraces the highest level of globalisation among the 60 largest economies in the world.

AVIATION

Dragonair workforce expansion underway A walk-in interview session is being offered by Dragonair to look for new qualified cabin crew. According to Dragonair, Dragonair General Manager Inflight Services Cecilia Leung said: “Dragonair always strives to provide top-quality premium services to its passengers and we are constantly looking to recruit high-calibre people to sustain the success of the company.

ECONOMY

Hong Kong total deposits up 1.4% The Hong Kong-dollar loanto-deposit ratio climbed from 78.1% at the end of December to 79.3% at the end of January. Total deposits with authorised institutions rose 1.4% in January while Hong Kong-dollar deposits rose 0.3%, with the expansion in demand and savings deposits exceeding the decline in time deposits. HOTEL AND TOURISM

Visitor arrivals surged 21.5% in January 2011 A total of 3,598,030 visitors arrived in January this year. According to Hong Kong Information Services Department, the Tourism Board said the growth was driven by a 31.2% rise in Mainland arrivals as 2.5 million visitors from Mainland came. About 70% of

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MARKETS AND INVESTING

Province and in Japan. According to Hong Kong Information Services Department, Save the Children will receive $500,000 for relief work in Yunnan and an additional $1 million for its work in Japan. The Association of Chinese Evangelical Ministry will receive $800,000.

HK is ideal offshore renminbi centre For overseas businesses wanting to boost their trade and investment ties with the mainland, Hong Kong is the ideal offshore RMB centre. According to Monetary Authoriy Chief Executive Norman Chan in his speech during the RMB Australasia Summit in Sydney, from 2000 to 2010, the Mainland’s exports to Australia increased fourfold to US$30.7 billion, while imports from Australia increased tenfold to US$60.3 billion.

TRANSPORT AND LOGISTICS HOTEL AND TOURISM

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ECONOMY

Mainland beats Hong Kong in largest holder of foreign currency reserves Hong Kong ranked ninth as its currency reserve assets amounted to US$273.2 billion at the end of January 2011. According to Hong Kong Information Services Department, the Monetary Authority said the amount increased US$4.5 billion on the end of December.

Tiger Airways and South East Asian Airlines to start new daily flights between HK and Manila The new route will offer low fares to tourists, business travellers and Filipinos working abroad on the important link between the Philippines and China. According to Tiger Airways, the new daily flights will start on 14 March 2011.

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particularly from countries like mainland China.

Hong Kong airport named world’s best for fifth consecutive year Hong Kong International Airport also came third in both the Asia-Pacific region and overall categories. According to Hong Kong Information Services Department, Airports Council International has named Hong Kong International Airport the world’s best among airports serving more than 40 million passengers annually, for the fifth consecutive year. Financial Services Exchange Fund foreign assets up $3.7B The Exchange Fund’s foreign assets grew by $3.7 billion in January to reach $2.0394 trillion.The Monetary Authority said the monetary base, comprising certificates of indebtedness, Government issued currency notes and coins in circulation, the Aggregate Balance and Exchange Fund Bills and Notes issued, amounted to $1.0642 trillion.

Government strengthened tourism ties with Henan The Travel Industry Council signed a co-operation agreement with the Henan Provincial Tourism Administration. According to the Hong Kong Information Services Department, the agreement was signed at the Henan-Hong Kong Bilateral Tourism Exchange & Co-operation Meeting. The co-operation agreement aims to strengthen co-operation and exchange, and information sharing, plus develop honest and quality tourism.

A study shows almost 70% of Hong Kong employers expect their staff to be available while on annual leave or out of office hours. According to the latest Robert Half Workplace Survey, Hong Kong employers are the most demanding in the Asia Pacific. 68% of employers said they expect their employees to be available or contactable while on annual leave or out of office hours which is well above the regional average of 40% (Singapore: 45%; Australia: 22%; and New Zealand: 20%).

MTR fares to increase by 2.3% in June The fare hike is due to the Fare Adjustment Mechanism which is linked to the y-o-y percentage changes in the Composite inflation and Nominal Wage Index for transportation. According to Hong Kong Information Servicaes Department, MTR Corporation said that they will provide various fare concession schemes and ten new trains will be phased in this year after testing and commissioning.

ECONOMY AVIATION

1,003 flight movements set new daily record The April 22 record of Hong Kong International Airport supassed the daily average of 891 movements by 12.57 per cent. According to Hong Kong Information Services Department, another 521 flight movements also operated through the Hong Kong Flight Information Region on that day, making up a total of 1,524 flights handled by the department within the 24-hour period. HR AND EDUCATION

Hong Kong has the region’s most demanding bosses

Hong Kong goods re-exports up 20.5% In the first 2 months of 2011, the volume of total exports grew 19.9%, and the volume of imports rose 14%. The volume of Hong Kong’s goods re-exports grew 20.5% in the first two months of the year, compared with the same period in 2010, while that of domestic exports fell 4.3%. FINANCIAL SERVICES

Government granted $2.3mn in quake aid A Disaster Relief Fund has been approved for two relief agencies to undertake aid projects for earthquake victims in Yunan

HOTEL AND TOURISM

33% of HK hotel price increase reflects economic comeback Last year, Hong Kong average hotel room rates rose by 33% or $929, compared to a 2% global average. According to the Hotels.com Hotel Price Index, the strength of the increase is lkely attributable to a growth in demand for both corporate and leisure travel

AVIATION

Dragonair to give refund for tickets between Hong Kong and Japan Passengers holding tickets issued on or before 11 March 2011 with departures to and from Fukuoka and Okinawa will be eligible for a refund. According to Dragonair, This is the latest in a series of measures to assist passengers since the earthquake and tsunami struck Japan. FOOD AND BEVERAGE

Hong Kong to check Japan food imports for radiation Hong Kong does not depend largely on Japan for its food supply, said Secretary for Food & Health Dr York Chow. The Centre for Food Ssafety will monitor fresh products from Japan and will check them for radiation. HONG KONG BUSINESS ANNUAL 2012 | 25

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FINANCIAL SERVICES

Is Hong Kong’s banking sector in trouble? The Royal Bank of Scotland says there is risk of a financial crisis after an extended period of ultra-loose monetary conditions in Hong Kong. However, this may not be the case as it has enough fiscal reserves which can be drawn upon in times of trouble. Economy Inflation hits 34-month high of 5.2% yoy in May Though a touch lower than expectations for 5.3%, it still sat above market expectations for 5.0%, says HSBC. The sudden jump in China’s May food price inflation is said to cause the mounting inflationary pressures.

(HKIA) to include three runways is crucial to meeting the territory’s future need for cargo capacity and stay economically competitive. HR and Education Unemployment rate stands at 3.5% The labour force grew by 17,800 to almost 4 million in March-May. Decreases in the unemployment rate were mainly observed in the wholesale, foundation and superstructure, as well as manufacturing sectors, while increases were more apparent in the decoration, repair and maintenance for buildings, warehousing and support activities for transportation, and food and beverage service activities sectors, said a news.gov.hk report.

AVIATION

Hong Kong desperately needs the third runway: DHL This, as passenger market grows by 6.7% from 45 million international in 2009 to 62.2 million in 2014. Air freight is also expected to grow from 3 million tonnes in 2009 to 5.3 million tonnes by 2014. In a statement, DHL believes the proposal to expand Hong Kong International Airport 26 | HONG KONG BUSINESS ANNUAL 2012

MARKETS AND INVESTING

HK stocks close flat due to China’s increased reserve requirement Hong Kong shares closed flat after China’s central bank raised the amount banks must keep in reserve. The Hang Seng China Enterprises Index rose 55.43 points, or 0.45 percent, to close at 12,488.27. Three sub-indices gained

Sun Holdings plans $1bln IPO in Hong Kong Proceeds would be used to expand Sun’s hypermarket chain in China. The hypermarket operator is reportedly increasing its stores from 180 to 200 this year. A Reuters report said, “Sun Holdings owns 140 RT-Mart and 40 Auchan hypermarkets in China, making it the largest operator in the country ahead of Wal-Mart Stores Inc and Carrefour SA.”

FINANCIAL SERVICES

HK will remain the dominant offshore RMB centre for now: HSBC This amidst possible establishment of Singapore as a second offshore RMB trading hub. HSBC said, “Hong Kong will likely remain the dominant offshore RMB centre for some time, given its head start, as well as its concentration of offshore entities of mainland corporates and institutions, which have driven much of the growth of the market so far.”

FINANCIAL SERVICES

tial rents shoot to 14-year high Private residential rents averaged HK$20.1/sqft in June, the highest recorded since September 1997. DBS says the impact of the recent financial crisis on rents in July will should be limited given its lagged nature. ECONOMY

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ECONOMY

Foreign currency reserve assets increased US$4.3bn in April 2011 The official foreign currency reserve assets of Hong Kong amounted to US$276.9 billion at the end of April. According to the Hong Kong Information Services Department, the total foreign currency reserve assets represent 55% of Hong Kong dollar M3. There were no unsettled forward contracts at the end of April and March. INFORMATION TECHNOLOGY

Hong Kong internet economy to reach $146bn by 2015 The expected growth is to be driven by growth in mobile and online shopping, said Google Hong Kong. According to the Hong Kong Information Services Department, the report on the internet economy suggests that the local internet economy was worth about $96bn, or 5.9% of Hong Kong’s GDP, in 2009. By 2015, it is expected to equal 7% of the GDP.

Retail sales value up to over $35b The value of total retail sales in July 2011 increased by more than 29% compared to the same period in 2010. The Census and Statistics Department said, “Analysed by broad type of retail outlet and comparing July 2011 with July 2010, the volume of sales of miscellaneous consumer durable goods increased the most, by 84.6%. This was followed by sales of electrical goods and photographic equipment (+73.3% in volume); jewellery, watches and clocks, and valuable gifts (+37.0%); wearing apparel (+24.7%); miscellaneous consumer goods (+19.8%); commodities in department stores (+19.2%); footwear, allied products and other clothing accessories (+17.8%); furniture and fixtures (+15.3%); and commodities in supermarkets (+4.8%).” HR AND EDUCATION

Minimum Wage Commission to start review in Q1 2012 The needed economic and employment data will be available then. “The commission will analyse and consider a host of data, including the impact of

employment and economic activities since the implementation of the statutory minimum wage in May, as well as the consumer price indices, before it can decide whether there is a need to change the statutory minimum wage rate, currently set at $28 per hour,” said a news.gov.hk report. The commission will submit the review report to the Chief Executive by November 2012.

Hong Kong’s inflation may have surged to 8.6% in July Standard Chartered says inflation will continue its seasonal uptrend from August onwards. It expects increases of 10.1% and 12.5% in exports and imports, respectively.

HSBC’s pre-tax profit up 16% to US$6.8b in H2 2011 And Hong Kong delivered delivered profits of US$3.1 billion, up 7%. According to a release, HSBC’s businesses in Asia delivered profits before tax on a reported basis of US$6.8billion in the first half of 2011, up 16%, on the same period last year. As a key contributor to overall Group performance, HSBC in Asia accounted for 59% of total Group pre-tax profits. MARKETS AND INVESTING

CEO resignation pushes SMIC down in HK trading China’s biggest chipmaker saw the biggest decline in months in Hong Kong after David Wang failed to win reappointment and eventually quit. A Bloomberg report said, “The Chinese chipmaker fell 9.5 percent to 57 Hong Kong cents as of 9:39 a.m. local time, the biggest intraday decline since May 20, on resuming trading after being suspended since June 30.”

HOTEL AND TOURISM

Hong Kong is the favorite destination of business travelers in Asia Accor has revealed the findings of its Accor Asia Pacific Business Traveller Research 2011, which seeks to better understand the travel and behavioural preferences of business travellers based in Asia Pacific. The survey interviewed over 10,000 respondents who made business trips in the first half of this year. Based on data collected, Singapore (39%) and Hong Kong (38%) can expect to be the 2 most frequented destinations by business travellers for the second half of 2011. Both China (29%) and Thailand (29%) were ranked joint third. RESIDENTIAL PROPERTY

Hong Kong’s private residen-

MARKETS AND INVESTING

Knight Capital to close its Hong Kong office The electronic trader will also lay off 6% of its global workforce. A Reuters report said, “Knight Capital, which currently has 1,465 full-time employees, has also cancelled more than 40 replacement hires and said it continues to seek further cost cuts.” According to the report, the company has seen a prolonged decline in market conditions and expects to cut annual operating expenses by about $40-50 million through the costcutting measures.

COMMERCIAL PROPERTY

Hong Kong’s parking rate is Asia’s highest Hong Kong’s rental yield of car parking spaces tops 4% per annum, relatively higher than the other sectors such as residential and office properties. The cost of parking a car in terms of daily or monthly rate generally increased over the past twelve months. Among the top ten, no single region dominated in this year’s survey, with North America, Europe and Asia Pacific represented by a broad mix of cities. HONG KONG BUSINESS ANNUAL 2012 | 27

MOST READ

MARKETS AND INVESTING

Daily news: www.hongkongbusiness.hk on HKEx. The company will trade under the Stock Code 6813, with CAPMALLSASIA-S as its English Stock Short Name and -凱 S as its Chinese Stock Short Name on HKEx.

Hong Kong M&A amount to a whopping $55.3b in 2011 The country accounts for 12% of the total M&A deal flow in Asia. The deal values for Hong Kong M&A are driven by the record US$26 billion of outbound M&A activity, the highest M&A volume on record for a thirdquarter period, according to a report from Thomson Reuters.

MOST READ

PROFESSIONAL SERVICES

COMMERCIAL PROPERTY

Trade Marks Registry finds inaccurate data Internal audits of its register revealed inaccuracies blamed on human error. A report by the Information Services Department said, “The Trade Marks Registry will correct some inaccurate data found during internal audits of its register and expresses its regrets to parties who may be affected.”

Hong Kong is most expensive office location worldwide in 1H 2011 With Class A gross rents averaging $214 psf /year. According to Colliers International’s report, the Asia Pacific region posted strong results during the first half of 2011 reflected by the pan-regional vacancy rate tumbling 121 basis points to 11.42 percent. All but seven of the 25 markets tracked recorded lower vacancy rates. Once again Hong Kong recorded the region’s lowest vacancy rate in the region at just 3.7 percent. Rents moved modestly higher in the first half of 2011, increasing an average of 2.9 percent.

ECONOMY

Exports to the Mainland slump 7.3% in September Overall, the value of Hong Kong’s total exports of goods fell 3% compared to that in September 2010. Meanwhile the value of imports of goods increased by 2.3% over a year earlier. RESIDENTIAL PROPERTY

Housing inflation to remain high until 2H12 Tough luck for Hong Kongers aiming to find affordable housing, at least until later next year. UBS says housing inflation will stay elevated for a while, as the lagged impacts of rising property prices continue to filter through. 28 | HONG KONG BUSINESS ANNUAL 2012

MARKETS AND INVESTING

CapitaMalls Asia gets formal go-ahead from HKEx CapitaMalls Asia announced that on 17 October 2011 The Stock Exchange of Hong Kong Limited had provided their formal and final approval for the listing of, and permission to deal in, the ordinary shares in the capital of the company on the Main Board of the HKEx. The shares will be primary-listed on SGX-ST and secondary-listed

FINANCIAL SERVICES

Hong Kong finance professionals keen on seeking greener pastures abroad 67% of professionals want career growth, better salary packages, improved overall lifestyle and new work experiences overseas. According to the International Talent Mobility Report, the global body for professional accountants, and leading recruitment firm Robert Half International, many finance and accounting professionals want to gain international experience, but few firms in Asia Pacific are offering overseas career opportunities.

FINANCIAL SERVICES

Daily news: www.hongkongbusiness.hk Hong Kong was emerging as a listing hub for mining and resource companies. ECONOMY

ECONOMY

Hong Kong September exchange fund falls by $45bn Of the $2.13tn Exchange Fund’s foreign assets, Monetary Base amounted to $1.06tn. The Exchange Fund’s foreign assets fell $45.8 billion to $2.1317 trillion at the end of September, the Hong Kong Monetary Authority.

needs of different sectors of the community.

ECONOMY

RETAIL

Hong Kong takes a bite of Apple Apple opened its first store in Hong Kong amidst growth of retail sales driven by spending from visiting Mainlanders. A Bloomberg report said, “The Hong Kong store is opening more than three years after Apple started its first self-operated shop in mainland China as the Cupertino, California-based company expands in a region where revenue surged sixfold last quarter. Retail-sales growth in Hong Kong exceeded 20 percent for a fifth straight month in July, bolstered by spending from Chinese visitors.”

Hong Kong’s growth to plummet in 2012 UBS warns the country may hit rock bottom in 1Q12. As GDP is expected to slow to 1.6% from this year’s estimated 4.5%. ECONOMY

Is Hong Kong getting cheaper as a location? Survey shows Hong Kong has dropped 26 places to 58th position in the global ranking - the largest fall of any city in Asia. Meanwhile Singapore has become the sixth most expensive location in Asia after four Japanese cities and Seoul, according to the latest Cost of Living Survey conducted by ECA International. Singapore rose from last year’s eighth position to sixth in the latest survey, overtaking Hong Kong.

FINANCIAL SERVICES

Licensed banks in Hong Kong now up to 151 The Hong Kong Monetary Authority has granted a banking licence to Switzerland’s Banque Privée Edmond de Rothschild SA. HKMA said the granting of the banking licence took effect on 16 September 2011. The number of licensed banks in Hong Kong has now increased to 151, according to HKMA.

INFORMATION TECHNOLOGY

41% of businesses show worrisome neglect of disaster recovery plan And guess how many businesses have no continuity plans for their workplace requirements? According to a release, over two-fifths of Hong Kong businesses (41%) do not have a disaster recovery (DR) plan in place for their IT and even more (63%) have no business

continuity plans for their workplace requirements. A string of natural disasters during 2011, including the catastrophic earthquake and tsunami in Japan in March and the recent floods in Thailand, has driven the issue of DR to the top of boardroom agendas, underscoring the huge cost to businesses of natural disasters and their aftermath. While these are extreme examples, the consequences of more common events such as fires or vandalism can also seriously damage a business. MARKETS AND INVESTING

Hong Kong seen as a global mining companies listing hub The HKSE has attracted several large high profile mining company listings over the last few years. As China’s insatiable demand for natural resources continues to grow to fuel a burgeoning economy that remains one of the world’s strongest, global mining industry players are increasingly recognising Hong Kong as an ideal location for a public listing due to the city’s proximity to China’s capital markets that highly value commodity based stocks. PwC Hong Kong Mining Leader and Assurance Partner Benson Wong said there was no doubt

Hong Kong’s retail sales may have dropped to 21.5% in October It seems like less Hong Kongers are raiding the malls. Standard Chartered expects growth to have moderated further, to 21.5% from 24.1% by value, and to 12.0% from 15.2% by volume.

New mortgage loans drop 17% in October New loans approved also fell to HK$12.5 billion.The Hong Kong Monetary Authority said new mortgage loans drawn down during October decreased by 16.8% to HK$11.5 billion compared with September. Meanwhile new loans approved in October fell by 14.6% to HK$12.5 billion compared with September. Among these, according to HKMA, approvals for primary market transactions decreased by 14.1% to HK$2.2 billion.

INFORMATION TECHNOLOGY

ECONOMY

Hong Kong seen to have HK$35bn budget surplus Study advised government to employ fiscal resources to enhance competitiveness while helping the disadvantaged. PwC expects the HKSAR Government will record a healthy HK$35 billion consolidated budget surplus in the fiscal year 2011/12 against a small deficit of HK$8.5 billion forecasted. In view of the global economic uncertainty, it is expected the overall economic environment will be more challenging in the year ahead. Given the circumstances, PwC urges the Government to examine how it may use its fiscal reserves to support a long-term strategy that enhances Hong Kong’s competitiveness while addressing the

Hong Kong fails to back local IT sector Too many security, business continuity and legal issues still to iron out, says an industry player. Network Box managing director Michael Gazeley shared to Hong Kong Business some loopholes in the IT sector that require government attention. COMMERCIAL PROPERTY

Hong Kong property rents and prices to hit a reverse next year Retail properties offer greener pastures amid the subdued outlook. With prices and rents hitting all time high, all indications suggest that the end of Hong Kong property market’s bull-run is near after almost 24 months of unrelenting spikes. Colliers International projected today that all properties – with the exception of ground-floor retail properties in traditional shopping districts - will enter a down cycle in 2012. HONG KONG BUSINESS ANNUAL 2012 | 29

company and industry - medical and healthcare equipment

Catering to Hong Kong’s ageing population

“In the first five months of 2011, Hong Kong’s total exports of medical and healthcare equipment increased by 15%.”

There has been an increasing demand for medical and healthcare products designed for the ageing population as the number of people aged 60 and above continues to rise and is even expected to reach 2 billion worldwide by 2050.

include sight testing instruments and veterinary science appliances, increased by 4% in the first five months of 2011, while exports of electro-diagnostic apparatus, including apparatus for functional exploratory examination or for checking physiological parameters, increased by 19%. Outsourcing is growing in popularity among overseas manufacturers of medical and healthcare equipment in recent years. Hong Kong companies stand a good chance in acting as contract manufacturers or sourcing partner given their edges in quality assurance and IPR protection. Though the cost of regulatory compliances is relatively higher in Hong Kong than the mainland, this helps differentiate Hong Kong companies from other low-cost competitors and reinforces the role of Hong Kong companies as a partner providing high-quality products and services.

he medical and healthcare equipment industry has two distinct markets - household consumer market and professional or institutional market, which include hospitals and clinics. Most medical and healthcare equipment companies in Hong Kong are engaged in OEM business, such as producing massagers, blood pressure monitors for household consumer use; and rubber molding, plastics resins for institutional use. Taiwan is traditionally Hong Kong’s main competitor. In recent years, with increased competitiveness in price and product development, the Chinese mainland is increasingly putting pressure on Hong Kong local companies, inducing them to strive for product and company re-positioning. Many Hong Kong based companies have undertaken to provide engineering design services in order to enhance their competitive edge. In order to lower production costs, many Hong Kong manufacturers have relocated their production facilities to the Chinese mainland, and most of them are engaged in the manufacturing of mechano-therapy

30 30 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

appliances/massage apparatus. However, quality control, marketing, research and development, design, as well as material and equipment procurement continue to be conducted in Hong Kong. Products with better growth prospects for Hong Kong manufacturers include home-based equipment, hygiene sterilised supplies, equipment for less-invasive procedures, orthopaedic tools and devices, devices and supplies for high health-risk diseases and injuries and telemedicine etc. Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessary reflect the export business managed by Hong Kong companies. In the first five months of 2011, Hong Kong’s total exports of medical and healthcare equipment increased by 15%. Exports to the Chinese mainland, the largest market for Hong Kong’s medical and healthcare equipment exports, grew by 17%. Exports to the US and the EU grew by 33% and 19%, respectively. Among different product categories, Hong Kong’s exports of miscellaneous medical instruments and appliances which

Industry Trends Demographic trends have an important impact on the medical and healthcare equipment industry. According to the World Health Report released by the World Health Organisation, the world average life expectancy will rise to 73 years by 2025 – a 50% improvement on the 1955 average of only 48 years. Currently, there are more than 759 million people aged 60 or above, which accounts for 11% of the world’s total population. According to the United Nations, there will be 2 billion people in the world who are aged 60 and over by 2050. These trends have resulted in an increasing demand for medical and healthcare products designed for the ageing population. The total global expenditure for health is now more than US$4.1 trillion a year, according to the World Health Organisation .The health expenditure as a percentage of GDP has been increasing among all major economies, including the Chinese mainland. The increasing share of medical services or healthcare in household expenditures in some developing countries can be translated into more opportunities for Hong Kong exporters of medical and healthcare products. Meanwhile, growth of public health expenditures in the more industrialised countries is slowing down which, however, creates opportunities for home medical equipment targeting atpatients undergoing recuperation and therapy processes.

company and industry - medical and healthcare equipment Performance of Hong Kong’s Exports of Medical and Healthcare Equipment 2009

2010

Jan-May 2011

HK$ Mn

Growth %

HK$ Mn

Growth %

HK$ Mn

Growth %

-36

-21

-32

Re-exports

9,569

-5

10,057

4,280

+16

of Chinese Mainland Origin

4,000

-6

4,108

1,707

+13

Total Exports

9,598

-5

10,080

4,287

+15

(HK$ billion) Domestic Exports

by Market

2009

2010

Jan-May 2011

Share %

Growth %

Share %

Growth %

Share %

Growth %

54.4

54.6

+17

13.3

-13

13.7

15.2

+33

9.4

-21

9.6

9.7

+19

Germany

3.1

-11

3.3

+11

3.5

+28

Netherlands

1.6

-27

1.8

+16

1.9

+28

Japan

7.4

-23

5.6

-21

4.5

-29

ASEAN

3.1

-23

3.1

2.5

-6

South Korea

2.2

-17

2.4

+17

3.8

+94

Macau

1.8

+65

1.7

-5

1.5

-15

Chinese Mainland US EU (27)

by Category

2009

2010

Jan-May 2011

Share %

Growth %

Share %

Growth %

Miscellaneous Medical Instruments and Appliances

31.7

-2

26.9

54.6

+17

Miscellaneous ElectroDiagnostic Apparatus

17.0

-20

16.2

18.9

+19

7.9

+16

12.9

+72

13.2

+27

Syringes/Needles etc. for Medical/Surgical

Share %

Growth %

Source: Hong Kong Trade Development Council ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessary reflect the export business managed by Hong Kong companies. * Insignificant

Product Trends As a result of the ageing population, treatments for cardiopulmonary disease, diabetes, and neurological disorders will see rapid growth, so as orthopedic devices and pharmaceuticals that can help ageing baby boomers stay active. In addition, increased consciousness in personal health and fitness in developed countries is boosting the demand for home-based or self care equipment such as, com-

mode chair, pill alarm box, ionizers and positioning aids, shower chairs, walkers, canes, crutches and patient lifts. These equipments facilitate the prevention, detection and control of diseases. Modern technology is playing a major role in the medical and healthcare equipment industry. Innovations such as microminiature and remote surgery techniques, DNA-based diagnostics, tissue-engineered organs, and advanced informa-

“According to the World Health Report released by the World Health Organisation, the world average life expectancy will rise to 73 years by 2025 – a 50% improvement on the 1955 average of only 48 years..”

tion technologies provide solutions to some of the most persistent and debilitating healthcare problems and create demand for medical equipment utilising these new technologies. In addition, the bluetooth technology also gives rise to new medical devices, such as a patient-worn pulse oximetry and a portable patient monitor. Technology has also given rise to telemedical services and lessinvasive procedures. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 31 31 HONG

company and industry - jewellery

Striking gold With the high level of technology in the precious jewellery industry, Hong Kong has become one of the leading producers of gold items in the region.

ong Kong’s jewellery industry can be broadly classified into two sectors: jewellery made of precious metal and imitation jewellery. In terms of value, some 80% 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. 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. With increased investment by Hong Kong manufacturers on the mainland and improved crafting skills of mainland workers, re-exports of jewellery from China have increased briskly in recent years. Performance of Hong Kong’s Jewellery Exports Hong Kong is the world’s fourth largest exporter of fine jewellery after Italy, the US and Switzerland. In 2010, Hong Kong’s total exports of precious jewellery increased 21%, after dropping by 23% in 2009, amid return of consumer confidence. However, prices of precious metals and stones have surged dramatically. In volume terms, therefore, Hong Kong’s exports of precious jewellery remained flat in 2010. The top three markets of Hong Kong’s precious jewellery exports are the US, the EU and Switzerland, collectively accounting for some 64% of the total. Sales to most traditional markets rebounded substantially in 2010. For example, Hong Kong’s

jewellery - company and industry “The most popular product category is gem-set jewellery, particularly diamonds set in 14K or 18K and yellow/ white gold.” exports to the US and the EU increased 20% and 8% respectively after some 20% declines in 2009. Sales to Switzerland were particularly impressive, surging by 38% in 2010. By comparison, exports to Chinese mainland were modest, growing by 8% in 2010. On the other hand, exports of pearls, gem-stones and rough diamonds rebounded strongly by 37% in 2010, after dropping by 17% in 2009. Hong Kong is the world’s largest exporter of imitation jewellery. In 2010, total exports of imitation jewellery amounted to HK$8.4 billion. Unlike fine jewellery, imitation jewellery is rarely domestic-made but reexported from origins outside Hong Kong, notably the Chinese mainland, which accounts for 93% of all exports from Hong Kong. In 2010, exports of imitation jewellery increased 19%, after falling by 17% in 2009. 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, has somewhat trimmed down their profit margins. Yet, compared with other industries, jewellery makers are already in a better position to pass cost increases onto buyers and end users if they are caused by price surges of precious materials, which make up the most part of a jewellery article’s value. 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. Product Trends In terms of materials, white metal will remain the mainstream, while there has been a renewed interest and demand for colour stone jewellery. Demand for yellow gold is on a rise again, albeit with a fashionable twist. Titanium is gaining popularity for its light weight, strong nature and non-sensitivity to human body. It is also worth noting that, in recent years, consumption of diamond jewellery has increased rapidly, particularly in emerging economies such as China and India where incomes are rising fast and consumers’ purchasing power is strong. Yet, lower-priced items with more creative use of karat gold and alloys may also become more popular with less

32 32 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

Performance of Hong Kong’s Jewellry Exports^ Precious Jewellery

2008

2009

2010

HK$ Mn

Growth %

HK$ Mn

Growth %

HK$ Mn

Growth %

8,851

5,789

-35

7,219

+25

Domestic Exports

28,222

+12

22,718

-20

27,378

+21

of Chinese Mainland Origin

19,789

-1

15,421

-22

19,069

+24

Total Exports

37,073

+10

28,507

-23

34,597

+21

(SITC 897.3)

Precious Jewellery by Market

2008

2009

2010

Share %

Growth %

Share %

Growth %

Share %

Growth %

37.5

-8

35.7

-27

35.2

+20

24.3

+13

24.1

-24

21.4

France

5.3

+27

5.4

-21

5.8

+30

United Kingdom

6.8

-3

6.8

-24

5.7

Italy

4.1

+33

4.2

-22

3.5

Switzerland

7.5

+59

6.9

-25

7.8

+38

Chinese Mainland

3.3

+30

7.1

+68

6.3

ASEAN

4.8

+18

4.7

4.9

+25

Japan

3.7

-2

3.8

-21

3.9

+26

Macau

1.7

+509

2.9

+30

3.6

+53

Precious Jewellery by Category

2008

2009

2010

Share %

Growth %

Share %

Growth %

Share %

Growth %

96.4

95.4

-24

96.3

+23

Articles of Pearls, Precious or Semiprecious Stones

3.4

+32

4.4

-2

3.2

-11

Goldsmiths’ & Silversmiths’ Wares, Precious Metal

0.2

-20

0.2

-13

0.5

+180

Articles of Jewellery, of Precious Metal

Pearls, Gem-Stones and Rough Diamonds (SITC 667) Domestic Exports Re-Exports Of Chinese Mainland Origin Total Exports

2008

2009

2010

Share %

Growth %

Share %

Growth %

Share %

Growth %

213

-8

202

-5

130

-36

83,983

+38

69,971

-17

95,678

+37

5,606

-1

4,341

-23

5,672

+31

84,196

+38

70,173

-17

95,808

+37

Note: ^ 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.

affluent customers. The number of younger consumers has increased over the past few years. They are fashion-conscious and putting a great stress on the design element. In many cases, they are influenced by the trends in clothing fashion, mainly through magazines, TVs or

movies. In Asia, for example, the biggest jewellery buyers are the rising numbers of women entering the workforce, according to De Beers. In terms of product trends, jewellery designs have been increasingly influenced by clothing fashion. Consumers, especially women, are opting for

“In 2010, Hong Kong’s total exports of precious jewellery increased 21%, after dropping by 23% in 2009, amid return of consumer confidence.”

more accessories like jewellery to express their sense of style. While feminine, romantic pieces are expected to be soughtafter in the luxury market, wear ability is getting important in the young girl market, and this reflects in the increasing trend to wear jewellery with jeans in a mix-and-match fashion. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 33 33 HONG

company and industry - information technology equipment

3D is the future of information technology

“Hong Kong’s exports of IT equipment grew robustly by 25% in the first half of 2011, after a strong growth of 33% in 2010. ”

The industry is exploring business opportunities by applying 3D display technology to computer products.

mainly sourced from overseas suppliers like the US, Japan, Taiwan and South Korea. Other items such as PCB’s, passive components, mechanical parts and connectors may be sourced from other local manufacturers, or local enterprises on the mainland. There is an increasing number of Hong Kong manufacturers adopting a strategy of vertical integration to enhance valueadded content to their products. Product design and development, software programming, tool-making, production and/ or quality assurance are all done under one roof. In view of the short product life cycles of IT products, Hong Kong companies place much emphasis on the collection of market intelligence. This enables them to start the development of new products at the earliest stage to catch up with the fast changing market environment. The success of Hong Kong’s IT equipment industry also 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. 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, and ISO 14000 - a standard for environmental management system. 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. Hong Kong’s exports of IT equipment grew robustly by 25% in the first half of 2011, after a strong growth of 33% in 2010. Exports of computer parts and accessories, complete computers and office machines surged by different degrees in the period. The Chinese mainland was the largest export market for Hong Kong’s IT equipment industry, absorbing over two-thirds of the total exports. Exports to the mainland, mainly parts and accessories, increased strongly by 23% in the first half of 2011, amid the robust input demand stemming from expansion in outward processing production. Meanwhile, exports to the EU and the US grew by double digits, while exports to ASEAN expanded rapidly. Exports to

ong Kong exports consist a wide range of information technology products, especially computer parts and accessories like motherboards, keyboards, computer cases, power supplies, display cards, memory cards, LAN cards and cables and harnesses. Also, a number of companies are engaged in the trading and/or manufacturing businesses of computer peripherals and items like mice, USB flash drives, LCD monitors, hard disk drives and optical disk drives, as well as complete set computers such as notebooks, desktops, netbooks and tablets. Most Hong Kong manufacturers have relocated their production facilities to the Chinese mainland, where various produc-

34 34 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

tion processes like PCB assembly, plastics injection moulding and sheet metal working are carried out. Their Hong Kong offices focus mainly on product design and development, industrial engineering, management, logistic support and marketing, etc. In the wake of this relocation, most of such companies have been re-classified as non-manufacturing establishments, despite the fact that they have manufacturing activities across the boundary. Hong Kong’s IT equipment industry is characterised by heavy dependence on imported parts and components. Given its free port status and the advanced telecommunications infrastructure, Hong Kong allows companies to source freely worldwide. For example, CPU’s, memory chips and other integrated circuits are

information technology equipment - company and industry

Performance of Hong Kong’s Exports of IT Equipment

Japan also performed well. Product Trends On the back of technological advancement and falling prices amid keen competition, conventional IT products like personal and notebook computers have become mass products. Now, the industry is focusing on further technological enhancement to sustain their business. Notably, small and

mobile computer devices with wireless connectivity, in particular the tablet computers such as the iPad, are well received in the market. On another development, the industry is exploring business opportunities by applying 3D display technology to computer products. Indeed, a number of industry players are in the pipeline to promote their 3D computer devices, such as shut-

“Exports to the mainland, mainly parts and accessories, increased strongly by 23% in the first half of 2011, amid the robust input demand stemming from expansion in outward processing production.”

ter glass 3D monitors, nakedeye 3D monitors and 3D webcams. Also, the industry is in the process to launch computer products with interfaces of faster communication speed or higher data transfer rate, especially those in USB 3.0 specification.

HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 35 35 HONG

company and industry - household electrical appliances

Evolution into wireless appliances Manufacturers have developed wireless versions of appliances to enhance user friendliness.

ong Kong produces and exports a wide range of household electrical appliances, including kitchen appliances ranging from food grinders, mixers and juicers to thermic appliances like coffee makers, toasters, electric knives, electric kettles and ovens; home care appliances like electric fans, air conditioning machines, vacuum cleaners, floor polishers, space heaters and irons; personal care products like hair dressing and hand drying apparatus, shavers, hair clippers, massagers, face steamers and electric toothbrushes; and household lighting products. In 2008, Hong Kong was the world’s second largest exporter of hair dressing apparatus, and the third largest exporter of electric food grinders, mixers and juicers in value terms, according to the latest available figures. The industry is dominated by manufacturers and traders of small-sized household appliances, with a few companies producing large items such as air conditioning machines and space heaters. Today, most manufacturers have relocated their production facilities to the Chinese mainland to maintain cost competitiveness. Offices in Hong Kong are mainly responsible for product development, quality control, management, marketing and logistic support.

Hong Kong’s total exports of household electrical appliances surged by 20% in 2010. Sales of major products like household lighting products, thermic domestic appliances and hair dressing/hand drying apparatus all performed well last year. The US and the EU were the largest export market, together constituting over half of Hong Kong’s total exports of household electrical appliances. While sales to the US rose rapidly by 27% in 2010, exports to the EU expanded by 8% in the period. Exports to other markets like Japan, the Chinese mainland and Australia also performed well, growing by 33%, 11% and 16% respectively in the period. Sales Channels Hong Kong manufacturers of household electrical appliances mostly produce on OEM and ODM basis for reputable brand names, of which some 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 may distribute the merchandises through their own channels or re-sell to their clients for further distribution. There are a few large Hong Kong manufacturers, like Goodway and Megaman marketing electrical appliances under their own brand names,

“Hong Kong’s total exports of household electrical appliances surged by 20% in 2010.”

Performance of Hong Kong’s Exports of Household Electrical Appliances^

while smaller companies also sell their brand products to smaller importers and distributors in overseas market. Their sales network covers not only the developed economies, but also emerging markets like Latin America and Eastern Europe. Industry Trends Hong Kong exporters of household electrical appliances are subject to fierce competition from other Asian suppliers. Particularly in the case of simple appliances involving lesser technological input, Hong Kong companies have long been competing with Southeast Asian suppliers and local Chinese enterprises. As more design works are being undertaken by Hong Kong companies, there is a tendency of overseas importers to shift liabilities arising from defective products to local manufacturers and traders. It has thus become increasingly critical for Hong Kong exporters to observe laws and regulations in relation to consumer protection and product liabilities in overseas markets. On the other hand, the fast changing consumption pattern has resulted in low inventory levels in major export markets, requiring quick response for inventory replenishment. Product life cycles have also shortened amid the advancement in technology, leading to the need for more frequent changes to product features and cosmetic designs in order to lure consumers. In this respect, Hong Kong companies are well known for their adaptability and responsiveness to the rapidly evolving consumer tastes and technological changes. They constantly upgrade their capability in product and aesthetic designs. Some companies also re-engineer their procurement and production management systems, in a bid to shorten delivery lead times. Product Trends Household electrical appliances carrying a single function are much sought after in western markets. These include heatingbased products, like coffee/tea makers and toasters; and motor-based appliances such as food choppers, blenders and juice-extractors. Yet many electrical appliances are now featured with electronic controls and LCD/ LED displays. To enhance user friendliness,

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household electrical appliances - company and industry

some wired appliances have evolved into wireless versions powered by charged batteries, including wireless coffee makers, electric irons and vacuum cleaners. Regarding household lighting products, aesthetic design is among the major elements of manufacturers to tap the market demand. A wide range of lighting sets for domestic uses, such as track lights, linear lights and spotlights, are offered in a great variety of novelty designs in order to meet different consumer preferences. Along with the growing concern on environmental protection, provision of environmentally appealing

electrical appliances which comply with, for instance, European or North American eco-labelling and energy-saving schemes, is becoming a competitive edge of Hong Kong exporters of household electrical appliances. On the other hand, lighting models of high efficiency and longer lifetime are in demand. In particular, a number of industry players are focusing on the development of LED lamps and lighting apparatus, which can reduce power consumption with an even longer lifetime than the electronic compact fluorescent lamps.

“While sales to the US rose rapidly by 27% in 2010, exports to the EU expanded by 8% in the period. Exports to other markets like Japan, the Chinese mainland and Australia also performed well, growing by 33%, 11% and 16% respectively in the period.”

In addition, the industry has continued to focus on Internet application and networking technology to develop the so-called smart appliances, aiming at bringing the fully automated households to life. Smart appliances for airconditioning, security, entertainment, lighting, etc. can be remotely controlled via the Internet. Coupled with the mobile technology for Internet access, a touch of a button on the mobile phones will let consumers able to turn on the air-conditioners before arriving home, or programme their recording and lighting apparatuses. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 37 37 HONG

company and industry - import and export trade

import and export Trade - company and industry

Challenging Hong Kong’s trading industry

“Hong Kong’s sales value of offshore trade in 2008 amounted to HK$3,363 billion, up 26.5% over 2007. ”

The growing trend of direct dealing between customers and manufacturers, known as “trade disintermediation”, has led traders to find more competitive sources of supplies.

duced on the mainland or Hong Kong and shipping them to overseas markets. These firms rely on their specialist knowledge of the sources of products in the region and the low costs of their supplies as their main competitive advantages. • Traders with some value added services: Many firms now source raw materials for their suppliers and provide finance for these materials. They often use letters of credit from their customers as a guarantee for raising finance for their purchase orders. Other firms develop a sub-contractor relationship with a number of factories in which they exert significant control over the management of production, including quality control. • Traders with sophisticated value-added services: In certain cases exporting firms have added value to their traditional activity to such an extent that it may be difficult to retain the label of being exporters. For example, some firms have become designer and manufacturer of components for their supplier factories to produce finished goods, which the firms subsequently export. These firms add value mostly from their design team and their competitive edge comes from their ability to design products which sell well in the target markets. The business environment for Hong Kong’s trading firms is becoming more challenging amid the growing trend toward direct dealing between customers and manufacturers, known as “trade disintermediation”. In 2008, the rate of gross margin of merchanting was 6.4%, down from 8.6% in 2004, illustrating the squeeze in margin. In response to trade disintermediation, Hong Kong traders now provide more value-added service in addition to finding more competitive sources of supplies. Hong Kong traders can also help overseas buyers coordinate production when the buyers have a sudden surge in orders and quick turnaround is needed. In the same period, the commission rate of merchandising for offshore transactions was 4.7% (2004: 3.6%), while the rate of reexport margin was 17.5% in 2008 (2004: 17.3%). Both remained stable.

ong Kong is the world’s 11th largest trading economy. In 2009, Hong Kong’s total merchandise trade decreased by 11.8% to US$661 billion in 2009. The recovery of global trade boosted Hong Kong’s total merchandise trade by 28.6% in the first half of 2010. Range of Services Hong Kong’s import and export trading firms are active in sourcing various types of goods, including raw materials, machinery and parts, and a wide range of consumer goods. There are three main types of sourcing activities: first are sourcing goods produced in Hong Kong; second are sourcing goods from around the region for re-exports; and third are sourcing goods from one country to be shipped directly to a third country without touching Hong Kong ground. The import business of Hong Kong trading firms is mainly generated by the distributing capabilities under the identity of agents or dealers. These trading firms usually specialise in one area of products and represent one or more foreign brands. Their trading map usually encompasses Hong Kong, the Chinese mainland or other Asian countries. Due to the development of trade sup-

porting services on the Chinese mainland, trading firms increasingly source goods offshore for sales in international markets. Some of these goods are transhipped via Hong Kong, or shipped directly without touching Hong Kong ground. Such trade, known as offshore trade, is not reflected in Hong Kong’s trade statistics. According to the Census and Statistics Department, Hong Kong’s sales value of offshore trade in 2008 amounted to HK$3,363 billion, up 26.5% over 2007. In comparison, the value of re-exports was HK$2,733 billion in 2008, up 6% over 2007. The amount of offshore trade has surpassed the value of Hong Kong’s re-exports. Service Providers Hong Kong’s import and export trading firms are typically small, employing around 5 persons on average. There are around 99,477 import and export trading firms in Hong Kong, with less than 300 of these firms having more than 100 employees. There are three broad categories of import and export trading firms: • Left hand - right hand traders: these refer to trading firms which match sellers and buyers without adding any significant value to the process. These firms are characterised by the conduct of a straight-forward sourcing operation, usually identifying goods pro-

Exports Hong Kong’s import and export trading sector exports its services mainly in the form of offshore buying and selling of goods. Given Hong Kong’s proximity and the relocation of Hong Kong’s manufac38 38 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

Industry Data

turing bases to the mainland, particularly the Pearl River Delta, the Chinese mainland is a major source of offshore trading activities. As Hong Kong manufacturers are diversifying their production activities to other low-cost countries, the o ffshore trading pattern is expected to reflect the move. In 2009, Hong Kong earned US$25.9 billion from exporting trade-related services, accounting for 30.2% of total services exports. The Chinese mainland accounted for 24.0% of Hong Kong’s exports of merchanting and trade-related

services as of 2007. Industry Development and Market Outlook Recovering from the financial tsunami, Hong Kong’s total merchandise trade increased by 28.6% in the first half of 2010. Many other countries in Asia also showed strong growth in exports and imports in the same period. The financial tsunami is taking its toll on the world economy and Asia is not spared from its effects. As an open economy, with total trade equivalent to more than 300% of its GDP,

“In 2009, Hong Kong earned US$25.9 billion from exporting trade-related services, accounting for 30.2% of total services exports.”

Hong Kong suffered a decline in trading activities. However, it is performing better than many of its peers in Asia, some of which suffered declines of over 30% in exports and imports in the same period. • In recent years, Asia has become a more integrated market, thanks also to the various free trade agreements signed in the region. In particular, the China-ASEAN Free Trade Agreement, which commenced in 2005 with scheduled tariff elimination to be completed in 2010, has contributed to higher intra-Asian trade. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 39 39 HONG

company and industry - furniture & furnishing

furniture & furnishing - company and industry

Developing Hong Kong’s local brands

“In the 2010, mainland’s exports of furniture and parts amounted to US$39 billion.”

As the competition in the furniture industry intensifies, furniture manufacturers have started to develop and market their own brands.

ers have also started to develop their own brands. Notable examples include mattress manufacturers marketing their own brands in the local and overseas markets. Furniture manufacturers also become more careful about the choice of raw materials to meet international standards, such as compliance with legal or other environmental requirements in their target markets. The Chinese mainland is the largest furniture exporter to many countries, including the US and Japan. In 2010, mainland’s exports of furniture and parts amounted to US$39 billion, an average yearly growth of 17% over the last five years, despite the economic slowdown in 2009. Guangdong province is a major manufacturing centre of furniture on the Chinese mainland. Apart from Hong Kong, manufacturers from Taiwan and even the US have also set up production plants on the mainland. China also offers a huge potential market for furniture manufacturers. The increasing consumption power of Chinese people, its booming property market and promising tourist industry serve to drive the demand for both residential and hotel furniture, as well as other higher-end products. Over the last five years to 2009, China’s retail sales of furniture recorded an average growth over 30% per annum. In 2010, it grew by 37%. Some foreign companies are actively seeking for business partners in China to explore opportunities of setting up production operation in China. Hong Kong can act as a platform for these companies to enter the mainland market with its long-time experience in production and distribution network on the mainland, as well as the reputation for its quality, integrity, reliable delivery and management.

ong Kong’s furniture manufacturers engage in the production of a wide range of products including household, office and kitchen furniture, as well as mattresses, bedding and parts of furniture.. Most of the manufacturing activities of the furniture industry are now carried out on the Chinese mainland. With the head office in Hong Kong, acting as a controlling office principally responsible for high value-added services such as management, finance, accounting and marketing, production plants have been set up on the Chinese mainland to utilise the advantage of lower operation cost and abundant land supply there. A wide variety of raw materials are used in production, including wood, rattan, plastic and metal. Among others, wooden furniture is the major production and exports of the industry. It includes furniture in rosewood

and black-wood, especially wooden tables, chairs and wardrobes. To many Hong Kong furniture manufacturers, Asian countries are the major sources of raw materials. For example, solid wood is mainly sourced from Malaysia and Thailand, while Indonesia is the major supplier of rattan, whereas Japan and Taiwan supply iron and steel. Industry Trends Competition is keen in the furniture industry. Furniture manufacturers and exporters are suffering from decreasing profit margins. Many companies strive to reduce their cost of production and increase efficiency. Some relocate their manufacturing operations to other areas with lower operation cost. Some foreign manufacturers are taking steps to strengthen their domestic production through product specialisation. For example, some US companies focus on popular wood species not available elsewhere. Hong Kong’s furniture manufactur-

Product Trends Green furniture: As a result of the increasing awareness about environmental protection and more stringent legal requirements worldwide, furniture manufacturers are more cautious in choosing the materials for production. For example, they use fabrics that do not give off toxic fumes in the 40 40 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

Performance of Hong Kong’s Furniture Exports

^ 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. The US remains the largest market for Hong Kong’s furniture exports. Following the US are the Chinese mainland, EU and Japan. The Chinese mainland’s share in exports is picking up in recent years. Wooden furniture remains takes up the largest share in exports, the share of metal furniture is also increasing.

production process, such as polypropylene. In order to reduce the consumption of wood, some alternative materials are used in view of environmental concerns. Some manufacturers are also making furniture from recycled products, such as reclaimed wood and old teak from wood buildings. Some manufacturers are adopting a de-materialisation approach by designing furniture which uses less material. Furniture painting also needs to be environmentally friendly. Multi-functionality: More flexible, functional and smaller furniture which incorporates more than one function is popular. The demand for this type of furniture is not limited to people living in small quarters, but also people cluttered up with stuffs. Products such as a raised bed with lots of storage

space underneath and folding chairs hung on a wall can help provide storage solution and free space on the floor. Ready-to-assemble and do-it-yourself furniture: RTA and DIY furniture and home furnishing products have gained popularity around the world, especially in Europe and North America. Fewer official working hours, increasing aging population and early retirements will be the major drive for the growth in the sector. Natural variations: the new American classic with simplicity designs is coming back. Furniture featured with clean lines and a visible sign of hand workmanship is popular in the US. Wood species such as cherry, white oak, maple

“Over the last five years to 2009, China’s retail sales of furniture recorded an average growth over 30% per annum. In 2010, it grew by 37%.”

and pine are well-liked by the customers. Globally inspired design: The idea of bringing the world into our home is catching on and the cultures in other parts of the world in getting reflected in the design of furniture. For example, a more Zen-like interior space can be found Asian inspired furniture. Modern style upholstered furniture: Contemporary and trendy upholstery is in demand in Europe with robust growth in the past few years. Popular designs include clear and simple lines which are made from different materials. Leather and heavier durable fabrics are the majority for upholstered furniture.

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company and industry - clothing industry

What brand are you wearing? As a global sourcing hub in Asia, Hong Kong attracts a number of international trading houses and major retailers, including American and European department stores like Macy’s and JCPenney.

he clothing industry is a major manufacturing sector in Hong Kong. It is the third largest manufacturing employer in the country, with 1,107 establishments hiring 13,246 workers as of March 2011. 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 one of the largest groups involved in importexport trade in Hong Kong.

Performance of Hong Kong’s Exports of Clothing Hong Kong’s total exports of clothing grew year-on-year by 9% in the first five months of 2011. In a bid to sidestep the safeguard quotas imposed by the US and the EU on mainlandorigin clothing products after the expiry of the quota regime under WTO’s Agreement on Textiles and Clothing, quite a few Hong Kong manufacturers have relocated their production back to Hong Kong, and devised intricate outward processing arrangements with the mainland to maximise quota utilisation. However, the importance of OPAs has decreased in view of the surprisingly low utilisation of China’s quotas since the second semester of 2006, and more importantly, the expiry of the quota regime in the US and the double checking surveillance system in the EU, starting 1 January 2009. During January-May 2011, Hong Kong’s domestic exports of clothing ended its downtrend and resumed growth of 2% after declining by 80% in 2009 and 28% in 2010, while re-exports rose by 9% after a 7% increase in 2010. On the other hand, Hong Kong’s clothing exports to the US increased

clothing industry - company and industry “Hong Kong’s clothing exports to the US increased by 5% in the first five months of 2011, and those to the EU rose by 3%.”

retailers have started to put a stronger emphasis on their own labels. Renowned retailers such as H&M, Marks & Spencer, Orsay, Palmers, Pimkie, Springfield and Kookai have owned their private labels. As consumers desire to have private labels on everyday garments like jeans, accessories and T-shirts, the doors are also open to the supply of these clothing items to private label owners.

by 5% in the first five months of 2011, and those to the EU rose by 3%. Clothing exports to major EU markets including Germany, France and Italy grew by 8-12%, but those to the UK and Netherlands fell by 9 and 3%, respectively. Taken together, sales to the US and the EU accounted for more than two-thirds of Hong Kong’s total clothing exports. 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 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. 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 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) and mail order houses (e.g. Otto and Great Universal Stores). 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. Medium to high-priced fashion clothing bearing Hong Kong designer labels is being sold/have been sold in renowned department stores overseas such as Bloomingdale’s, C&A, Harrod’s, Isetan,

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Performance of Hong Kong’s Clothing Exports

Note: ^ 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.

Macy’s, Marui, Mitsukoshi, Nieman Marcus and Seibu. Industry Trends Online shopping and marketing: Online shopping is increasingly popular in overseas markets, particularly in the US. According to Cotton Incorporated’s latest survey, 24% of US consumers purchased clothing online, while 66% regularly browsed online for clothing in 2010. The growing variety of online shopping sites plus the mushrooming of social media marketing and mobile retailing is expected to boost online

shopping and sales further in 2011 and beyond as on-the-fly comparison shopping continues to gain popularity among consumers. Facebook, Twitter and various mobile shopping applications will prevail with the wider access to broadband internet and the further enhanced functionality of mobile devices. Growing importance of private labels: Private or house labels, in essence, have become an increasingly effective marketing tool among garment retailers. In order to differentiate as well as upgrade the image of their products, major

“Taken together, sales to the US and the EU accounted for more than two-thirds of Hong Kong’s total clothing exports.”

Rising green consciousness: Consumers are becoming more practical, thoughtful and socially conscious. For instance, according to Organic Cotton Market Report 2009 released by Organic Exchange, there is growing consumer demand for ‘green products’, leading the global retail sales of organic cotton apparel to reach US$4.3 billion in 2009, up 35% over the previous year. Thanks to this expanding trend, clothing manufacturers increasingly became certified to traceability standards such as OE Blended, OE 100 standard and the Global Organic Textile Standard, while reputable clothing stores like Nike, Adidas, H&M, Wal-Mart have responded by expanding their assortment of organic cotton clothing. Growing interest in China’s domestic market: The rapid expansion of mainland’s economy has attracted great interest of Hong Kong clothing companies to explore its clothing market. Today, China’s apparel market is the world’s second largest, behind only the US. Going hand-in-hand with the market expansion, Chinese consumers are becoming more fashionable and brandconscious. A 2010 McKinsey survey found that about 70% of apparel sales in the Chinese mainland were branded and 45% of Chinese consumers thought well-known brands had better quality. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 43 43 HONG

company and industry - telecommunications equipment

The rise of the smartphone

“Hong Kong was the world’s largest exporter of telephone sets in value terms in 2009.”

Sales of mobile phones, particularly smart phones, are rising rapidly as mobile communication becomes a part of the daily lives of consumers.

half of 2011, after a strong growth of 33% in 2010. Exports of major items like parts of telecommunications equipment, apparatus for transmission/reception of voice, images or other data, and telephone sets all increased by different degrees. Exports to the Chinese mainland expanded rapidly in the first half of 2011, as there was continued demand for parts and accessories on the back of increases in mainland’s processing production. Exports to the US and the EU, accounting for about one-fourth of the total exports, also performed well amid the continued consumer demand for telecommunications products. Sales to ASEAN were also facilitated by a steady demand for telecommunications parts for processing production in the region. Product Trends Mobile communication has become part of the daily lives of consumers in most countries. Sales of mobile phones with advanced features, particularly the so-called smart phones, are rising rapidly. Enhanced fea-

ong Kong exports a variety of telecommunications equipment, ranging from basic telephones to sophisticated system products. Major export items include corded phones and cordless phones, mobile phones, Internet phones, etc. According to the latest available statistics, Hong Kong was the world’s largest exporter of telephone sets in value terms in 2009. Another major export category is parts and accessories, including parts for system products and a variety of mobile phone accessories. Hong Kong also exports different kinds of telecommunications apparatus with radio reception, like walkie talkies and base stations for telecommunications. Other items include navigational apparatus

like GPS devices and telephone switching/ exchange equipment. Hong Kong’s telecommunications equipment industry is characterised by heavy dependence on imported parts and components. Given its free port status and the advanced telecommunications infrastructure, Hong Kong allows companies to source freely worldwide. For example, most digital processors, memories and/or other chips are imported from Taiwan, Japan and South Korea, etc. For other parts and components, such as PCBs, passive components, key-pads, display modules and mechanical parts, Hong Kong companies may source from other local manufacturers, or local Chinese enterprises on the mainland. Hong Kong’s exports of telecommunications equipment surged by 31% in the first

telecommunications equipment - company and industry

Performance of Hong Kong’s Telecomunications Exports

tures, especially those related to Internet applications, have been added on to the majority of the models, in addition to other features like digital/video cameras, multimedia playback functions and GPS. This has lured demand especially from youngsters and higher-income consumers. Nevertheless, fixed-line network will continue to play a vital role in the communication world. Spurred by the demand for high-speed data transmission and Internet access via 44 44 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

the fixed-network, broadband applications, especially those making use of optical communications technologies, are hot areas for development. But some companies have continued to concentrate on the digital subscriber line technology, which utilises the existing copper telephone lines to deliver high-speed data services. With respect to domestic telephone products, there is a constant appetite for cordless phones. Thanks to changing regulations of telecommuni-

“Hong Kong’s exports of telecommunications equipment surged by 31% in the first half of 2011, after a strong growth of 33% in 2010. ”

cations authorities, a certain radio frequency spectra have been opened for cordless phones operating at higher frequency, including the DECT phones for Europe, and the 900MHz, 2.4GHz and 5.8GHz cordless phones for the US. Higher frequency products are well sought after due mainly to their better communication quality and enhanced security. Yet corded telephones are not expected to obsolete in the medium term. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 45 45 HONG

company and industry - electronics industry

electronics industry - company and industry

Giving Hong Kong’s exports a boost

“Hong Kong’s electronics exports rose by 13% during January-July 2011, after surging by 28% in 2010.”

Hong Kong’s electronics industry is the largest merchandise export earner of the territory, accounting for 56% of Hong Kong’s total exports in 2010.

resistors, capacitors, inductors, crystals, resonators, speakers, printed circuit boards and transformers. Against the fast changing markets, Hong Kong companies emphasize quick response to ensure effective marketing services to their customers, and to monitor the changing product trends. 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, and ISO 14000 - a standard for environmental management system. Hong Kong’s electronics exports rose by 13% during January-July 2011, after surging by 28% in 2010. Exports of IT equipment, telecommunications equipment and semiconductor items grew by different degrees in the first seven months of 2011, while exports of AV equipment declined by 4%. Exports to the Chinese mainland, which

ccording to the latest available statistics, Hong Kong was the world’s largest exporter of telephone sets and sound recording apparatus; the second largest exporter of calculators, computer parts/accessories and video recording/reproducing apparatus; and the world’s third largest exporter of radios and video cameras/recorders in value terms in 2009. Finished goods constitute about one quarter of Hong Kong’s electronics exports, of which the majority are consumer electronics for domestic use. The largest category is audio-visual equipment, consisting of radios and optical discs players, hi-fi equipment, TV sets, MP3/MP4 players, etc. Moreover, Hong Kong exports a variety

of computer products, such as desk-top/ notebook computers, routers, monitors and optical disk drives, as well as telecommunications products like corded and cordless telephones and mobile phones. Other items with smaller export value include calculators, electronic dictionaries and USB memory devices. Parts and components constitute about three quarters of Hong Kong’s electronics exports, of which the majority are reexported to the Chinese mainland for outward processing production. Meanwhile, Hong Kong produces and exports a variety of parts and accessories for telecommunications items, AV equipment, office machines and computers, as well as components like

Performance of Hong Kong’s Electronics Exports

Note: ^ 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.

accounted for nearly twothirds of the total electronics exports, grew by 14% during January-July 2011. Exports of electronic parts and components, the major items of Hong Kong’s electronics exports to the mainland, continued to rise on the back of expansion of mainland’s outward processing production. Meanwhile, electronics exports to the EU and the US were both steady, thanks to sustained consumer demand for electronic products. Elsewhere in Asia, exports to ASEAN, which constituted mainly of parts and components, grew by 46 46 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

18% in the first seven months of 2011, on the back of continued expansion of export production in the region. But exports to Japan were sluggish in the period. Industry Trends Increasing competition from mainland and other Asian suppliers has long been a threat to Hong Kong companies. In response, many manufacturers have shifted the more labourintensive processes across the border. They have also changed their product mix to strengthen their competitiveness, moving towards higher value-added and more sophisticated products.

“Exports to the Chinese mainland, which accounted for nearly two-thirds of the total electronics exports, grew by 14% during January-July 2011.”

The fast changing consumer pattern has resulted in low inventory levels in major export markets, requiring quick response for inventory replenishment. Product life cycles have also shortened amid advancement in technology, leading to the need for more frequent changes in product features and specification in order to lure consumers. In this respect, Hong Kong companies are well known for their adaptability and responsiveness to the rapidly evolving consumer tastes and technological changes.

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company and industry - textiles industry

Climbing to new heights in 2011 After surging 14% in 2010, Hong Kong’s textile exports experienced further growth of 12% in the first five months of 2011.

he textiles industry – comprising spinning, weaving, knitting and finishing of fabrics – had a total of 783 manufacturing establishments as of March 2011, employing 5,770 workers, or 5% of the local manufacturing workforce. The textiles industry is one of Hong Kong’s major export earners, accounting for 3% of the total exports for the first five months of 2011. In recent years, with rising production costs and stringent environmental regulations, an increasing number of manufacturers have shifted their production of lowerend products to the Chinese mainland and Southeast Asian countries. Their manufacturing operations in Hong Kong are focused on sophisticated and high value-added items, including quality ring-spun, openend 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 joined forces with with mainland cotton suppliers in producing cotton textiles. After climbing 14% in 2010, Hong Kong’s textile exports experienced further growth of 12% in the first five months of 2011. Re-exports, accounting for higher than 98% of total textiles exports, grew by 12%. Some 70% of these re-exports were originated from the Chinese mainland, and they gained another 14% during January-May 2011. Meanwhile, domestic exports continued its downtrend with a 16% decline. Asia is the leading market for textiles exported from Hong Kong, accounting for more than 93% of Hong Kong’s textile exports. Of the top 10 export destinations,

textiles industry - company and industry “After climbing 14% in 2010, Hong Kong’s textile exports experienced further growth of 12% in the first five months of 2011.”

Performance of Hong Kong’s Textiles Exports

nine of them are in Asia. Sales Channels Hong Kong is both a leading production centre and a hub for clothing sourcing globally. 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. The industry is capable of producing either a wide range of quality products in bulk or specialised items within a short lead-time. 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 centre for buyers looking for new and trendy fabric materials. The Interstoff Asia International Fabric Show, held twice a year

Note: ^ 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.

in spring and autumn, is a significant marketing and sourcing platform in the region, for both fabric manufacturers and buyers alike. Industry Trends In the face of fierce competition in the global market, Hong Kong’s textiles industry is moving moving-up to supply sophisticated textile products with original designs. Today, the operation of the textiles industry in Hong Kong is focused on higher value-added activities such as sales and marketing, quality control, designs and development, while offshore plants are specialised in lower value-added operations. 48 48 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

The textiles industry has invested heavily in capital-intensive and advanced machinery to keep up with the latest technology know-how. Advanced production technologies are sourced mostly from vendors from Germany, Switzerland and Japan. Modern machinery like open-end spinning machines and shuttleless looms has been widely adopted by local manufacturers. As such, Hong Kong textiles manufacturers are able to offer a wide range of fibres, yarns and fabrics to clients. Product Trends In line with a modest economic recovery, consumers are eas-

“Asia is the leading market for textiles exported from Hong Kong, accounting for more than 93% of Hong Kong’s textile exports.”

ing grip on their wallets, somewhat bolstering the demand for mid-priced and high-end textile products. Among various kinds of fibres, cotton remains the most preferred material for consumers, while some man-made fibre fabrics, such as polyester and polyester blends, are gaining popularity. The growth in demand for polyester is partly due to the technical improvements achieved in recent years, particularly with respect to moisture absorption. Moreover, innovative new fibres and fabrics have buoyed demand in many different areas. To answer the needs, more and more breathable, flexible, anti-bacterial, anti-ultraviolet, wrinkle-free, water-resistant and environmental friendly materials are invented and marketed. To this end, Hong Kong manufacturers are seeking for cooperation with research institutions. For instance, Spark Thread (HK) Ltd has cooperated with the Sichuan Institute of Textile Industry, and successfully introduced the pupa protein viscose filament yarn dyeing technology. Microfibres have been getting more and more attention. The major benefits of textile products made of microfibres are its light weight and superior performance in keeping warm. In the field of furnishings, microfibres are more often used in the area of decorative fabrics and drapery. In this context, a newfangled stain-resistant polyester fabric that can offer both water absorption and oil repellence is reportedly becoming a trend in the textile industry. Invented by the Japanesebased Teijin Fiber Limited as a comfortable, soft and stainresistant fabric for all seasons with unprecedented coating formed on each individual fibre (rather than the fabric as a unit), this new material can be used in uniforms, sportswear and fashionable clothing like slacks that require both oil repellence and water/sweat absorption. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 49 49 HONG

company and industry - printing industry

Constantly innovating production techniques With the advent of new technology, like filmless printing or CTP technology, production time is shortened and more defined images are produced.

rinting is a supporting industry to publishing, advertising and various light consumer goods industries like toys, food, cosmetics etc. It is a leading manufacturing industry in Hong Kong and most of them are small and medium enterprises in Hong Kong. The industry has undergone a decline since the mid-90’s, owing both to a relocation of activities to mainland China and to the expansion of the Internet, and the consequent drop in newspaper and magazine sales. Printers in Hong Kong produce a wide range of books, booklets, brochures and leaflets, and paper and paperboard labels, advertising materials, commercial catalogues, calendars, postcards and greeting cards. Some specialise in the production of higher value-added / high tech printing products, such as children’s novelty books with pop-ups and additional objects, cheque books, passports, bills and statements, securities and prospectuses etc. that require considerable skills, substantial capital investment and confidentiality. Overseas customers are increasingly looking for faster turnaround and shorter delivery time in order to maximise return through smaller but more frequent orders. Hong Kong printers are known for qual-

ity, quick delivery, competitive pricing and ability to cope with short-notice printing jobs. The quality is comparable to that of the US, Germany and Japan, the pioneers in printing technology. Hong Kong printers are also known for their inventiveness and willingness to find solutions to production problems. The ability to meet high quality requirements has allowed Hong Kong to become a top printing and publication centre in the world, despite the increasing price competition from mainland printers. Hong Kong’s excellent telecommunication networks are great assets of the industry. In effect, publishers in Hong Kong can quickly access information from various parts of the world, an advantage of vital importance to time-sensitive publications. With proximity to the mainland market and a high degree of freedom of the press, Hong Kong has attracted many international publishers/news agencies to set up regional centres here. The Financial Times (Asia Edition), The Economist, The International Herald Tribute, The Asian Wall Street Journal etc, are all printed in Hong Kong and some are shipped into China for distribution. Printing is an industry with constantly updating technology. The ability to catch

printing industry - company and industry “Hong Kong has attracted many international publishers/news agencies to set up regional centres here.” up with new production techniques is thus crucial. Hong Kong printers are equipped with advanced models of lasersetters, electronic colour scanners, electronic page-composing systems, digital printers, automatic finishing systems and one to five-colour printing machines. Many Hong Kong companies are equipped with lamination machines, die-cutting, papercutting, shrink-wrapping, folding, hotstamping and binding machines, etc. to keep the production process in-house to ensure a quality product. Many have also introduced computer-to-plate systems, as well as equipment for security printing. Industry Trends Filmless printing, such as computer-toplate, is becoming mature. With CTP technology, images can be transmitted onto a zinc plate directly without the process of colour management and making colour separation films. This development can shorten the prepress production time and produce more defined images. Digital printing enables direct imaging texts and graphics going directly from the computer to the printing machine without the use of plates. This shortens production time and cost, and improves speed and accuracy. It is easy to operate and suitable for printing small quantities with flexibility, short lead time and customisation (e.g. advertisements and personalised direct mailing, tickets). To reduce operation costs, local printers have shifted a major share of their operations to China. However, they maintain their Hong Kong offices to receive overseas orders. They are also increasingly making use of high technology to cut costs e.g. overseas buyers could place orders from abroad through broadband connections, given they are confident with Hong Kong printers’ reputation and wanted to maintain their long standing business connections. The clumsy processes of specifying requirements, enquiries, checking the sample draft, amending information, confirming order , etc. could all be finished online. Also, production processes are being automated with computer systems. Printers are increasingly making use of information technology to manage production processes. Product Trends Children’s books are becoming more sophisticated as children do not only read

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Performance of Hong Kong’s Printed Matter

Note: ^ 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.

books, but they may also listen and talk to them, use them to build models or solve puzzles, or even play with soft toys that are housed inside the book. The rising trend of distance learning, where teachers and students are geographically separated, will rely on electronic devices as well as printed matter for information exchanges. Demand for printed matter related to educational purpose is expected to increase. Traditional printed products are required to have innovative designs to meet the needs of various market segments. For example, everyday items such as calendar can take different forms from desktop models to

large 3D wall calendars. Higher printing quality is required, thus 5-colour/7-colour presses are being introduced. Holography is a method of recording and reproducing the complete image of a three-dimensional object. This method has only been used for certain purposes, such as the use on credit cards. But technology improvement has made mass production of holograms possible, and they are being used on various forms of packaging, including labels. Separately, changes in the operation of the distribution sector have also resulted in an increasing demand for bar code printing. As publishers pledged to be

“The industry has undergone a decline since the mid-90’s, owing both to a relocation of activities to mainland China and to the expansion of the Internet and the consequent drop in newspaper and magazine sales. “

more environmentally friendly, printshops are pushed to use more environmentally friendly supplies e.g. recycled paper and synthetic paper (which may affect printing quality and needs adjustment on printers’ part), UV ink and ink-based on beans (which would reduce the use of chemical solvents in cleansing). The chemical-free plate system is introduced, which does not require the use of chemicals. Although the use of FSC or PEFC-certified paper remains relatively small, it is increasing fast. Some printers are also exploring new types of environmental friendly paper such as bamboo paper. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 51 51 HONG

company and industry - food and beverages

food and beverages - company and industry

Offering a taste of Western culture

“Hong Kong manufacturers, such as Garden, Hop Hing and Lam Soon, have been targeting at the mainland market.”

Hong Kong’s food and beverages trading companies play a pivotal role in introducing Western food to mainland consumers, and in assisting smaller producers in Hong Kong and the Chinese mainland in selling overseas.

the UK, and Vitasoy has factories in Shenzhen, Shanghai in China, and the US and Australia.

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, Kwan Hong Yuen Trading, Yu Kee Trading, Sun Shun Fuk, etc., . There is a considerable scale of food and beverage production in Hong Kong. Most of this production is for local consumption. Major products include instant noodles, macaroni, spaghetti, biscuits, pastries and cakes. Others include canning, preserving and processing of seafood, like fish, shrimps, prawns, and crustaceans; manufacture of dairy products like fresh milk, yoghurt and ice cream; seasoning and spirits. With growing Western interests in oriental food and condiments such as soya sauce, soya milk and oyster sauce, there has been increasing demand for Hong Kong’s food exports. Some Hong Kong brands, such as Lee Kum Kee and Vitasoy, have expanded their markets vigorously in both Chinese mainland and overseas markets, and received high recognition. The industry has attracted substantial foreign investment. A notable foreign investor is Nissin from Japan, which produces instant noodles in its factory in Tai Po Industrial Es-

tate, and is now the leader of Hong Kong’s instant noodles market. In 2006, Amoy, a frozen dim sum and sauces producer in Hong Kong, was acquired by Ajinomoto, a Japanese food conglomerate. China is currently the largest market for Hong Kong’s exports of processed food and beverages. Hong Kong manufacturers, such as Garden, Hop Hing and Lam Soon, have been targeting the mainland market. For example, Garden has established joint ventures with Hua Jia in Dongguan, and Gong Yang in Yang Zhou. Hong Kong’s guaranteed food safety gives it an edge over China-made products. Changing lifestyles, rising income, and the growth of supermarkets to replace wet markets have all led to a boom of packaged and convenience food in China. As the number of working women increases, along with growth in the number of elderly and single person households, consumers continue to look for ways to reduce cooking time and grocery shopping time. Pre-made sauce/condiments and frozen/ canned food are popular items among general households. Large Hong Kong manufacturers have expanded their global network and set up offices or factories in major markets. For example, Lee Kum Kee has factories and regional offices in Chinese cities, the US and

Sales Channels Many Hong Kong food and beverage manufacturers deal directly with overseas importers and supermarket chains. However, Hong Kong’s food and beverage trading companies play a pivotal role to introduce western food to mainland consumers through Hong Kong, and to assist smaller producers in Hong Kong and the Chinese mainland in selling overseas. Many Hong Kong brands have successfully entered overseas markets. Garden (biscuits, cakes and candies), Doll (instant noodles), Vitasoy (soft drink), Amoy, Lee Kum Lee (cooking sauces) and Lam Soon (edible oils) are the leading local brands. Many of these brands appoint distributors and/or establish overseas offices to promote overseas sales. These Hong Kong brands have expanded vigorously to the overseas markets and received increased international recognition. For example, Vitasoy Group has spread far beyond Hong Kong and now sells its products in more than 30 markets throughout the world including the US, Canada, China, Europe, Papua New Guinea, Australia, New Zealand, South East Asia, Trinidad, Venezuela and Israel. In most markets, Vitasoy Group has appointed local distributors. 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, Canton Fair in Guangzhou and Style HK Show in various mainland cities. HKTDC also organises from time to time study or matchmaking missions for Hong Kong manufacturers to visit specific markets for establishing new business relations. Industry Trends Health and wellness offerings are increasingly adapted to meet the expectation of consumers on processed food and beverages. In particular, ageing populations and rising health consciousness are creating a receptive environment for products that aid the “maintenance” of health, such as cholesterol-lowering spreads and high calcium milk. While health issues are creating new openings, microwave and packaged foods

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Performance of Hong Kong’s Food and Beverages

Note: ^ 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.

also provide a promising growth for the sake of convenience. At present, policies on GM food labelling vary in different countries and areas. For example, GM food labelling is mandatory in countries such as the EU, Japan, New Zealand, Australia, South Korea and Taiwan. In China, eight categories of GM crops including soya bean, corn, rice, cotton, rapeseed, sweet peppers and tomato, as well as some of their products are required

to be labelled. In the US and Canada, labelling of GM foods is only required when the food is significantly different from its conventional counterpart in terms of composition, nutrition and allergenicity. In Hong Kong, prepackaged food items with 5% of more GM materials in their respective food ingredients are recommended to be labelled. The use of online shopping has become increasing popular for grocery shopping in Asian

“Lee Kum Kee has factories and regional offices in Chinese cities, the US and the UK, and Vitasoy has factories in Shenzhen, Shanghai in China, and the US and Australia.”

countries. In Taiwan and Japan, many working housewives would place their orders via internet to buy food, including fresh fruits and vegetables. On the Chinese mainland, online grocery shopping is getting popular in big cities such as Beijing and Shanghai, shoppers prefer buying packaged/processed foods and snack rather than fresh food items online.

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company and industry - auto parts & accessories

Fancy wheels for the young ones There has been a growing trend, especially among young drivers, to improve their automobiles’ appearance, resulting in greater demand for fancy designs for auto equipment.

lthough the auto parts and accessories industry is not a major industry in Hong Kong, a large variety of auto parts and accessories are exported. Product-wise, car radios are the largest single items amid the strong position of Hong Kong in exporting a wide range of consumer electronics, including audio-visual equipment for in-car entertainment. Hong Kong also exports certain direct parts and accessories for motor vehicles and motorcycles. A wide range of other parts and accessories for automobiles are also on the export list. These include pneumatic tyres, safety glass, rear-view mirrors, locks, car seats, lead-acid batteries, electrical lighting, alarms, navigational equipment, wiring sets, counters and meters, exhaust systems as well as certain parts for use in combustion piston engines. Hong Kong exports a great variety of auto parts and accessories, which cover different industrial sectors, ranging from electrical appliances and electronics to metal and plastics parts or mechanical components. Some products may have exported under categories of electronic products, and me-

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chanical or plastic parts. But relevant trade statistics do not have detailed breakdowns for particular items exclusively used in automobiles. However, figures may also include a small amount of products that are not for use in vehicles, due to the aggregation of some HS codes. One salient feature of Hong Kong’s exports of auto parts and accessories is the dominance of re-exports, which account for about 99% of total exports. This may suggest the importance of Hong Kong as a trading centre and entreport for auto parts, in particular, for the Chinese mainland market. Industry Trends Major players of the global auto industry have shifted production close to their markets to gain better access and to reduce costs. This trend has encouraged parts suppliers to follow suit. As many Asian countries have considered the development of auto industry as one of the major pillars of their economic growth, auto parts suppliers with presence in the region will gain a definite advantage. For example, an increasing number of foreign automobile assemblers have formed joint

“It is estimated that electronics components now accounted for around 35% of the total vehicle components, up from less than 25% in 2000.”

auto parts & accessories - company and industry Performance of Hong Kong’s Auto Parts and Accessories Industry

ventures in the Chinese mainland. With growing pressure on cost and quality, the automotive industry has increasingly adopted advanced information technology in design and manufacturing. Computer aided design has become a popular tool in many industries, and is getting mature in automotive geometric design. Computer -aided manufacturing, which is largely related to numerical control machining, is also being adopted. Other new technology being adopted in the automotive industry includes rapid prototyping and virtual reality. Some auto parts makers are also forming joint ventures to boost their technology know-how as well as expanding the product range. Product Trends Consumers in the developed economies have helped shape the industry’s development, as they are getting more concerned about passenger safety, driving performance and environmental friendliness. These areas have been the focus of innovation by auto parts suppliers. The world, including developing countries such as China, is becoming more concerned about urban pollution, and is paying greater attention to efforts to reduce air pollution and to raise fuel efficiency. More eco-friendly materials are replacing synthetic materials. Product development is a key priority as suppliers need to introduce improvements in performance and appearance regularly. Increasingly, more advanced and newlydeveloped features are incorporated in automobiles. To some manufacturers, building new models with different value-added functions or features is a core strategy. Examples include the wide range of car audio models and advanced electronic technology to help monitor and manage the movement of vehicles. There is an increasing trend of using more electronic components in automobile, including engine control, instruments, safety electronic components, navigational components, security components and other related products. It is estimated that electronics components now accounted for around 35% of the total vehicle components, up from less than 25% in 2000. Telematics, that is the integration of computing, wireless communications and GPS, is expected to be another growth area of product and service development. Among the vast range of accessories,

Note: ^ 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. Trade figures for different product groups are based on HS classification system and maybe different from values under the SITC system.

high-end car audio products, in which Hong Kong is quite competitive, are becoming increasingly popular. Auto radio, with the same advanced features of home audio stereo products, and CD players are popular items. In addition, car security systems which include remote-controlled alarm systems and lock systems also have good market potential in countries with high crime rates. Meanwhile, there is a growing trend, especially among young drivers, to improve their auto-

mobiles’ appearance, resulting in greater demand for fancy designs for audio equipment, alloy and aluminium wheels and wheel covers, seat covers and anti-theft systems, mobile phone holders, etc. Consumers are paying more attention to comfort and convenience. Therefore, vehicles are increasingly equipped with all sorts of accessories ranging from telephones to more advanced items such as global positioning systems. Nowadays, the automotive accessories aisle in any

“One salient feature of Hong Kong’s exports of auto parts and accessories is the dominance of reexports, which account for about 99% of total exports.”

store is filled with a wide range of product selections dedicated to comfort and convenience, and in meeting also every imaginable need while travelling in a vehicle, such as backseat organizers for kids, adjustable cup holders and hands-free cellular phone attachments.

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company and industry - machinery

Hong Kong as the trading centre for machinery The country’s geographic and cultural proximity has given machinery traders and manufacturers an upper hand in penetrating the mainland market.

ong Kong manufactures both non-electrical and electrical machinery and parts. Industrial machinery manufactured by Hong Kong companies mainly include plastic injection moulding machines, blow moulding & extrusion machines, pad printers, textiles dyeing & finishing machines, die-casting, electric discharge machining, wire cutting & other metal working machines, robotics as well as printing and packaging machines. Other more advanced machinery, such as die bonding machines and electronic processing machines, is also produced by Hong Kong. Parts & accessories include bearings, gears, screws, bolts, cutting tools and cooling systems. Direct current motors, electrical transformers, static converters & transformers, and electrical apparatus for circuits are the major export items for electrical machinery and parts. The relative share of electronic components has increased due to the increasing use of servo system, a control system installed in high-end injection moulding machines to ensure performance consistency and to help saving energy, and these parts are normally imported. Major parts are imported from

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Japan and Germany, including mechanical parts like pneumatic & hydraulic mechanisms and compressors, electrical parts like process cooling & heating equipment, and electronic parts like temperature, pressure, distance and time controls. Large manufacturers have started automation in producing standardised parts. Automatic tool handling and computer numerically controlled workstations are used for metal machining. However, to most of the smaller companies, as machines are usually custom-designed for clients, order size for each type of machines is too small to justify automation. Most Hong Kong manufacturers have set up plants in the Chinese mainland to take advantage of the lower production costs or to target the domestic market of the Chinese mainland. The plants in Hong Kong now concentrate on final assembly of the more delicate parts, such as the electronic controls, and to perform quality control inspection, whereas offices are mainly engaged in marketing, accounting, purchasing and engineering development. While the main engineering

machinery - company and industry “...there is an increasing need for manufacturers to develop the distribution network and provide after-sales services.”

Performance of Hong Kong’s Auto Machinery & Parts Exports

design may be drafted in Hong Kong, the engineering details are developed in the Chinese mainland. Besides manufacturing, Hong Kong plays the role of a trading centre for machinery, especially for the mainland market, serving factories of both Hong Kong and mainland manufacturers. Hong Kong has good supportive infrastructure. Its machinery trading companies have long established trading or agency relations with their overseas and southern mainland counterparts. Well-established relationships and responsive after-sales services, combined with geographic and cultural proximity, have given Hong Kong’s machinery traders and manufacturers an upper hand in penetrating the mainland market. Industry Trends An increasing number of machinery manufacturing plants are being relocated to the Chinese mainland. Following the rapid industrial development in the Yangtze River Delta region, certain Hong Kong machinery manufacturers are also taking the move to set up plants in the YRD or even other parts of China. As a result of expanded capacity after Hong Kong manufacturers have set up plants in the Chinese mainland, competition among Hong Kong manufacturers has been increasingly keen. In addition, manufacturers have to compete with other Asian competitors such as Taiwan in the medium-level market, and with Chinese mainland enterprises in the lower-end market. The increasing application of plastic materials in electronic and telecommunications equipment, medical and auto-parts has stimulated the demand for high precision and more sophisticated plastic injection machinery. Since most customers of machinery need to remain competitive, the demand for higher quality and precision machinery and equipment has continued to increase. Such trend will result in more applications of computer technology in design and production. For example, computeraided design, manufacturing and engineering (CAD/CAM/CAE) for machine structure design and analysis can be applied to plastic machine industry for better design for precision equipment in the elimination of vibration and to improve rigidity. In order to explore overseas markets, there is an increasing need for manufacturers to develop the distribution network and

provide after-sales services. At present, the general strategy for manufacturers is to upgrade quality, and some large manufacturers have also improved their operation efficiency. In the case of metal working machines, electronic setting units have been incorporated to control tool and material feeding. Plastic injection moulding machines have introduced programmable controllers and close looped designs for monitoring screw position, injection speed, temperature and pressure to reduce moulding defects. Safety features have also been upgraded, like introducing device to control mould opening.

Product Trends Many Hong Kong manufacturers have tried to improve their product competitiveness by using higher quality components and precision parts, incorporating programmable or computer control features and enhancing safety features. They are looking for opportunities to diversify their products, particularly towards higher quality and performance. Energy saving and environmental-friendly are increasingly important in designing of new machines. In this regard, several developments of machinery and techniques are noteworthy. These include the technique of co-injection for items such as two-colour pads,

“Most Hong Kong manufacturers have set up plants in the Chinese mainland to take advantage of the lower production costs or to target the domestic market of the Chinese mainland.”

metal injection moulding for auto parts and consumer products such as watches, injection compression for very thin parts and quality optical products, and gas-assisted injection for manufacturing items like auto parts. The development of hybrid injection machine combining features of electric and hydraulic machines can have the benefit of precision, energy saving and high compression power. The application of servo system is another development trend which helps save energy.

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company and industry - building and construction

Hong Kong’s building boom The overall gross value of construction work performed by main contractors in the country amounted to a whopping HK $26 million over a period of just three months.

onstruction activities can be broadly be classified into three categories; buildings (residential, commercial, and industrial/ storage/service), structures and facilities (transport, other utilities and plant, environment, and sports and recreation), and non-site activities (decoration, maintenance and repair, etc.) The overall gross value of construction work performed by main contractors in Hong Kong has been rising since 2009. A strong growth of 61.1% in the value of public sector sites drove up the construction activity by 7% to HK$111 billion in 2010. As the ten major infrastructure projects are being rolled out in phases as scheduled, the demand for construction services in Hong Kong, particularly demand from the public sector, is expected to remain high.

HK$10 million (US$1.3 million) in annual gross value of construction work account. They account for 97% of the construction industry. The majority of the small ones act as subcontractors to the large companies, which tend to be main contractors. There are quite a number of very big construction companies that are capable of handling projects requiring sophisticated technology and strong financial background and are expanding their business across the region. There is no formal restriction for entry to the contracting business in Hong Kong. Foreign and local contractors are treated alike, and they can tender public sector projects so long as they have good track record and sufficient financial capability. Many services professionals are involved in the building and construction industry, notably architects, surveyors and engineers.

Services Providers Hong Kong’s construction industry is characterised by a small number of large local contractors, a high level of subcontracting, the presence of many overseas contractors, and a substantial number of companies categorized as developers and contractors.. Most Hong Kong construction companies are small in size, with just less than

Exports Hong Kong’s expertise in timely construction of quality high-rise residential and commercial buildings is internationally renowned and in great demand in overseas markets, especially on the Chinese mainland. The Middle East continues to be a market with high potential for Hong Kong’s construction companies. Government infrastructure plans

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“The overall gross value of construction work performed by main contractors in Hong Kong has been rising since 2009.” as well as stimulus packages provide good support to construction activities in the Gulf region. Saudi Arabia, for example, the government has launched an over US$100 billion-valued stimulus package in 2011, with nearly half of the investment going to the infrastructure development. According to the country’s infrastructure report for the second quarter of 2011, the construction industry is expected to grow with an average annual rate of 4% in 2011-2015. Apart from the ten major infrastructure projects, the HKSAR government has also forged ahead with other works, such as Operation Building Bright and Revitalising Historic Building. In addition, the further development of Hong Kong International Airport, including the construction of the proposed third runway, is under discussion, according to the HKIA’s Master Plan. As a result of these projects, the employment condition in the construction industry has improved significantly, with the unemployment rate in the industry down to recent 4.5% from the post-tsunami peak of 12.8% For the fiscal year ending March 2012, the government estimates that total public spending on infrastructure could go up by 45% YoY to HK$58 billion (US$7 billion) for the fiscal year ending 31 March 2012. Infrastructure projects in the region Many Asian countries need to upgrade their basic infrastructure, such as road networks, port facilities, and housing. The rise of Asian consumerism has also led to rising investment in modernising their retail distribution channels. Shopping malls are springing up in many Asian countries, typically India, Indonesia, the Philippines, Thailand, Malaysia and Vietnam. Hong Kong construction companies are actively seeking opportunities in these markets. Luks Group, for example, engages in cement production and property development in Vietnam. The Middle East is another market which has attracted some Hong Kong companies, with many projects won in many Middle East countries. Hip Hing Construction has won contracts in Abu Dhabi’s carbon-free city Masdar, as well as contracts in Dubai to construct a 72-storey residential building called HHHR Tower together with Al Ahmadiah Contracting & Trading. Paul Y, was awarded the contract worth US$77 million to build the 54-storey Arraya Office Tower in Kuwait. Another Hong Kong construction company, Chun Wo Development,

building and construction - company and industry Industry Data

Source: Quarterly Report of Employment and Vacancies at Construction Sites, Census and Statistics Department

Major indicators of the building and civil engineering industries

Source: Key Statistics on Business Performance and Operating Characteristics of the Building, Construction and Real Estate sectors in 2009

Hong Kong Exports of Construction Services

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

with initial investments in two residential projects in Abu Dhabi, also entered the Middle East market. China’s construction market Rapid urbanisation drives up China’s demand of infrastruc-

ture development. According to China’s 12th Five-Year-Plan, urbanisation is targeted to go up by 4%, reaching 51% in 2015 from 47% in 2010. With the help of the RMB4 trillion stimulus package introduced in the wake of the international

“A strong growth of 61.1% in the value of public sector sites drove up the construction activity by 7% to HK$111 billion in 2010.”

financial crisis in late 2008, infrastructure development on the Chinese mainland gained growth momentum. According to the United Nations, China’s urbanisation rate is projected to reach 53.2% in 2020, and 72.9% in 2050. Infrastructure demand HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 59 59 HONG

company and industry - travel goods and handbags

Travel in comfort and style

“The US was the largest export market for travel goods and handbags in Jan – Sep 2011 (accounting for 26% of total)...”

Consumers nowadays are looking for products that offer fashion and functionality at a reasonable price.

China (13%), Japan (10%) and South Korea (10%). In terms of product categories, exports of travel goods and handbags both increased by 14%.

Sales Channels Many of Hong Kong’s travel goods and handbags are exported under OEM arrangements with overseas manufacturers. Buyers usually provide product specifications and designs. Yet, Hong Kong manufacturers are increasingly involved in product design and development, engineering, modelling, tooling and quality control. Apart from producing for the OEM customers, some Hong Kong manufacturers also have their own R&D undertakings to develop new models and produce their own branded products. However, due to the difficulties of reaching individual sellers, most of the local manufacturers prefer selling to overseas importers and distributors, who in turn market to the wholesalers and retailers. Apart from online shopping, retail channels of distribution of the travel goods and handbags industry primarily include department and specialty stores, national and mass merchant retailers, warehouse clubs, and company-owned retail stores. In order to establish connections and explore market opportunities, travel goods and handbags manufacturers and traders can join trade fair missions organised by the (HKTDC) Hong Kong Trade Development Council and to participate in various international trade fairs such as Style Hong Kong, Tokyo International Gift Show and JFW International Fashion Fair in Tokyo. HKTDC also organises from time to time study or match-making missions for Hong Kong manufacturers, in particular those OEM manufacturers, to visit specific markets for exploring business potential and establishing new business relations.

ong Kong companies export a wide range of travel goods and handbags, which accounted for 46.7% and 53.3% respectively. Major products include leather handbags (30%), cases for binoculars, cameras, musical instruments and spectacles (27%), handbags with plastics/textiles sheeting (24%) and wallets and purses (15%). Many Hong Kong manufactures have relocated their production base to the Chinese mainland to capitalise on the cheaper wages and rents. Domestic exports now account for only a very small share of total exports of travel goods and handbags. With a good cluster of supporting industries, the competitiveness of Hong Kong exports in terms of productivity, quality, reliability and delivery has been enhanced. Many handbags and luggage fittings, like clips and buckles, are supplied by nearby factories specialising in metal and plastic parts. Some other Hong Kong and mainland manufacturers are vertically integrated, which further enhances quality control and flexibility in production and creates synergy.

The worldwide luggage market encompasses a wide range of products with differences in product quality and prices. At one end of the market are high-quality, full-featured products that have prestigious brand names, higher prices and selective distribution. Beneath this ‘‘luxury’’ market is a broad middle market in which products are differentiated by features, brand name and price. Within this market, sales are largest at mid and low product price levels. Product differentiation decreases and breadth of distribution increases at lower price levels. At the lower end of the luggage market, unbranded or private label products with few differentiating features are sold in significant volumes and at low margins, competing primarily on the basis of price. During the first three quarters of 2011, the value of Hong Kong’s total exports of travel goods and handbags increased by 14% and reached HK$35.2 billion. The US was the largest export market for travel goods and handbags in Jan – Sep 2011 (accounting for 26% of total), followed by the EU (22%),

Industry Trends Sales of travel goods are largely influenced by the number of travels people undertake. With the rising income and easy access to travel visa/permit, Chinese tourists are the fastest-growing group of international tourists in the world. Due to closer economic ties with the rest of the world and rising affluence, more Chinese people are planning to travel overseas for either business or leisure purposes. Yet, most of them are looking for value-for-money luggage and other travel 60 60 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

travel goods and handbags - company and industry Performance of Hong Kong’s of Travel Goods and Handbags Exports

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

goods, which offer a huge market potential for Hong Kong manufacturers. Product Trends Today’s travellers are not only seeking increased comfort and convenience while travelling, but are searching for products that also offer fashion and functionality. According to the Travel Goods Association in the US, increasingly popular 20-inch suitcase and carry-on luggage in different sizes are in demand. In addition, many new fabrics and materials have been introduced, including micro fleece grid fabric, crinkle nylon/ polyester blends, suede skin etc. Nowadays, many consumers preferred cheaper and more casual softside bags and luggage, the production of which is labour intensive, in particular for hybrid luggage, instead of hardside luggage, the production of which is capital intensive. As electronic gadgets are be-

coming more popular, demand for cases for electronic gadgets such as iPad, Blackberry and mobile phones is increasing significantly. Besides the consumer market, many companies will order them as corporate gifts for their clients, creating a new market niche for the industry. With more women in the workplace, many of the new travel goods are being specifically designed for women, including portfolios, computer bags and wheeled totes for female professionals. In addition, there are new luggage lines that feature special sections for toiletries, cosmetics, shoes and other items that enable female travellers to travel more conveniently. Meanwhile, ergonomicallydesigned items continue to be in high-demand, with new items including luggage with handle systems that can be alternated for left-handed and right-handed people; products

“During the first three quarters of 2011, the value of Hong Kong’s total exports of travel goods and handbags increased by 14% and reached HK$35.2 billion.”

with weight-bearing, pushbutton retractable handles and four swivel wheels that allow bags to pivot 360 degrees; luggage with a shock-absorbing wheel system that adjusts to surface changes for smooth rolling; and a collection that features a removable wheel and handle system for numerous travel options etc. For handbags, styles and colours are closely aligned with the trend in the fashion industry. Some of the current trends in handbag design include: handbags made out of lamb/ deer skin, denim and wool that almost imitate clothing, use of unconventional materials like canvas, emphasis on delicacy in details, leather bowling bags, handbags made of faux fur and vintage design with beading and embellishment. As handbags become accessories to fashion, their life cycles have shortened, and new items are introduced all year round. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 61 61 HONG

company and industry - leather consumer goods

leather consumer goods - company and industry

Rebounding sales of luxury leather goods

“The US is Hong Kong’s leading export destination for leather consumer goods, representing 31% of the total during the first five months of 2011.”

Consumers are starting to loosen their once-tightened belts and, to some extent, have resumed buying of high-end leather consumer products, resulting to many famous brands recording a leap in profits.

decreased slightly by 1%, whereas exports to the EU soared by 16%, with three major member states, namely Italy, Germany and the Netherlands up 27%, 5% and 41% respectively. Despite the earthquake and tsunami in March, exports to Japan experienced a climb of 26% in the first five months of this year, whereas sales to the Chinese mainland and South Korea surged encouragingly by 122% and 72%, respectively. Product-wise, exports of leather footwear, which takes up about 60% of all exports of leather consumer goods, experienced a growth of 9% during January-May 2011, while sales of handbags, trunks and suitcases were up 57%. Furthermore, exports of leather apparel and gloves, mittens and mitts recorded respective increases of 27% and 19%, while other clothing accessories gained 25%.

hile the presence of manufacturing establishments of leather consumer goods is insignificant, the latest official statistics show that there was a workforce of 40 people. 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, leaving only limited capacity in Hong Kong to meet small orders. Some manufacturers have invested heavily in advanced automated machinery and operation systems to streamline the whole production process. Many Hong Kong companies are engaged in the trading of leather consumer goods. At the end of 2010, the number of establishments involved in the import-export trade of leather consumer goods amounted to 2,510. Direct workforce employed by these establishments totalled 11,190. 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 Mirabell, Staccato and Belle, take strong initiatives in developing the mainland market. Performance of Hong Kong’s Exports of Leather Consumer Goods After mounting a 25% increase in 2010, Hong Kong’s exports of leather consumer goods soared by another 22% year-on-year to HK$18.1 billion in the first five months of 2011. In the process, re-exports, accounting for almost all exports of leather consumer goods from Hong Kong, grew in line with the total exports by 22%, while domestic exports slid by 15%. The US is Hong Kong’s leading export destination for leather consumer goods, representing 31% of the total during the first five months of 2011. Following the US are the EU and the Chinese mainland, with respective shares of 18% and 13% during January-May 2011. In terms of performance during the first five months of this year, Hong Kong’s exports of leather consumer goods to the US

Sales Channels With an aim to foster 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, sponsored by Hong Kong Trade Development Council, organises the Hong Kong Footwear Design Competition every year. 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), China (Dalian) International Garment & Textile Fair and MOTEXHA (Dubai). 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. Leather industry is highly specialised and vertically integrated. Relocation may also provide the advantage of being more accessible to raw materials and in facilitating the retailing and distribution. In view of soaring production costs, manufacturers have further invested

62 62 || HONG HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012

Performance of Hong Kong’s of Leather Consumer Goods Exports

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

heavily in advanced automated machinery and operation systems to streamline the whole production process. On the other hand, 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. Environmental concerns also pervade the industry. Since leather processing usually involves production technology and chemicals that cause environmental pollution, the indus-

try is considered as one of the most polluting industries, and the Cleaner Production Promotion Law requiring manufacturers on the mainland to improve their production processes and product designs for better environmental protection is imposed. Following the imposition of the ‘Discharge Standards of Pollutants for Leather and Fur Making Industry’ to reduce the total discharge volume of pollutants by 11% within five years, more stringent environmental policies are expected. Product Trends Recovering from the global

“ For 2011, the market is being flooded with patent black leather handbags, opposite to the return of seventies style leather handbags in classic brown in 2010. “Biodegradable” and “ecofriendly” products are grabbing the attention of the leather consumer goods industry.”

economic crisis, consumers are starting to loosen their oncetightened belts and, to some extent, have resumed buying highend leather consumer products. Many luxury leather retailers have noted a huge sales rebound over the past 12 months, with many famous brands recording a leap in profits. As leather consumer goods are increasingly viewed as fashion accessories, the trend emanating from smart over clean chic, neo sports up to romanticism, is expected to gather pace in the market as recession fades away. Plain, clear and versatile are also new attributes to fashion. Furthermore, there is a trend to combine the elegance and grace of leather in formal wear, giving rise to greater demand for leather shoes and bags alongside with the rise of feminism. With many people becoming more willing to spend on stylish and luxurious handbags, leather vogue handbags are drawing more and more attention in the fashion world, and have been considered a wind vane reflecting the current trends of the season and forming the vogue mark in people’s wardrobe. For 2011, the market is being flooded with patent black leather handbags, opposite to the return of seventies style leather handbags in classic brown in 2010. “Biodegradable” and “ecofriendly” products are grabbing the attention of the leather consumer goods industry. For instance, many Western countries have made stringent requirements on chrome-tanned leather and its products as chromium salts, the chemical used in the tanning process, have the potential hazard of causing cellular damage. Some infant shoes importers are demanding chrome-free leather shoes, while leather products manufactured with more environmentally-sensitive approaches using wax, vegetable dyes, etc, are becoming increasingly popular. HONG KONG KONG BUSINESS BUSINESS ANNUAL ANNUAL 2012 2012 || 63 63 HONG

numbers | indicators

Average Monthly Salaries of Selected Occupations

64 | HONG KONG BUSINESS ANNUAL 2012

numbers | indicators

Average Wage Rates for Employees up to Supervisory Level (Excluding Managerial and Professional Employees) by Broad Occupational Group by

HONG KONG BUSINESS ANNUAL 2012 | 1

2 | HONG KONG BUSINESS ANNUAL 2012

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numbers | indicators

Statistics on Labour Force, Unemployment and Underemployment

Vital Events

66 | HONG KONG BUSINESS ANNUAL 2012

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4 | HONG KONG BUSINESS ANNUAL 2012

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numbers | indicators

Number of Establishments, Persons Engaged and Vacancies (other than those in the Civil Service) Analysed Industry Section B: Mining and quarrying Establishments

Real Estate Projects Statistics

Year 2010 2011

Persons engaged

Vacancies

Month Sep

Year-on-year % change

-25.0

-8.4

Dec

0.0

-4.6

Mar

0.0

-29.0

Jun

-33.3

-27.4

***

Sep

-33.3

-18.4

***

Industry Section C: Manufacturing Establishments

Producer Price Indices for Industrial Sector by Selected Industry Grouping (Year 2008 = 100)

Year 2010 2011

Persons engaged

Vacancies

Month Sep

Year-on-year % change

12 357

-5.6

117 686

-5.6

1 591

30.8

Dec

12 441

-3.7

117 590

-5.9

1 567

Mar

12 281

-3.5

115 135

-6.1

2 361

52.7

Jun

12 296

-1.7

113 816

-5

2 164

49.8

Sep

12 109

-2.0

111 534

-5.2

2 306

44.9

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

Year 2010 2011

Persons engaged

Vacancies

Month Sep

Year-on-year % change

327

3.5

11 194

7.5

125

Dec

324

3.8

11 075

1.9

93.5

Mar

337

9.1

10 904

46.2

Jun

326

-0.3

11 020

2.5

***

Sep

322

-1.5

10 973

-2

***

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

Year 2010 2011

68 | HONG KONG BUSINESS ANNUAL 2012

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Persons engaged

Vacancies

Month Sep

Year-on-year % change

1 168

18.3

56 502

17.8

300

Dec

1 101

55 425

4.3

126.7

Mar

1 053

4.7

58 807

9.1

149

217

Jun

1 062

-1.8

58 609

5.6

302

411.9

Sep

1 143

-2.1

63 728

12.8

534

641.7

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numbers | indicators

numbers | indicators Industry Section K : Financing and insurance

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

Year 2010 2011

Persons engaged

Establishments

Vacancies

Month Sep

Year-on-year % change

115 491

5.8

563 704

7 015

55.9

Dec

116 530

4.1

564 881

0.4

6 487

34.8

Year 2010 2011

18 479

9.6

193 086

Dec

19 026

8.3

196 413

5.8

4 429

52.7

Mar

19 456

9.8

198 643

6.4

3 917

5.8

8.3

202 835

6.3

4 866

8.4

206 635

4 755

-8.8

117 805

564 955

0.1

8 294

26.5

Jun

117 517

2.2

560 799

-0.2

8 267

35.7

Jun

19 655

10.4

Sep

20 039

117 859

2.1

564 343

0.1

7 743

Year 2010 2011

Persons engaged

Establishments

Vacancies

Month Sep

Year-on-year % change

60 397

4.1

242 652

2.5

5 564

Dec

61 713

3.9

248 349

3.6

4 936

7.9

Year-on-year % change

Year 2010 2011

Persons engaged

Vacancies

Year-on-year % change

12 367

7.7

110 241

2.9

2 973

28.6

Dec

12 942

7.9

112 542

3.8

2 603

53.8

Mar

13 497

12.3

116 784

6.5

3 147

28.2

63 151

5.1

251 348

4.5

6 028

23.9

5.3

252 001

4.7

5 197

18.2

Jun

13 713

12.7

118 781

7.9

3 128

10.3

Sep

13 911

12.5

119 995

8.8

2 884

-3

63 482

5.1

252 935

4.2

6 135

Industry Sections M & N : Professional and business services

Persons engaged

Establishments

Vacancies

Month Sep

Year-on-year % change

9 078

159 984

1.4

2 148

87.8

Dec

9 484

7.7

161 544

1.4

2 086

43.2

Year-on-year % change

Year 2010 2011

Persons engaged

Vacancies

Month Sep

Year-on-year % change

36 038

6.7

308 923

4.9

4 733

-5.2

Dec

36 899

7.2

314 344

5 623

39.3

Mar

37 856

8.4

317 445

5.8

7 026

24.6

Mar

9 661

6.5

162 053

1.6

2 535

52.4

Jun

9 741

6.7

163 086

1.7

3 011

51.8

Jun

38 155

7.1

320 712

5.6

6 571

13.5

13.2

Sep

38 758

7.5

325 887

5.5

6 674

41.0

9 744

7.3

Establishments

163 775

2.4

2 431

Industry Sections P - S : Social and personal services

Persons engaged

Establishments

Vacancies

Month Sep

Year-on-year % change

15 194

6.8

247 015

2.8

7 279

2.9

Dec

15 911

8.4

255 288

3.3

7 814

65.4

Year-on-year % change

Year 2010 2011

Persons engaged

Vacancies

Month Sep

Year-on-year % change

37 762

429 163

2.9

11 824

45.8

Dec

39 018

8.5

432 812

2.4

10 377

34.6

Mar

40 065

436 239

13 249

19.9

Mar

16 597

9.9

262 972

6.3

7 733

Jun

16 801

11.4

266 095

7.5

8 119

22.4

Jun

40 590

8.1

438 734

2.8

12 736

26.5

9.7

Sep

40 930

8.4

440 643

2.7

13 901

17.6

Sep

16 817

10.7

266 313

7.8

7 988

All industry sections covered in the survey

Industry Section J : Information and communications Establishments

2011

36.6

Month Sep

Industry Section I : Accommodation and food services

Year 2010

5 215

63 318

Sep

2011

Jun

Establishments

Year 2010

Year-on-year % change

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

2011

Mar Sep

Year 2010

Year-on-year % change

Industry Section L : Real estate

Part of Industry Section G : Retail Establishments

Vacancies

Month Sep

Mar Sep

Persons engaged

Year-on-year % change

Persons engaged

Establishments

Vacancies

Month Sep

Year-on-year % change

9 788

12.3

88 443

0.6

2 602

92.3

Dec

9 958

10.3

88 894

1.2

2 084

Year 2010 2011

Month Sep

Persons engaged

Year-on-year % change

328 449

Vacancies

Year-on-year % change

5.9

2 528 680

2.6

51 088

31.7

Dec

335 350

5.5

2 559 240

2.2

48 137

39.3

Mar

342 123

5.9

2 584 652

57 188

24.4

Mar

10 361

12.5

89 301

2.1

2 673

19.1

Jun

10 477

11.1

91 059

2 192

-4.8

Jun

343 653

5.4

2 597 616

3.2

56 645

25.3

-13.9

Sep

345 733

5.3

2 618 495

3.6

57 688

12.9

Sep

10 617

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8.5

91 663

3.6

2 240

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ABN AMRO

PRIVATE BANKING This page clock-wise: ABN AMRO’s headquarters at Gustav Mahlerlands in the Netherlands, Partnership with INSEAD, ABN AMRO exterior Opposite Page: Arjan de Boer, Executive Director, Head of ABN AMRO Private Banking for North Asia

FAST FACTS • Long-standing presence in Asia with a legacy dating back to 1826 • An international wealth

PHILOSOPHY

ABN AMRO’s core values are: Trusted, Professional and Ambitious. By this we aim to be trusted long term partners of our clients, highly professional in delivering our services and ambitious as an organisation so that we can be the best in our industry and do everything possible to deliver the right service to the right clients at the right time. These values form the basis of our corporate culture. It is also our ethical compass to becoming a bank that always puts its clients first and create sustainable long-term value for all of our stakeholders – clients, shareholders, employees and society-at-large.

management division of ABN AMRO Bank N.V., an independent bank

ABN AMRO PRIVATE BANKING IS ‘HIGHLY COMMENDED’ IN BEST PRIVATE BANK IN EUROPE AWARD

under the supervision of the Dutch Central Bank • Global footprint spanning 12 markets worldwide with over 4,000 professionals employed • Sizeable establishment encompassing over 120,000 high net worth

BN AMRO Private Banking was highly commended in October 2011 in the ‘Best Private Bank in Europe’ category of the Global Private Banking Awards 2011 organised by The Banker and Professional Wealth Management magazines, part of the Financial Times Group. The awards evaluate private banks for their ability to deliver trusted advice, due diligence and risk management, as well as design efficient asset allocation strategies and bespoke portfolio solutions. Jeroen Rijpkema, Chief executive officer of ABN AMRO Private Banking, said: “This award is first and foremost a tribute to the long-term relationships we have with so many private banking clients across Europe and to the ongoing commitment of our staff. ABN AMRO Private Banking comprises some of the oldest and most trusted private banking brands in Europe”. The judges were impressed by the bank’s asset growth relative to its peer group, pan-European ambition and clear strategic plan. The bank was also acclaimed for its high conviction and cross-border investment ideas, hedge fund capabilities and socially responsible investment tools. ABN AMRO Private

78 | HONG KONG BUSINESS ANNUAL 2012

clients with more than

Banking has one of the largest research and strategy teams of any private bank, with 40 analysts covering all major asset classes. Here in Hong Kong, Managing Director Arjan de Boer, Head of ABN AMRO Private Banking for North Asia, said: “The Highly Commended ‘Best Private Bank in Europe Award’ together with our ‘Asiamoney Polls 2011 award’, “Ranked Amongst the Top 10 Best Global Private Banks in Asia” (in the USD1m to 5m category) is very good news for the entire organisation. The criteria for these awards come from comments and opinions of both clients and peers.” Recently in December 2011, Standard & Poor’s also upgraded ABN AMRO to A+ (from A). This upgrading in the present volatile environment where many banks ratings are being reviewed and even downgraded demonstrates the market’s confidence in ABN AMRO’s strong capital position and balance sheet. Obviously pleased with all the good news, De Boer said, “Asia is one of our fastest growing markets and our North Asia market is coming up nicely with significant revenues in excess of HK1billion. We are also very happy to have recently received approval from the China Banking Regulatory Commission (CBRC) to

re-open a representative office in Shanghai. In addition, there are also plans in the pipeline to apply for a full banking license in India. It has been a hard work, but we have a strong growth ambition in Asia and therefore we remain committed to this region and aim to capitalize on the opportunities for growth.” A Dutch institution, ABN AMRO was the first foreign bank in Asia, starting in Jakarta, Indonesia, or, as it was then known, Batavia, dating back to 1824. According to de Boer, “This 200 year history in Asia allows the bank to understand the needs of Asian high net worth clients very well. Having a risk-adverse, conservative Dutch/European banking style has allowed ABN AMRO to weather the recent market turmoil together with its long term clients”. De Boer said, “Hong Kong’s high net worth investors are very savvy and are more inclined to take advice only from a trusted advisor who is sufficiently well-versed with product knowledge and the necessary skills to manage their portfolios. We have always tailored our client’s portfolios to each individual’s situation and we insist that our staff be well educated about the entire private banking universe. “This is why we are continuing our own investment

in our people’s learning and development with a new global initiative in partnership with INSEAD, one of the world’s highly respected institutions. We are sending all our private bankers for an ABN AMRO INSEAD customised certification programme, to ensure that all of our private banking staff can offer the same high level of advice everywhere in Asia. “This represents a significant outlay of resources. ABN AMRO is the only private bank with this customised programme with INSEAD and it demonstrates the Bank’s commitment to deliver high quality and consistent service to its clients, de Boer explained. Focussing on high net worth and ultra high net worth individuals, the bank has much to offer clients, such as a global footprint spanning 10 countries and nearly 4,000 employees. The company boasts a network of experienced professionals including research analysts, economists, portfolio managers, estate planning experts and product specialists.” Each client has a dedicated client service team comprising of private bankers, investment advisors and assistant private bankers.

USD200 billion of assets under management * • Ranked Top 10 of Best Global Private Bank in Asia ** • Highly Commended in Best Private Bank in Europe Award ***

* AUM as of November 2011 ** Asia Money Polls 2011, voted by HNWI with USD 1-5 million of AUM *** Global Private Banking Awards 2011

HONG KONG BUSINESS ANNUAL 2012 | 79

LIFE INSURANCE

AGEAS INSURANCE COMPANY (ASIA) LIMITED

This page clock-wise: Ageas Hong Kong is a longterm supporter of the Matilda Sedan Chair Race; Ageas is named Company of the Year (Insurance) in the prestigious SCMP/ IFPHK Financial Planner Awards 2011; The facts about future financial needs are just a few clicks away with the free and easy-touse Ageas iPhone apps Opposite page: Mr Stuart Fraser, Ageas Hong Kong’s CEO, attributes the company’s responsiveness to market needs as being a key element of its solid foundations

FAST FACTS • The financial status of Ageas Hong Kong

PHILOSOPHY

Driven by an ambition to achieve and excel by nurturing lasting relationships, Ageas is committed to becoming a leading financial services provider in Hong Kong.

RESPONDING TO MARKET DEMAND, CUSTOMER-NEEDS-DRIVEN LIFE INSURER AGEAS ATTRIBUTES ITS SUCCESS TO QUALITY, CUSTOMISED PRODUCTS AND SERVICES

he CEO of Ageas Insurance Company (Asia) Limited (Ageas Hong Kong), Stuart Fraser, says: “The need to meet evolving challenges in the market is driving Ageas Hong Kong to satisfy our customers’ needs by providing them with comprehensive, high-quality personalised products and excellent services.” One of Hong Kong’s largest life insurance companies, Ageas Hong Kong is a wholly-owned subsidiary of Ageas, an international insurance group with a heritage dating back more than 180 years. Headquartered in Belgium and Netherlands, Ageas is among Europe’s top 20 insurance companies, with 13,000 employees working throughout Europe and Asia. Combining global strength with local flexibility, the company offers the Hong Kong market a diversity of financial protection products and wealth management services. “Our professionalism is recognised by the many accolades the company has received recently”, Fraser continues. “Besides the High-Flyers Award, they include being named Company of the Year (Insurance) in the prestigious SCMP/IFPHK Financial Planner Awards 2011. Our financial planners were also the Industry Winners for 2009 and 2011 in the same awards.” 80 | HONG KONG BUSINESS ANNUAL 2012

Innovative and comprehensive one-stop financial planning solutions Ageas Hong Kong treasures the long-term relationships it has with its customers, and it promotes them with a holistic approach to financial planning. This is based on three pillars: “Protection”, “Savings” and “Investment”. The concept enables Ageas customers to take good financial care of themselves at different stages of their lives. Ageas Hong Kong also upholds its commitment to innovation by offering a complete range of diversified and competitive products that deliver tailor-made solutions for their individual needs. “In 2011, Ageas Hong Kong became one of the pioneer companies authorised to provide Capital Investment Entrant Scheme (CIES) products – products designed for those wishing to apply for the right of abode in Hong Kong as investors,” Fraser notes. “The launch of our product – only the second of its kind – displays our visionary and forward-looking mindset.” “The Renminbi (RMB) has appreciated substantially in recent years. The market therefore has a huge demand for RMB-denominated products. Against this backdrop, we have launched our first RMB product, the ‘Dynasty’ RMB Endowment Plan. With premiums

is confirmed by a number of global rating agencies, namely : A- (Excellent) by A. M. Best, A- by Fitch Ratings, and Baa1 by Moody’s. • Ageas Hong Kong has more than 2,400

starting as low as RMB9,200 and a premium payment period of just 2 years, this plan is proving popular. Customers will receive a guaranteed return of 109.3 percent of the total premiums they have paid and the benefit of potential RMB appreciation when the plan matures after 5 years. This product suits Hongkongers’ demand for effective investments.” Ageas Hong Kong also proactively demonstrates the depth of its concern for its customers’ well-being. Referring to health protection, Fraser says: “A survey found that one in every 10 Hong Kong residents suffers from diabetes. The company has therefore been quick off the mark in responding to their needs by being the first insurer to introduce a Diabetes Mellitus Benefit under the “Forever Health” Critical Illness Insurance Plan. Leading the market in IT development Ageas Hong Kong is actively expanding its business and the reach of its marketing and promotion activities by leveraging on opportunities provided by advancements in IT. For instance, it was the first insurance company to start using Google Apps. The company has launched 3 free iPhone insurance Apps, “We Love the Future”, “Love Your Kid’s Future” and “We Love the Future: Your Earning Power Protection Formula”. Their easy-to-use and user-friendly design interface means users can easily get an instant and precise overview of the

funds they will require for their retirement, preparing for their children’s education, and any unforeseen circumstances they encounter in life. The company is certainly forward thinking. It was the first insurer in Hong Kong to use augmented-reality (AR) technology in its advertising. Smartphone users can download “U tie” and use it to capture key visuals in Ageas ads on the MTR trackside. From there, they are directed to the latest promotional videos. Caring for the community Ageas Hong Kong actively gives back to the community. “We are committed to shouldering our corporate responsibility in line with our corporate motto: ‘We love the future’,” says Fraser. “To this end, we have been a presenting sponsor of Kitchee Escola since 2008. This school provides completely free football training to aspiring young footballers aged 6 to 14.” Ageas Hong Kong has also become the title sponsor of the HKPGA Championships for 3 years, allowing this high-profile annual golf event to be revived after being suspended for 6 years. Moreover, the company was the major sponsor of Hong Kong League winners Kitchee’s exhibition football match against Spanish League (La Liga) Villarreal C.F. It was the only large-scale sports event staged in the city that raised funds for victims of the Japanese earthquake, tsunami and nuclear disaster.

professionally trained and highly skilled consultants. Their calibre is reflected by the fact that 6 percent of them are members of the Million Dollar Round Table, the premier international association for financial professionals. • The company has been awarded “Caring Company” logo for the past nine consecutive years by The Hong Kong Council of Social Service.

HONG KONG BUSINESS ANNUAL 2012 | 81

AIR PACIFIC

FIJI’S INTERNATIONAL AIRLINE This page clock-wise: David H. Pflieger in front of Air Pacific plane, outstanding facilities enjoyed by children and adults in Air Pacific, world-class service delivered by plane crews.

AIR PACIFIC: FIJI’S NATIONAL CARRIER SOARS HIGH ABROAD

PHILOSOPHY

Air Pacific is well on its way towards reaching the goal of becoming the preferred airline of the South Pacific. Staff training, new aircraft, more destinations and free on-board entertainment, great food and drinks, and stellar service from our naturally friendly staff makes Air Pacific one of the most pleasant flying experiences in the world. We’ve been successfully flying Fiji for 60 years, and we’re setting ourselves for another 60.

ir Pacific, Fiji’s national carrier, started operations on September 1, 1951, and is co-owned by the Fiji Government (51%), Qantas Airways (46%) and Air New Zealand (1%). Together with our subsidiary airline Pacific Sun, we fly more than 360 flights per week, carrying 1.1 million passengers internationally and domestically to Hong Kong, Australia, New Zealand, United States, Samoa, Tonga, Tuvalu, Kiribati, Vanuatu and Solomon Islands. Air Pacific and Pacific Sun operate a combined fleet of 12 aircraft - two B747s, one B767, four B737s, two ATR42s and four Twin Otters. These aircraft are all maintained by highly trained and certified engineers at our base at Nadi International Airport, while heavy aircraft maintenance is performed by Singapore Airlines Engineering Corporation (SIAEC) or HAECO, formerly Cathay Pacific Engineering Corporation. Our Managing Director and CEO is David Pflieger, who joined Air Pacific in May 2010 from award winning Virgin America in the USA. In addition to running Air Pacific’s fleet of B747, B767, and B737 aircraft and its team of almost 800 employees, Dave is a member of the Board of Directors of Pacific Sun, Fiji’s domestic airline, and also serves as the Chairman of the Board of Tourism Fiji, Fiji’s national tourism organisation. Mr. Pflieger has over 25 years of experience in the airline and aviation industry and has held various officer and director positions in Operations, Safety, and Legal at Delta Air Lines, Song (Delta’s Low Cost Carrier), and Virgin America in the U.S., where he was a senior vice president and founding officer. Pflieger said, “Air Pacific recruits highly qualified

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FAST FACTS

David H Pflieger, Managing Director / Chief Executive Officer

and capable professionals across its team of almost 800 employees from Fiji and abroad. Our engineers and pilots are trained by Boeing, Qantas and Air New Zealand to perform work on the various aircraft in our fleet. Our pilots go through extensive six month skills refresher and simulator training evaluation, which prepare them to handle both normal and emergency situations. Air Pacific is currently revitalising itself to become a better airline for its customers and the people of Fiji. “We’ve implemented much of our revitalisation plan in the last few months, beginning with the induction of a new B737 aircraft which will allow us to increase frequencies and make travelling much more convenient on our Australian routes”, Pflieger added. With great enthusiasm, he explained, “Other schedule improvements include the redeployment of our B747-400 aircraft to Hong Kong, another important market in our revitalisation plan. We also just announced an order to purchase three brand new Airbus A330-200 aircraft, the first of which is scheduled to arrive in Nadi in March 2013. These new planes will dramatically improve the comfort and experience of our customers on flights to/from Fiji, as we continue to work at becoming the preferred airline of the South Pacific. Air Pacific started flights to Hong Kong in December 2009 after we ceased operations to Narita, Japan earlier that year”. He said to support Air Pacific’s expansion in the region, the airline has set-up a new office in Hong Kong to manage strategic marketing and sales partnership in Hong Kong, China and the South-east Asia. We have also undertaken joint marketing

campaigns with Fiji’s Tourism Board (Tourism Fiji) and other partners to increase traffic and numbers of Chinese tourists to Fiji. Hong Kong is an ideal strategic location for expanding and capturing the growing opportunities in the region. Air Pacific offers customers two great travel class options when flying to or from destinations. Tabua Class is equivalent to business class, offering discerning travellers a unique and exclusive class of travel. On the ground, customers who choose to fly Tabua Class can enjoy business class check-in, increased baggage allowance, express airport lanes and access to great lounge facilities at most airports. In the air, Tabua Class customers are served a three-course meal, a range of fine wines, champagne, liqueurs and a selection of cheeses. With individual inflight entertainment screens, customers have a choice of up to 21 channels of entertainment on the Boeing 747 aircraft and up to 10 movies on our other aircraft. Pacific Voyager is economy class. With naturally friendly cabin crew and elegant, yet relaxed cabin décor, guests are welcome to Fiji when they get on board and can sit back and enjoy the hospitality of one of the world’s friendliest people. There are a great range of entertainment options in several languages to choose from onboard Air Pacific international services. From the classics to comedies, customers can enjoy the broad range of blockbuster

movies and TV programs, and there’s a dedicated channel for children. Pflieger said, “We’re proud to represent one of the most welcoming cultures in the world, and are Fiji’s ambassador to the world. And with easy connections through Nadi to the Pacific island countries of Kiribati, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu, we have the South Pacific well and truly covered. We are well on our way towards reaching our goal of becoming the preferred airline of the South Pacific”. Air Pacific has also won numerous awards in Fiji and is recognised as an integral part of the country’s critical tourism industry. The company employs almost 800 employees, earns revenues of F$600 million, and directly contributes a significant portion of the country’s Gross Domestic Product (GDP) and carries nearly 70% of all visitors to Fiji. In November 2011, Air Pacific was ranked among the Top 10 “Small Airlines” of the world in Condé Nast Traveler’s 2011 Readers’ Choice Awards. After nearly 29,000 travel magazine readers expressed their opinions in the annual “Best in the World” survey, the magazine awarded Air Pacific a seventh place ranking among the world’s best small carriers, earning it a spot among readers’ picks of the Top 30 Airlines in the world. In December 2010, for the third year in a row, Air Pacific was voted by the readers of Global Traveler magazine as the “Best Airline in the South Pacific” in the seventh annual award survey for 2010.

• Air Pacific, Fiji’s national carrier, started operations on September 1, 1951, and is co-owned by the Fiji Government (51%), Qantas Airways (46%) and Air New Zealand (1%). Together with our subsidiary airline Pacific Sun, we fly more than 360 flights per week, carrying 1.1 million passengers internationally and domestically to Hong Kong, Australia, New Zealand, United States, Samoa, Tonga, Tuvalu, Kiribati, Vanuatu and Solomon Islands. • Air Pacific and Pacific Sun operate a combined fleet of 12 aircraft - two B747s, one B767, four B737s, two ATR42s and four Twin Otters. These aircraft are all maintained by highly trained and certified engineers at our base at Nadi International Airport, while heavy aircraft maintenance is performed by Singapore Airlines Engineering Corporation (SIAEC) or HAECO, formerly Cathy Pacific Engineering Corporation.

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FINANCIAL PLANNING

ALTRUIST FINANCIAL GROUP

This page clock-wise: Altruist joined the City Dash 2011 to raise funds for the voluntary organizations; Altruist participated in Walk for Millions; Altruist earned FamilyFriendly Employer Award 2011. Opposite page: Mr. Glenn Turner- Chief Operation Officer of Altruist

FAST FACTS

PHILOSOPHY Altruism for 10 years. Listen to the voice of customers; serve customers with integrity and professionalism; aim to provide a fruit ful life to customers; concern for not only the wealth of o every individual, what he or she aspires customers, but also in life is an important element of their their health and professional and personal existence. wisdom, and undertake But to reach their goals and fulfil their regular voluntary work aspirations, they ought to have financial security, for society. in good times and in challenging times.

FINANCIAL SOLUTIONS REFLECT IS CARING APPROACH AND UNDERPIN GOALS OF LIFE

One company understands the importance of a financial foundation that underpins those dreams better than most. Altruist Financial Group Limited (Altruist), founded by President Mr Albert Lam, a pioneer in transforming an insurance agency to an independent financial advisor, has for more than a decade provided independent, impartial advice to thousands in pursing their life goals. Chief Operation Officer Glenn Turner says health, family, career, and personal interests are the four factors that are most important to people, although the order of priority could change from one person to another. Often, he says, important things in life would be built upon a solid financial foundation. But until what is important has been identified, the financial aspect takes a back seat, he points out. He says that what is important is the individual’s life goals, and financial planning underpins those objectives. “This sets the stage for the way in which Altruist

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approaches its interaction and dialogue with people. Financial planning is the subset. This is one thing that differentiates us from other financial institutions,’’ Mr Turner explains. Before a product solution is discussed and outlined for an individual, Altruist examines four steps, Mr Turner says. It begins with a fact-finding exercise, then a solution is planned, before proceeding to an interview with the person and necessary modifications. And then, an appropriate financial solution is drawn up. And over the past decade, Altruist has not only helped to transform the lives of many men and women, but also shaped Hong Kong’s financial planning industry along the way. Altruist, the industry pioneer, has been heavily engaged in the industry and driven its evolution. This is partly reflected in the many roles that Mr. Turner himself plays. He chairs the Independent Financial Advisors Association, and is a general committee member of The Hong Kong Confederation of Insurance Brokers, Insurance Management Committee of the Hong Kong Management Association, among other organizations. “Altruist is heavily represented in all these organizations with our personnel being involved at the executive level of these organizations. We are

actually helping to drive the industry forward,’’ Mr Turner elaborates. “We are directly involved in the regulatory shaping of the financial planning or insurance broker community.’’ Altruist has also obtained membership with other industry organizations such as the General Agents & Managers Association of Hong Kong, Life Underwriter Association of Hong Kong, The Institute of Financial Planners of Hong Kong Limited, Hong Kong Confederation of Insurance Brokers, Independent Financial Advisors Association Limited, Life Insurance Marketing and Research Association, and Hong Kong Management Association Insurance Management Committee. Sometimes, Altruist’s involvement in the industry stands out, as is the case with the Life Insurance and Marketing Research Association, an American based research and educational body, where Altruist is represented as the only broker. “In Hong Kong, we are on the executive board. Around the world, there are 950 life company members of LIMRA and only one broker – that is us,’’ Mr Turner says with pride. Altruist also takes pride in its caring approach to employees, its clients, and society. In caring for employees, Altruist raises awareness of core values of families and helps foster a culture of loving families. Altruist provides marriage leave, compassionate leave, paternity leave, birthday leave, examination leave, exam subsidy, and

organizes different social gatherings and activities for colleagues. These initiatives have earned the company the Family-Friendly Employer Award 2011. Altruist demonstrates its caring approach to society by actively participating in charities and fund-raising projects such as the Walk for Millions, scholarships for Hong Kong Polytechnic University and Kwantlen Polytechnic University Foundation (in Canada), voluntary services such as blood donation days, flag selling days, charity sales and other volunteer activities. And importantly, Altruist shows that it cares for clients by providing a comprehensive one-stop financial shop to meet diverse needs. The Wealth, Health, Wisdom concept is a key part of this. There are different financial products to support Wealth, while health checks and health seminars are offered to protect the Health of clients. And Wisdom is offered through various seminars and workshops on themes such as career matching, and financial quotient workshops that enhance the understanding of candidates as well as of professional financial planning concepts. As a result clients become wise consumers. Mr Turner says Altruist looks at service as its reason for being and sees the sale as only a stepping stone to service. “We think of service differently to most of the industry.’’

• Members of professional affiliations: CIB, IFPHK, IFAA, LIMRA, LUA, GAMA, MPFA, SFC, • Exclusive distribution right from CIGNA & Standard Life on its variable life product, • Caring company Logo (2003-2011), • Hong Kong Business High Flyers (2005-2009, 2011), • First joint venture insurance company license in Shenzhen & Ningbo, • Family Friendly Award (2011)

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OUTSTANDING AV BRAND

BOSE

This page clock-wise: Bose Corporate Center at Framingham, Bose Corporation receives red dot award: design team of the year 2008, Bose® 901VI Direct Reflecting® Speaker System, Bose® QC® 15 Acoustic NoiseCancelling® Headphones Opposite page: Dr. Amar G. Bose and his Model 901 prototype

FAST FACTS PHILOSOPHY

Since Bose Corporation was founded in 1964 by then Massachusetts Institute of Technology Professor Dr. Amar G. Bose, the original philosophies and founding principles have not changed. Bose maintains an exceptionally strong commitment to research, for it is within the discipline of research that yesterday’s fiction becomes tomorrow’s reality. We strive to identify things which, when made better, improve people’s lives.

NOW HEAR THIS! LISTEN CLOSELY TO ONE OF THE BEST SPEAKERS IN THE WORLD

ose Corporation was founded in 1964 by Dr. Amar G. Bose, then professor of electrical engineering at the Massachusetts Institute of Technology. As an MIT graduate student in the 1950s, Dr. Bose decided to purchase a new stereo system. He was disappointed to find that speakers with impressive technical specifications failed to reproduce the realism of a live performance. The quest for better sound was on. Extensive research in the fields of speaker design and psychoacoustics—the human perception of sound—led to the groundbreaking 901® Direct/Reflecting® speaker system in 1968. Its unprecedented approach to sound reproduction came much closer to the essence and emotional impact of live music, and won immediate acclaim. Although these speaker systems accurately emulated the characteristics of a simulated, massless, ideal, spherical membrane, the results of listening tests were disappointing. This led Bose to conduct further research into psychoacoustics that eventually clarified the importance of a dominance of reflected sound arriving at the head of the listener, a listening condition that is characteristic of live performances. This finding led to a revised speaker design in which eight of nine identical small mid-range drivers (with electronic equalization) were aimed at the wall behind the speaker while one driver was aimed forward, thus ensuring a dominance of reflected over direct sound in home listening spaces, replicating the dominant reflected sound fields listeners experience

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in live performances. Before hearing his new design for the first time, although confident that his new design would produce a dominance of reflected sound arriving at the ear of the listener, faithfully replicating that aspect of a “live” listening experience, Amar Bose was unsure as to whether his new “direct/reflected” design would be a small audible improvement or a large one over his earlier design and the best commercially available loudspeakers. The new pentagonal design, named the Model 901, was a very unconventional design for speakers at the time (which were generally either full-size floor-standing units or bookshelf-type speakers). The Model 901 premiered in 1968 and was an immediate commercial success, and the Bose Corporation grew rapidly during the 1970s. Bose Corporation has developed and manufactured audio devices, such as speakers, amplifiers, headphones, Bluetooth accessories for mobile phones. automotive sound systems for luxury cars, automotive suspension systems, and performed some general research as well as focus on better sound reproduction in all formats. The list of major Bose innovations continues to grow. Fourteen years of research led to the development of acoustic waveguide speaker technology, found in the award-winning Wave® radio, Wave® music system and Acoustic Wave® music systems. Acoustimass® speaker technology reshaped conventional thinking about the relationship between speaker size and sound, enabling palm-sized speakers to produce

audio quality previously thought impossible from speakers so small. Auditioner® audio demonstrator technology removed the guesswork from sound system design for arenas and other large venues. It allows builders, architects and facility managers to hear precisely what a Bose® system will sound like in their building, before any equipment is installed, even if the building only exists as a blueprint. Bose Lifestyle® systems provided a welcome alternative to conventional component-based systems by offering fully integrated home entertainment solutions. Lifestyle® systems deliver award-winning performance and elegance from elements specifically engineered to work together. The systems approach has paved the way for numerous Bose solutions, audio and beyond. Integrated systems account for the acclaimed performance of Bose automotive sound systems and Acoustic Noise Cancelling® headsets. The revolutionary Bose suspension system and ElectroForce® linear motion system rely on proprietary Bose software and hardware working together in harmony. All feature technologies available only from Bose. The company aims for excellence in everything it does, from the way the business is run to the Bose customer service. From the products to the owner’s manuals one uses to set them up, the customer

experience is the key. In everything Bose is clear in its mission, and the staff and engineers truly believe that “good enough” is merely a starting point. “We’ve taken our commitment and our passion for innovation and applied them to developing unique sound solutions to meet virtually any audio challenge in any application, even the space program. While many of our products are designed for entertainment and home audio solutions, you’ll find Bose sound is prevalent in both the aviation and automotive industries, too. The company also designed professional sound systems for many applications, including stadiums and auditoriums, houses of worship, retail businesses, department stores and restaurants. Today, Bose technology can be found wherever quality sound is important, from the Olympic games to the Sistine Chapel or from NASA space shuttles to the Japan National Theatre. In the home and on the road, from large outdoor arenas to intimate neighborhood stores, restaurants and clubs, listeners can hear the realism of the most respected name in sound—Bose. In Hong Kong, the company has seven stores, including one at the Chep Lap Kok International Airport. The company’s commitment to excellence has served the company well. Today, Bose has operations in the United States, Europe, Canada, Australia, Asia and South America.

• 1964 Founding of Bose. In the 1950s, Dr. Amar G. Bose observes that loudspeakers don’t deliver natural sound Extensive research into the science of sound leads to the formation of Bose Corporation • 1968 Birth of a Legend. Bose introduces the revolutionary 901® Direct/Reflecting® speaker • 2010 Rethinking the Television Experience. Bose changes the way people look at—and listen to—television with the debut of the VideoWave® Entertainment System.

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CANADIAN INTERNATIONAL SCHOOL

LEADING INTERNATIONAL SCHOOL This page clock-wise:

Aberdeen Campus under construction, 1998. Aberdeen Campus, 2011 with Leo Lee Arts Centre, Tower and astro-turf field Opposite page:

Head of School Dave McMaster with PreReception students

FAST FACTS MISSION

To develop responsible global citizens and leaders through academic excellence. The school also emphasises service to the community.

20TH BIRTHDAY A CAUSE OF PRIDE AND A REASON FOR REFLECTION

ore than 1,800 students of 41 nationalities are joining 250 staff, supportive parents, generous benefactors, more than 800 alumni and well-wishers to raise a toast this year to the 20th birthday of the Canadian International School of Hong Kong, as they salute the academic and extracurricular achievements, and contributions to society. A landmark is being hailed, while recalling with pride the many milestones along the way. Founded in 1991, the school has elevated itself to the stature it enjoys today with the unfailing support of 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. Celebrations will reflect on the history and the 13 graduating classes, and will reach a crescendo with The Roaring Twenties Anniversary Ball featuring The Canadian Cotton Club on Saturday, 25 February 2012 at The Grand Hyatt Ballroom. The anniversary logo that adorns the souvenirs, banners, posters, hats and everything else, itself has been designed by a talented young student and selected from 100-plus entries to a contest. In the past two decades, the school, which is now spread over a 31,000 square metre campus, has evolved from its infancy hosting 81 students who studied in a four-storey rented building in Causeway Bay, where the children had to haul their books to the classrooms by climbing 150 steps. There was not even a computer network, then. Now, the entire campus is wireless, and the library, which originally had 30 iMacs connected to the

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internet, has 31 machines with 24-inch flat screens. Each student from Grade 5 and up has his or her own MacBook. The school became the first in Asia to be awarded the certification Apple Distinguished School, 19982000. And in 2009, the school hosted the global Apple Educator Leadership Summit, the first of its kind in Asia. Much like the story of how the campus turned into IT heaven, other aspects, too, have evolved for the better over the past two decades. The 20-year-old has grown into a leading academic and technologically advanced international school in Asia producing women and men equipped to handle the world’s many challenges. The school’s mission of “developing responsible global citizens and leaders through academic excellence”, is reinforced by emphasizing service to the community and environmental responsibility in tandem with academic excellence. Head of school Dave McMaster takes pride in the school’s outstanding academic achievements in the IB Diploma. In 2011, every one of the 104 students registered in the full diploma programme received their IB Diploma compared with the worldwide pass rate of 76 percent. Two students received a perfect score of 45, a distinction gained by only 96 students, or 0.20 percent, worldwide in 2010. All students from Pre Reception through to Grade 12 study the IB curriculum at the school. As a through-train IB World School, this leading institution offers the Primary Years, Middle Years and Diploma Programme, in addition to the Ontario Secondary School Diploma, with grades from Pre-

Reception (3 years old) to Grade 12. Graduating students are highly sought after and they attend world leading universities. So too, are those who excel in the arts and athletics, representing Hong Kong on the city and country scale. Students excelling in extracurricular activities are notable, too. One student in particular was chosen to visit Antarctica and the Arctic, within a year, in recognition of her environmental campaign to raise awareness of food waste at school. Another young student, drew on the compassion of family and friends to raise HK$16,000 to assist survivors of the March earthquake and tsunami in Japan. A lower school student went to a summer training camp with Chelsea Football Club in England and another became the first Winter Olympian to represent Hong Kong. On an even more joyous note, a song by the music band Sun Eskimos, formed by four students, reached No. 1 on a local radio station. Recently, the CDNIS UNICEF Club once again hosted the annual “Stand Up Against Poverty” programme to provide students insight into humanitarian issues through fun and educational simulation games. Academic achievements are outstanding and the extracurricular activities are inspiring. Good reasons to wear the CDNIS badge with honour. McMaster says: “ I am proud to be the Head of

School at this time in CDNIS’ history. The reason we are here now and have the reputation we do is because of the tremendous hard work, belief and dedication of the people who came before me such as Neil Johnston and Alan McLeod, former Heads of school, and the long list of volunteers that helped to form the school during its fledgling days. They set the stage for the people currently at CDNIS to take the school into its next chapter.” As they reflect on a new chapter, students, teachers, parents and alumni will be looking back with fond memories on a colourful history replete with many milestones and even reported sightings of ghosts in the Borrett Rd campus, where 200 students studied, to the era when the Aberdeen campus overlooking Aberdeen Harbour opened, when 720 students streamed in through the gates. They will find encouragement in facilities such as the fully-equipped magnificent Leo Lee Arts Cen tre — a 604-seat drama, music and arts centre that opened in 2008. And they will remember the second phase of the Aberdeen campus that doubled the size of the main gym, adding 60 more classrooms and a swimming pool. The gym was renamed the Ho Sports Centre after Dr Stanley Ho’s contribution to its construction. These memories will flood in and be recalled with gratitude to all those who made it all possible.

• Canadian International School of Hong Kong was established in 1991 with 81 students • A through-train IB World School, offering the Primary Years, Middle Years and Diploma Programme in addition to the Ontario Secondary School Diploma • Currently over 1,800 students of 41 nationalities and 250 staff

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CRYSTALLIZE.ME

CRYSTAL LIVING This page clock-wise: Art Piece from Master Li-Wen, Chinese Glass Arts Exhibition and Sculptural Lighting “Drake” from Czech Artist exclusively for Crystallize•Me Opposite page: Photo opportunity for Deputy Director of R&D, Mr. Lukas Polak with the Hong Kong Executive Team in the Hong Kong Showroom, (+852 28324070).

FAST FACTS

CRYSTALLIZE • ME IS A CURATED OFFERING OF LUXURY CRYSTAL LIVING CONCEPT THAT INSPIRES A UNIQUE AND DISCERNING LIFESTYLE FOR SELECTIVE INDIVIDUALS

PHILOSOPHY

Crystallize•Me representing a unique magic of luxury and style, is a definite symbol of identity in the Western societies. While in China, people have always lived by a philosophy based on the ancient traditional culture – “clothing, food, home, travel”. Crystallize•Me has redefined these four traditional aspects into “Fashion, Cuisine, Deco and Discovery”. The “crystal life” philosophy of Crystallize•Me is not an indulgence in self-admiration rather it is to service the tasteful crowd. With the wondercrystal-ful pieces of Crystallize•Me, the refined and the discerning you will discover what the Dolce Vita offers.

rystallize•Me (Pronounce “Bao Xi Lai” in Chinese) luxury crystal brand that includes lighting fixtures, chandeliers, gifts, jewellery, decorative objects and bespoke art pieces are setting the pace for luxury crystal living in the major cities of China. Our Chinese name “Bao Xi Lai” (which implies ‘Imperial Luxury’) was originally a lighting importer only showcases European crystal chandeliers from Czech Republic to France, it has now grown to include selective crystal products made from the finest crystals available. Products such as glassware from Britain to Poland; designer home décor from United States to Italy etc. Crystallize•Me is bringing this unique crystal product experience under one roof, namely the “Bao Gallery”. The company has been re-modeling their traditional lighting showroom into this new Bao Gallery concept since 2010 (10 years since entering into the mainland China market). Oliver Ma, Managing director for sales and operations said, “We are now operating in Beijing, Shanghai, Hong Kong and Chengdu”. Elaine Tsang, the gallery manager in Hong Kong who has been with the company for 15 years, emphasized that Crystallize•Me was born out of a Hong Kong premium lighting company “Blue Heaven Crystal Living” which was founded in 1969. Crystallize•Me has now incorporated “Blue Heaven” as its premium brand lighting range made only in European countries.

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Other brands include “JK-Royal” for high-end crystal corporate gifts, “JK-Blue” for crystal costume jewellery etc. Bao Gallery (Hong Kong) is located in a Grade A office area of King’s Road. Ma said, “The key concepts of Bao Galleries are artistic creation and design for luxury crystal living, material excellence with the finest crystal, top-notch techniques, craftsmanship and authenticity. Of course, outstanding service, installation and after-care are on-going objectives”. The gallery also held exhibitions last year to showcase glass art made by Chinese glass masters. The exhibitions help glass-making students from Qinhua University, Shanghai University and the Chinese Art Academy in Hang Zhou as a way to encourage young artists and to connect with the glass artists in Europe. “Each piece is unique, not mass produced. Even though mainlanders like brand names, they are beginning to appreciate the beauty of a one-of-a-kind work of art that is specifically designed to fit into their own lifestyles and home décor”, Ma noted. He was excited to note that the company’s new focus on the discovery of the entire luxury living experience for clients. “The company is actively involved with individual clients from their earliest idea and sketches to drawing up the final plans, doing the architectural planning, and engineering support for all the lighting fixtures and art pieces. The company takes the

“Crystallize•Me” concept beyond engaging in retail, projects, the usual hotels and residences. We are now working with yacht owners and even crystallizing private jets”, he said. “We are also expanding through cooperation and partnerships, such as our manufacturing partner from the Czech Republic, where we source and produce our crystal creations, including the new art pieces we introduced in 2011. The Czechs are famous for craftsmanship and skills that have been honed over generations. With their talent, we produce traditional crystal chandeliers and decorations that look fit for royalty. But also, with the feedback from our mainland customers, we have tried new Asian design ideas for crystal pieces that appeal to our discerning Hong Kong customers as well as customers from our mainland China market”. Lukas Polak, Deputy director of research and development at the Czech plant, seems to understand and appreciate the growth plans of Crystallize•Me. “As a matter of fact, our factory has had a long relationship with Blue Heaven lighting, so we are delighted to expand our working relationship with Crystallize•Me. Although we have always been famous for our European-style crystal chandeliers, we realize that tastes change from these heavy, older pieces to those lighter and more stylish, artistic pieces even in residential properties, so we see the demand for glass arts installations shifting from business-to-business sales to business-to-consumer sales”, he said. “The benefit Crystallize•Me brings is we cooperate on the design during the construction for private clients who want unique pieces and we can bring the unique solution to the projects. Cooperating with Crystallize•Me allows us to access the China market, because they understand it and overcome all the language and customs barriers for the factory. We can avoid a lot of time wasting and expense by working with a well-trained team of people. We also appreciate

the training of the staff here who are expert at installation and post-sale services”, Polak added. “The set up of the factory in the Czech Republic allows us to create custom-designed lighting with local favours. Our portfolio includes artistic glass objects that can be combined with other materials”, Polak said, “There is no customer request we consider too difficult. We strive to realize each of our customer’s wishes with a unique artistic solution. Our main priority is to achieve the highest quality through a combination of traditional and cutting-edge techniques and materials. Having complete control of our production ensures, among other things, the company’s free hand throughout the entire process, from the selection of the raw metals, to the treatment of their surfaces and the final installation of the finished product”. Operations director Beryl Cheng in Hong Kong has to know her local customers, Chinese clients and the manufacturers in Europe. She said, “Our Hong Kong customers, many of whom are old Blue Heaven lighting clients, are environmentally conscious and are looking for more efficient lighting fixtures using LED bulbs and smaller ceiling lights. But they still like the luxury aspect and want to keep the crystal features with more modern designs. The Chinese customers prefer the bigger, heavier pieces but since each home is unique, each piece has to accommodate the dimensions given by the customer”. Ms Cheng is the middle-person between the growing demand from China and the European manufacturer. Managing director of the company Raymond Chui, said, “In terms of our business direction, we saw the opportunity in China and moved there 10 years ago began to introduce luxury crystal living concepts. Hong Kong people are good at conceptualizing and executing fresh ideas to make a new luxury brand, and now Crystallize·Me has the team in place to accomplish the vision.”

• 2000 -Branched out in mainland China as “Crystallize Me”, the one and only high-end luxury crystal living brand • 2002 -Project for APEC VIP room, Shanghai Westin Hotel, and the Bund in Central Shanghai • 2004 –Expanded into the market in Beijing, became the lighting supplier for China World Hotel and the Beijing Shangri-La Hotel • 2005 -Created “JK Blue” crystal gift associated with COFCO Plaza; as well as the “world’s 100 most famous diamonds” replicas • 2006 -“JK Blue” fashion jewelry • 2009 -Combine lighting/ jewellery/gifts into the concept of Crystallize Me • 2010 -Applied the new concepts of our showroom into Bao Gallery • 2011 -On-going Bao Gallery Crystal Art Experience is associated with China’s top crystal artists from Qinhua University, Central Academy of Fine Arts, and Shanghai University

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DHL GLOBAL FORWARDING (HK) LTD

CARGO AND LOGISTICS This page clock-wise:

DHL Global Forwarding received the Authorized Economic Operator (AEO) certificate from the HK Customs and Excise; DHL truck and cargo Opposite page:

Edward Hui, CEO, DHL Global Forwarding, Hong Kong, Macau and South China

FAST FACTS PHILOSOPHY As the leading player in logistics, the management defines what logistics is all about and work to find out how the company can simplify customers’ lives and make their business more successful. DHL Global Forwarding uses knowledge and skills to make the world a little bit better. From 1969 until today, the approach and dedication has remained the same. The company’s success has always been based around delivering excellent service for our customers. Never complacent, DHL has become a brand acknowledged for personal commitment, proactive solutions and local strength. At the heart of its success are its employees who focus on the customer’s needs and provide individually customized solutions.

• More than 1,200 employees • Over 6,945 customers

THE GLOBAL FORWARDING LEADER, DHL, FINDS WAYS TO IMPROVE SERVICES IN ITS WORLD-WIDE NETWORK

eutsche Post DHL (DPDHL) is the world’s leading mail and logistics services group, with about 470,000 employees in more than 220 countries and territories form a global network focused on service, quality and sustainability. DHL Global Forwarding, a subsidiary of DPDHL, has more than 1,200 employees in Hong Kong and over 6,945 customers. In order to deliver shipments on time and in good shape, DHL commits its expertise in international express, air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers. With superior service quality and local knowledge, DHL satisfies its supply chain requirements. The company strives to be the first choice for its customers, employees and investors: • Provider of Choice – The company wants to make the lives of customers easier, this is the key to great service. If the staff succeeds in this, the customer will indeed feel like a king and remain loyal to DHL Global Forwarding. • Employer of Choice - To show employees respect, to value them, can be quite a challenge in the face of heavy competition and economic pressure. But only when the spirit of respect and results is

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lived on a daily basis and felt by all will the company become first choice for employees. • Investment of Choice - Building up trust for people to invest in Deutsche Post DHL shares is a permanent challenge. If the company offers customers excellent service, if the employees provide top performance, then it will succeed as a company. Investors value this and then stay long term, providing DHL Global Forwarding with security and independence. To realize its goal to become the company of choice, DHL Global Forwarding has these significant developments: LCL and FCL Services DHL currently operates the world’s largest Less than Container Load (LCL) network with close to 2,000,000 cubic meters of LCL freight handled annually via 45,000 point-pairs. As a global leader in LCL, DHL carries more than 97 percent of its total volumes in house. The in-house systems and strong global network enable the control of cargo flow, information flow, speed, accuracy, cost efficiency and reliability. Going beyond port to port, DHL LCL service also offers complete end-to-end supply chain management

Awards and Recognitions

that includes pick-up at origin, consolidation and deconsolidation, delivery at destination and customs clearance. All LCL services are accompanied by DHL’s firstclass IT solutions such as DHL ‘Track & Trace’ system and other tools to allow full visibility throughout the whole supply chain. For complete peace of mind, DHL also provides insurance services to customers as a value-added service. DHL’s Shippers Interest Insurance (SII) covers losses or damages of all cargo transported by DHL, as well as transportation costs. A new direct LCL service connecting Ho Chi Minh City in Vietnam to Hong Kong and China was launched in July 2011. Via weekly scheduled shipments to Hong Kong, the service provides companies in Vietnam with access to 12 major trading ports in North America and 11 in North Asia, cutting transit times and helping the trade flows of South-East Asia’s sixth largest economy. There are also three new direct LCL services connecting Hong Kong to Costa Rica, Malaysia and Romania. International Rail & Multi-modal Services International rail is a key component of five multimodal services that DHL Global Forwarding unveiled last year as the solution to future logistics – enabling businesses in China to leverage to the maximum the country’s investments in infrastructure and enhance trade and connectivity to the world. The multi-modal services include Rail-Air /River-Rail/Sea-Air/Cross Border Road Freight and International Rail. Used together they are designed to ease the capacity shortage for air and ocean freight from China, an issue that could worsen as freight volumes from China and

Asia as a whole lead the global air freight and ocean freight recovery. DHL’s international rail service offers a range of options from bonded and non-bonded goods, door-todoor, station-to-station, door-to-station, station-to-door services with integrated multi-modal solutions such as air, ocean and road. DHL value-added services include track and trace, customs brokerage and documentation as well as routing consultancy and loading solutions which cover all destinations including Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan as well as China and Russia. Certification DHL has capabilities in different sectors to facilitate customers’ businesses. The company has been accredited the Authorized Economic Operator (AEO) Certificate S in Security and Safety by the HK Customs and Excise for Safety and Security in October 2011. With the certificate, the company can enjoy substantial customs facilitation benefits including priority treatment of consignments, reduced chance of customs physical examination of goods, priority from other countries to export cargoes to their territories in security alert situations or after a security incident, and recognition as a secure and safe business partner – an industry “kite mark”. DHL Global Forwarding Hong Kong met all of the three general criteria and all the nine security and safety criteria required to be awarded the highest level of AEO. This new accreditation further strengthens our determination in offering reliable and efficient services to customers, by leveraging the entitled benefits when their goods enter or leave Hong Kong.

• 2010 – “Bronze Award (Large Corporation) for Green Office Management Award” at Hong Kong Green Awards (HKGA) 2010 • 2010 – “Certificate of Merit for Enterprise Sector in Service Industry” at 2010 Hong Kong Outstanding Corporate Citizenship Award • 2009 – “Bronze Award in Contact Centre Service Team Award” at Hong Kong Association for Customer Service Excellence (HKACE) • 2007-2010 – Caring Company Award at Hong Kong Council of Social Service (HKCSS) • 2009 – “Certificate of Merit for Transport and Logistics” at Hong Kong Awards for the Environmental Excellence • 2008 – “People Development Award” at Hong Kong Logistics Award for Enterprise at Logistics Awards Hong Kong

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LUXURIUS BEDDING

DORMIREST

This page clock-wise: • Horizon Plaza Flag Ship Store • Cross-section of Dormirest DeLuxe HD • Dormirest DeLuxe HD Super king size 200cm x 210cm Opposite page • Kenneth Tjon, Managing Director

FAST FACTS • 2007 - Awarded ‘Hästens Rookie of the Year 2007’ for

PHILOSOPHY

It is a proven fact that the Scandinavian continental sleep system is the top of the line when it comes down to a good bed. Only the high-end manufacturers from i.e. UK, Sweden and Holland are making these wonderful beds. The only downside is the high-end price. Dormirest is determined to provide her customers the luxury of handmade Scandinavian continental box spring beds for the best price and quality. With Dormirest beds, our customers can spend the rest of their nights in first class without the need of a second mortgage!

ONE MAN’S SEARCH FOR A GOOD NIGHT’S SLEEP TURNS INTO A THRIVING BUSINESS THAT CHALLENGES THE BEST IN EUROPE

enneth Tjon is a driven man, urged on by the quest for a good night’s sleep. As founder of Dormirest, “The Nature of Beds” is his business motto. Tjon relishes his life’s quest for restful nights. He said, “I worked in the food and beverage industry for over 10 years, which meant long hours and very hard work. I found that if I did not get a good night sleep, I was grumpy, less competent and prone to make mistakes. So, realising the importance of sleep, I started to search for a good bed.” He grew up and was educated in Holland where sleep specialists sell many different kinds of beds. He went to a sleep specialist and explained that he needed a good night’s sleep and tried various models. He bought a bed, but it was not satisfactory so he continued to look around, buying several beds over the years without finding one that provided him with the rest he needed, until he found the Scandinavian brand Hästens. It is a hand-made bed of all natural fibres, no latex or foam, and takes around three months to deliver to the customer. The sleep specialist then suggested that a Hästens bed was his answer. Tjon thought it looked ugly but he tried it and noted that it felt. When he bought it, he was surprised that all Hästens beds are made to order, after taking into consideration the customer’s height, weight, sleeping posture and other preferences, so the bed is truly personalised for each client. The bed is made from horse hair, wool and cotton, all natural fibres, and uses pocketed springs. At that

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time, $15,000 euro seemed like a good investment for a poor sleeper. After that, he got a good night’s sleep every night. Tjon was tired of his F&B businesses and became fascinated with beds and he started to learn more about the process of making good ones. He noted that Hästens sold only in Northern Europe, so he decided to try to take the beds to Asia. Tjon said he did his research deeply because he was not raised in Asia, so he had to do more digging to find out what was available in Asia and the habits and desires of the Asian market. After thorough research, he decided that Hong Kong was the place to start a Hästens showroom. He and his then partner took their business plan to Hästens who were impressed by the quality of the research and the pictures of beds in hotels and other facilities. Soon they struck a deal to become Hästens sellers in Hong Kong. The first Hästens outlet was a small shop in Happy Valley that opened in 2006 and was an immediate hit. The partners received the “Rookie of the Year” award from the company in 2007, the first year of business. Their fellow dealers could not believe that they could sell so many expensive beds so fast, and sell them out of such a tiny space. Tjon said, “The reasons I eventually left Hästens was because of a lack of communication and some stubbornness on the part of the manufacturer. There was a lack of quality control and if a bed had to be remade for some reason, it took another three months

the best selling new showroom • 2007 - Awarded ‘Hästens Vividus award’ for premium Vividus sales • 2007 - Opening of first AUPING showroom in Happy Valley • 2008 - Opening of first LAVITAL showroom in Ap Lei Chau • 2010 - Launch of

for the customer to get served properly. I did not want to lose my reputation by negative publicity, so I changed brands and started to sell beds from Holland under the Lavital label, which was nearly the same quality as Hästens but a bit cheaper and I thought it was better value. I opened the Lavital showroom in 2008”. He said, “I always sent customers to the Hästens shop to test the beds and make the comparison with Lavital’s product. That’s how confident I was that I could sell Lavital”. His partner did not come with him, so he became the sole proprietor of the shop. Born a natural entrepreneur, Tjon began to wonder what made the European beds so expensive. Doing more research and study, he learned about the costs of the raw materials and springs and reached the decision that European beds were overpriced because of labour costs. It seemed natural to turn to China for the labour, and he set out to manufacture his own brand of all-natural, hand-made beds for the Asian market. Dormirest was born. “Dormirest is the bed of the people” said Tjon with a smile. He sources all the

materials from the same suppliers as Hästens and Lavital with one inventive addition, camel wool. He decided the humidity of Southern China was too high for regular wool so he tops it with camel wool, a substance that helps camels acclimatise to extremes of temperature and is helpful in regulating perspiration. Once the switch from retail to manufacturing was made, and the first samples created, Tjon said, “This was a product I could sell with all my heart”. Not only does he create beds equal in quality to Hästens and Lavital at one-fifth to one-third of the price, his unceasing search for better beds has led him to make innovations in the design of the springs, putting two more layers inside the mattress itself, to distribute the stress of the weight of the body better. He doubled and then tripled the amount of horse hair used in the topper and added the camel wool. King and queen sized beds comprise two separate mattresses so that couples don’t disturb each other when turning over. “My job”, said Tjon, “is to get you in bed”.

DORMIREST in Hong Kong • 2011 – Dormirest dealers in Israel, Iceland and the Netherlands

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ENAMEL JEWELRY

FREY WILLE

This page clock-wise: Gustav Klimt Hope Collection 18k Diamond Rings, Gustav Klimt Hope Collection Regina Bangle Watch, Gustav Klimt Hope Collection 18k Diamond Necklace, Gustav Klimt collection Silk Long Scarf, Sphinx Fashion Collection Silk Tie

FAST FACTS

PHILOSOPHY

“I believe that art is important for a happy life. To see the good, the beautiful, in everything around us makes us more positive, interesting people. It connects us together. My wish is to bring happiness.” Dr. Friedrich Wille

ART IS IMPORTANT FOR A HAPPY LIFE FreyWille brings beauty, art and fashion all together with enamelled jewellery that echoes fine art.

alented designer Michaela Frey founded the company in Vienna, Austria in 1951 in her parents’ flat, a site that still serves as the company’s headquarters to this day. She was well known for her decorative flair in objets d’art and was inspired by Austrian and French artists. In the 1960’s, she created for Harrods, the famous London shopping destination, a jewellery collection decorated with Swarovski crystals. In the 1970s, Dr. Friedrich Wille joined the company with an aim of expanding the brand in Europe and abroad. The two rebranded the company as FreyWille and opened one of the first boutiques in Paris in 1976 and London in 1978. FreyWille began working with the biggest names in haute couture, such as Yves Saint Laurent, Paco Rabanne and Hermés. This is the period where Michaela Frey began her association with the fashion world and invented passementerie necklaces, brooches, manchettes bangles and pocket watches inspired by the ‘Arts Nouveaux’ period. The company attracted thousands of collectors who breathlessly awaited each new design and accessory. Dr. Wille said, “I am inspired by art and philosophy, immaterial values, and wish to help people learn to live better lives though beauty and give them small reasons to be happy. Creativity is very precious so we keep bringing out new collections to send these perceptions of art as one key to happiness”. The 80’s marked a watershed in the history of

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FreyWille with the untimely passing of Michaela Frey and the arrival of a new team of designers, including Dr. Wille’s wife, Simone Grünberger-Wille, whose penchant for art history changed the brand dramatically. Collections such as “Avant-Garde”, “Tropical” and “Egypte” met with unprecedented success in Paris and elsewhere. Dr. Wille said, “We make most of the jewellery in Austria but several of the mountings are done in other countries, France, Switzerland and Italy, and use skilled artisans from Eastern Europe where the crafts have not yet died out. The enamelling process is very complicated with so many little pieces, and quality control is essential for colour matching. We use a system of screen printing to ensure consistency”. In 1992, the Foundation Claude Monet contacted FreyWille house with a view to designing an exclusive collection. FreyWille’s artists and craftsmen created a unique collection, in the great artist’s honour, by interpreting the famous Impressionist’s Givery flowers, resulting in “Hommage à Claude Monet”, the ‘Iris’ collection. In 1994, the company created a collection called “William Morris” for one of London’s fine museums. This period was also the beginning of the first collection inspired by the Austrian Symbolist and painter Gustav Klimt. At the same time, the artists created, under the direction of Simone Grünberger Wille, a new geometrical collection named “Modern Art” that changed everyone’s perception of what enamelled

jewellery could be. From 1997 to the present, the company has been developing an extensive network of boutiques, starting with branches in Germany, Switzerland and Italy. The move to Asia started with a shop in Hong Kong and of course the company is looking to China and Japan as well. New York, Los Angeles, and this year, Sydney, Australia followed. Dr. Wille remarked that the Chinese customers’ tastes are changing, becoming more sophisticated. The company has a steady stream of collectors from the USA and Europe, but those economies are slowing down, and Asia is growing so the company is planning further expansion. The company now counts 86 boutiques located in the most prestigious fashion areas of the world’s capitals, featuring collections of jewellery that are distinguished by their unique designs, shapes and colours, offering matching earrings, necklaces, bracelets, pendants and rings, as well as ladies’ watches, charm watches, scarves and clutch and evening bags, even venturing into men’s ties, belts and cufflinks. Women and men who buy and wear such eye-catching totems of good taste not only turn heads

but display an uncommon flair for fashion along with a keen eye for value. These collections would not be what they are today without the constant effort of the creative team committed to upholding the Austrian goldsmith and enameller’s reputation as the benchmark in decorative art jewellery in precious enamel. The Sphinx was chosen as the FreyWille emblem as the embodiment of one of the oldest dreams of mankind; a mystical beast that epitomizes pure creativity. Its goal is to harmonise the power and elegant majesty of the lion with the freedom of an eagle, and the intellectual capacity of a human. The Sphinx represents hope, dreams, and the power to create. The “Magic Sphinx” collections in new coral, white pearl, royal blue and platinum sets are among the most popular and enduring. This collection is one that clearly defines the FreyWille philosophy of Pure Art. The enamel canvasses are adorned with the Sphinx symbol; three dimensional and finished with different metallic enamel effects to add quiet luxury to this visually powerful collection of jewellery.

• 1950s : Folkloric designed enamel jewellery • 1960s : Created a collection for Harrods, decorated with Swarovski crystal • 1970s : Formed an association with YSL • 1980s : Royal bangle, Egyptian collection • 1990s : Diva bangle, “Hommage à Claude Monet”, Iris collection • 2000-07 : Halfmoon pendant, “Hommage à Hundertwasser”, Spiral of Life collection • 2008: Diva bangle, “Ode to Joy of Life,” Heavenly Joy collection • 2011: Luna Piena pendant “Hommage à Gustav Klimt”, Hope collection

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ENVIRONMENTAL PERFORMANCE

FUJI XEROX (HONG KONG) LIMITED

This page clock-wise: Fuji Xerox Team join forces to clean up Kodohanoma beach, Sustainable Value Chain of Fuji Xerox, and New Product of Fuji Xerox Opposite page: Mr Joseph Yu, Managing Director

FAST FACTS

PHILOSOPHY

The “Good Company Concept” was launched 1992, which promotes three attributes aimed at keeping and balancing the company for being “Strong”, “Kind”, and “Interesting”.

CONVERGENCE OF “360 DEGREE” GREEN PERFORMANCE AND BUSINESS SUSTAINABILITY

anaging Director Mr. Joseph Yu, head of Fuji Xerox (Hong Kong) Ltd. is very serious about sustainability. He said, “We remain committed to addressing sustainability at every step of the value and supply chain, from initial parts procurement and manufacturing right through to customer usage and products’ eventual disposal. That is why we are building sustainable solutions into every step of our value chain. Our aim is to be a 360 degree, earth friendly sustainable company”. He proudly states, “Fuji Xerox has a long-standing commitment to environmentally responsible product design, industry-leading print management services and solutions and an end-of-life resource recovery programme that is second to none. Having devoted decades of research, innovation and resources in this area, we continue to lead our industry by embracing a holistic, end-to-end view of every aspect of our environmental performance. While valued customers focus on reducing energy consumption, printing needs and electronic waste inside an organisation, we understand that the responsibility we committed to our clients is not limited to the user stage in the product’s life cycle”. Fuji Xerox’s innovative International Resource Recycling System enabled the company to make significant progress in its flagship ‘zero-landfill’ policy, which sees end-of-life products and consumables disassembled at the company’s international network of recycling facilities and recycled into the industrial

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process. The proportion of used products and consumables that were diverted from landfill hit an all-time record of 99.9 percent, up 0.1 percent from the 99.8 percent achieved the previous year. Yu said, “Another key focus for Fuji Xerox Hong Kong is reducing carbon emissions. Although the company generates a small amount of CO2 when measured against its competitors or current international standards, the Fuji Xerox group has set the ambitious target of achieving a 30 percent reduction in total carbon emissions from 2005 levels by 2020. Over the years 2010/2011, Fuji Xerox Hong Kong continued to contribute to that goal, reducing its carbon emissions from energy consumption by eight percent despite increased business. This is a significant achievement, exceeding the company’s goal of a 1 percent reduction per year”. Corporate citizenship Fuji Xerox has achieved a number of corporate social responsibility (CSR) milestones over the past year. Having achieved huge success with its “Eco-school Story Writing” and “Photo-taking for Biodiversity” initiatives in 2008 and 2009 respectively, the company launched a “Shooting Green” video competition in late 2010, aimed at raising youngsters’ awareness of environmental issues and promoting low-carbon lifestyles. “As well as events in the wider community, Fuji Xerox has enjoyed success in a number of its internal

CSR initiatives”, Yu said. Earlier this year, Fuji Xerox saw the creation of Hong Kong’s ‘Family-Friendly Employers Award Scheme’ by the Family Council, an advisory body that promotes the government’s objective of building social harmony and alleviating social problems by championing family values and creating a pro-family culture. The scheme gives out awards that demonstrate impressive practices in implementing family-friendly policies and promoting family values. Fuji Xerox Hong Kong won the distinguished Family-Friendly Employer Award category. Fuji Xerox products Especially famous for its printers, scanners and other multiple use high-tech products, Fuji Xerox is continuously improving them. “Our latest multifunction devices are equipped with the latest common controller software to provide advanced features that cater to the environment friendliness, convenience and new work styles and, in addition, provide environmental performance that balances energy conservation with ease of use”, Yu said. “Most of the new models feature Fuji Xerox’s proprietary ‘Smart Energy Management Technology’. The technology contributes to saving energy by only distributing power to areas actually used in the scanning unit, control panel, output unit or controller when a device recovers from the energy saving mode,” Yu explained. Furthermore, Fuji’s latest models are the first to feature Fuji Xerox’s proprietary motion sensor

technology, ‘Smart WelcomEyes’. This technology uses two motion sensors that automatically wake up a multifunction device from the sleep mode when a user approaches the machine, saving staff time waiting for the MFD to become completely operational. Coupled with the IH fusing technology that has the world’s fastest startup time of just three seconds, the devices allow users to make a copy or to do other operations with hardly any waiting time.

• 2011 – FXHK is honoured with a recognition certification from the Chief Executive of HKSAR during the 150th Anniversary of the Hong Kong General Chamber of Commerce

Fuji Xerox service “Our iSupport online service is powered by the company-developed ‘Electronic Partnership Broadband’ service (EP-BB). The service is offered free of charge to Fuji Xerox customers and adds up to an even greater customer experience when technical support is needed. The remote service capability of EP-BB consists of four core services, including ‘Automatic Meter Capture’, ‘Proactive Fault Alerts’, ‘Proactive Consumable Management’ and ‘Green Report’, which help to keep customers’ document management infrastructures running smoothly in an eco-friendly way. Another automated feature of the enhanced iSupport package is the intuitive e-Billing platform, which streamlines the payment and account management processes and offers unprecedented user-friendliness. All of these features help to minimize downtime, boost productivity and provide customers with an intelligent and powerful set of tools that make document management easier than ever before. HONG KONG BUSINESS ANNUAL 2012 | 99

GODIVA CHOCOLATIER

PREMIUM CHOCOLATIER This page clock-wise: Mr Wong Yim Yin, Regional Connoisseur Master, GODIVA 2011 Limited edition Chinese New Year Collection Opposite page: GODIVA Flagship store located at ifc mall, Hong Kong

FAST FACTS

PHILOSOPHY

For nearly 85 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. Godiva owns and operates all its own shops to preserve its tradition of providing the finest chocolates in varieties appropriate to global countries and cultures. The company strives to be a business whose goal is customer satisfaction and delight.

GODIVA CHOCOLATIER. GIVING OUT THE BEST

s the Chinese New Year is fast approaching, now probably is the best time to plan a sweet surprise for your beloved, send out best wishes to your relatives and show your appreciation at the workplace. Look no further as GODIVA CNY collection is the best choice to show your sincere New Year wishes to your loved ones. GODIVA wishes to bring you and your loved ones an exceptional year of the Dragon through the tenderness of their dedicate collection. The touching story behind the brand There is always a fascinating story behind a legendary brand. GODIVA’s history began more than 80 years ago in Brussels, Belgium when master chocolatier Joseph Draps founded a chocolate company named in honor of the legendary Lady GODIVA. According to legend, in 1057, the people of Coventry were suffering from extremely heavy taxes imposed by their lord, Leofric the Dane. Leofric’s sympathetic wife, Lady GODIVA, was determined to convince him to reduce the taxes, while Leofric believed her shameless to plead for the unworthy serfs. Lady GODIVA responded by saying he would discover how honorable the serfs were and struck a deal: Lady GODIVA would ride unclothed through the streets of the city and if the citizens of Coventry remained inside shuttered buildings and did not peek at her, their tax burden would be lifted. The following morning she made her famous ride and the citizens of Coventry graciously stayed inside to spare Lady GODIVA any feelings of shame. Leofric kept his word and reduced

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the grateful people’s taxes. Today, in Europe, Lady GODIVA is celebrated in countless works of art, including tapestries, paintings, sculptures and literature. The secret of a long-existing brand For a brand to succeed, it needs to strike a balance between tradition and innovation. According to Godiva’s Regional Connoisseur, Master Yin, aside from bringing the authentic taste of Belgium, Godiva excels throughout the years due to the spirit of continuous innovation. “Say, for example, the new Parfait Chocolates collection. It is a newly-invented collection that combines the taste of favorite multi-layered dessert fillings in a delicate chocolate cup. The eight different flavors are the perfect combination of classic desserts and chocolate. The deliciousness will linger so long that it is hard to forget,” Master Yin told Hong Kong Business. Furthermore, almost all the decorations on the chocolate are hand-made which demonstrate GODIVA’s pursuit to deliver the most refined chocolate with meticulous attitude. “In addition to skillful craftsmanship, cocoa beans and ingredients from around the world are carefully selected. Take GODVIA’s homemade hazelnut paste as an example, we have carefully selected whole hazelnuts from Turkey to make the paste from scratch. Yet, selecting the appropriate hazelnuts is not an easy task; hazelnut that is too big in size is difficult to be cooked and it will easily burn if too small. Therefore, we need to select hazelnuts that are more or less the same size, or else it can ruin the taste of chocolate,” Master Yin explained.

Giving the best to your love As the New Year starts, GODIVA brings its unique and sincere wishes to Chinese by rendering the mighty spirit of Chinese New Year with the sense of tenderness and ambitiousness. 2012 GODIVA Chinese New Year Collection, whose cocoa beans are selected from Dominica, Venezuela and Ecuador, is a perfect combination of Chinese tradition and premier chocolate. Cocoa beans from Venezuela have a rich taste of flower while those from Ecuador have a nice fruity taste, such a rare gift from nature. Magnificent 2012 GODIVA Chinese New Year Limited Edition Gift Box, whose image of Chinese Loong, meanwhile, shows the nobility of Chinese as the descendant of Loong, combining Chinese red and noble gold. The brand-new 2012 GODIVA Chinese New Year Limited Edition Gift Box, with rich content, is classic and luxurious. The gift box is equally ideal as a present for family members and loved ones as it is for friends and acquaintances. You can even treat yourself to one as a reward for all the hard work you have put in during the past year. How to savor fine chocolate How is the quality of the chocolate tested? Here are some simple tips according to Master Yin: Look at the chocolate pieces. Fine chocolates should have a consistent color and a natural-looking satiny

sheen free of air bubbles or other blemishes. The best chocolates also display a high degree of craftsmanship in their shapes and designs. Smell the chocolates. Savoring fine chocolate begins when you open the box and take in the bouquet of the contents. Fine chocolates should have a fresh, deep aroma, not the overly perfumed or sugary smell associated with artificial flavors or preservatives. Taste the chocolate. In tasting fine chocolates, look for two things: flavor and texture. Freshly made fine chocolates have very intense but refined flavors and subtle nuances of textures. With the notable exception of truffles, the couverture or outside coating of fine European-style chocolates is often molded in a sleek, semi-hard shape that “snaps” when you bite into it. The inside of a chocolate piece is called the center or filling and, in fine chocolates, is specifically intended to complement the couverture in terms of flavor and texture. When tasting a piece of chocolate let it melt against the roof of your mouth to feel the texture. A fine chocolate should be velvety smooth without any of the graininess that comes from incomplete refinement. Roll the chocolate over your tongue, allowing the flavors to permeate your mouth. The initial taste should be a nutty, roasted chocolate flavor, followed by sweetness and other flavor components. Lastly, fine chocolates tend to have a longer “finish” or pleasant aftertaste that lingers on the palate.

• With exquisite taste, premium quality, seasonal packaging, exclusive boutiques and innovative products, GODIVA Chocolatier is dedicated to over 80 years of excellence and innovation in the Belgian tradition. • Recognized around the world as the leader in premium chocolates, we bring the most ultimate chocolate experience and emotional appeal of gifting to chocolate lovers worldwide. • GODIVA Chocolatier produces many different chocolate pieces that fall into nine basic categories and are often mixed and matched to create a wide range of collections for personal, sharing, holiday and special-occasion use.

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HENDERSON REAL ESTATE AGENCY LTD

PROPERTY DEVELOPER This page clock-wise: Spectacular view of LÈGENDE ROYALE; Resortstyle outdoor swimming pool; Master show houses Opposite page: LÈGENDE ROYALE deluxe pool villas

FAST FACTS PHILOSOPHY

The group aims to add value to shareholders, customers and the community through a commitment to excellence in product quality and service delivery as well as a continuous focus on sustainability and the environment.

A LIFE OF OPULENCE AT AN EXCLUSIVE ADDRESS

enderson Land Development Limited is a name synonymous with award-winning high quality new homes and commercial developments, ranging from city landmarks such as the International Finance Centre in Hong Kong and World Financial Centre in Beijing, to exceptional residential properties such as 39 Conduit Road, Grand Promenade and The Beverly Hills.Henderson Land is a leading property developer with businesses in Hong Kong and throughout mainland China, When it launched LÈGENDE ROYALE in Tai Po, the response from those seeking to live in a fabulous location in luxurious surroundings was overwhelming. LÈGENDE ROYALE is the Phase III of The Beverly Hills located in an exclusive stretch of coastline in Tai Po, where the ocean embraces the property. The sight of the Tolo Harbour, Plover Cove Reservoir and Pat Sin Leng mountain range should be enough to seduce the most discerning families to crave for one of the many large luxury villas offered here. Those who love sailing will also love the location. And others who admire the lifestyle that a coastal address affords, are certain to fall for its charms. The architectural splendour of the villas is a sight to behold. The architects of LÈGENDE ROYALE have combined the lifestyle of French classical revivalism and Renaissance arts to create a fabulous new expression of European architecture.

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Facilities and services available to residents add to the opulent lifestyle that LÈGENDE ROYALE promises. As if to echo the blue ocean that glimmers on the doorstep of the villas, there is an abundance of green spaces provided for the leisure and the pleasure of the residents of this exclusive address in the spacious New Territories. Flowering gardens and trees liven up the estate that features 1.8 million square feet of lush green and recreational space. When a few hours of indulgence beckons, the privileged residents of some of the villas could soak themselves in their very own roof-top Jacuzzi with a glass of fine bubbly in hand and enjoy the solitude, or they may while their time away in the company of loved ones. There are also private rooftop spaces in every villa and covered parking spaces for the luxury vehicles of residents. Dotted around the private gardens are a number of swimming pools that tempt the resident to put in few laps before starting the business day or even at the beginning of a day of leisure. It is also a perfect excuse to spend a few cheerful hours in the pool with children, in the morning or a weekend afternoon. When weekends come around, or even public holiday breaks, the residents of the viilas would want to explore beyond their immediate neighbourhood. For anyone eager to set sail accompanied by their

families, friends and acquaintances, The Beverly, a luxurious vessel at LÈGENDE ROYALE is at their service. And in keeping with the grand address, this is no less than a super yacht, crafted by the Italians. A worthy vessel for residents who deserve the finest a yacht can offer in terms of modern styling and design of the interior and the exterior as well as in terms of the engineering. And when entertaining family and friends, or even spending a few hours of idle time, the residents can avail of the fine facilities of the plush clubhouse. It is one of a kind, as is an indoor ski where the enthusiast can train to tackle the snowy slopes of the resorts around the world. This ski venue is the first such facility in a luxurious residential development in Hong Kong. The fitness enthusiast will be thrilled to know that LÈGENDE ROYALE provides a 3.6 kilometre jogging

track. Just the excuse to burn those excess calories, stay healthy, stay in shape and all the while enjoying the luxury lifestyle to your heart’s content. When Mom and Dad are out jogging, the children could let themselves run wild in the theme park called The Forest, planned and built just for the little ones. They can also take a spin on the 350-metre mini race track for children. After breaking a sweat on the jogging track one could wander in to the Queen’s Spa Gallery to rest and recuperate. When all that is done, they can gather their family and sit down for a dinner in a hotel-style banquet hall. On special occasions, such as birthdays and anniversaries, they can host a feast for their guests. LÈGENDE ROYALE then, is a residence that has anticipated nearly every desire and aims to fulfil every wish.

• Founded in 1976 by current Chairman, Dr Lee Shau-kee, Henderson Land Development is one of the largest business entities in Hong Kong, employing 8,000 staff. • Listed on the main board of the Hong Kong Stock Exchange in 1981. • Henderson Land Group is made up of six listed entities -- Henderson Land Development Company Limited (0012); Hong Kong Ferry (Holdings) Company Limited (0050); Henderson Investment Limited (0097); Hong Kong and China Gas Company Limited (0003); Miramar Hotel and Investment Company, Limited (0071), and Towngas China Company Limited (1083).

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HSBC INSURANCE

MEDICAL INSURANCE This page clock-wise: HSBC Insurance advertisement, HSBC Main Building, HSBC Centre Opposite page: Agnes Choi, Director and Head of Corporate Insurance, HSBC Insurance (Asia Pacific) Holdings Limited and Jim Costello, Director and Head of Personal Insurance, HSBC Insurance (Asia-Pacific) Holdings Limited

FAST FACTS

HSBC MEDICAL INSURANCE LEADS THE MARKET FOR CORPORATE AND RETAIL CUSTOMERS

PHILOSOPHY

HSBC is committed to connecting our customers to opportunities that help protect and grow their wealth across every life stage and ambition. HSBC builds on the Group’s international and business connectivity as well as our global wealth capabilities to offer customers with simple, relevant and tailored solutions.

he Hongkong and Shanghai Banking Corporation Limited began providing medical insurance solutions to customers in Hong Kong in 1988 as part of efforts to expand the range of insurance solutions in order to address evolving customer needs across their various stages of life. To become a leading player in the market, a focus on customer needs is critical in order to provide a range of relevant solutions. A focus on understanding customer needs and building a relationship that looks at his or her total wealth and savings habits ensures that solutions are driven by needs rather than products. What has also become an important consideration for customers choosing a provider today is brand strength, trust and a proven track record, all three of which HSBC is famous for. Agnes Choi, Director and head of corporate insurance, HSBC Insurance (Asia Pacific) Holdings Limited, said, “Our aim is to become the partner of choice for customers’ retail banking and wealth management needs and, as we extended our insurance footprint across Asia and built on our regional HSBC network, we focused on helping customers in their financial planning to cover savings and protection related to medical and health care needs.” HSBC offers medical insurance protection to both corporate and retail customers. It is one of the leading players in the medical insurance market. The bank’s medical insurance business started in 1988 when

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HSBC acquired the Hong Kong business, Private Patients’ Plan. The company was then renamed Carlingford Medical Insurance Company. In 19951996, due to a global re-branding exercise, the company was renamed HSBC Medical Insurance Company. In 2005, the medical business was integrated into HSBC Insurance (Asia) Limited. Choi said, “HSBC’s brand strength, the quality of our staff and streamlined processes combined, make us the leading provider of choice in Hong Kong. We identify the customers’ needs and offer both tailormade policies and packaged plans accordingly. The fee structure is based on the claims experience both on a customer and community rated basis”. She went on to say, “With the customer as a starting point, we develop and offer solutions that address changing customer needs. For corporate customers, we provide both tailor-made products and packaged plans depending on the company’s needs. We also offer administration only schemes to selected employers”. Jim Costello, Director and head of personal insurance, HSBC Insurance (Asia-Pacific) Holdings Limited, is quite intense about serving individual clientele with customised service as well. He said, “Based on our research, customers are most worried about the rising costs of healthcare compounded by the reality that people are living longer and, in the main, healthier lives. “We work closely with customers in their financial planning, providing market insight and professional

advice to ensure that we understand their changing needs and offer a range of relevant solutions. We advocate that customers start planning early, save regularly and take responsibility for saving for their medical needs today and through to retirement. We also take in customer insight when developing solutions tailored to address evolving medical protection needs.” Costello explained that longevity and medical inflation are increasingly becoming key concerns that will impact people’s long-term savings. People need to take greater accountability for their medical needs as governments and corporations may no longer afford to provide the level of support traditionally offered. With the forthcoming Healthcare Reform, and continually increasing trends in medical cost inflation, there is increasing awareness among the public about the need to think about purchasing healthcare plans from the private medical insurance market. He said, “HSBC has always been customer-centric. We have a strong and professional team that provides high quality services to our customers. Dedicated staff is our major asset and together with our strong brand

name and high-quality service standards, we are proud to win this High Flyer award. It has always been our philosophy to serving our customers with genuine concern for their individual well-being. We feel that we can build further success with this customer focused outlook.” Echoing Costello’s ideas, Choi added, “To be one of the major players in the market, we are customer centric. We identify the customers’ needs and offer our professional advice and high-quality service standards to our customers.” “We work together with our customers in their planning and benefit design to assist them to cope with continuously increasing medical inflation. With the forthcoming healthcare reform in Hong Kong, and continually increasing trends in medical cost inflation, there is increasing awareness among the public in purchasing healthcare plans from the private medical insurance market”, she said. Choi forecasted, “We foresee there will be dynamic growth in the medical insurance business over the new few years.”

• HSBC offers medical insurance protection to both corporate and retail customers. • It is one of the leading players in the medical insurance market. The bank’s medical insurance business started in 1988 when HSBC acquired the Hong Kong business, Private Patients’ Plan. • The company was then renamed Carlingford Medical Insurance Company. • In 1995-1996, due to a global rebranding exercise, the company was renamed HSBC Medical Insurance Company.

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JIA INTERNATIONAL

KITCHEN DESIGNER This page clock-wise: Kitchen with flush sliding system; Mobile Pantry; ALNO Edition Fly wall mount system & wall unit storage system; Room divider concept for both residential & commercial use; ALNO Showcase Opposite page: Almon Au Yeung, Managing Director of Jia International Ltd.

FAST FACTS PHILOSOPHY

Jia’s company philosophy is to continue to develop the brands, provide more innovative designs and source new materials that are environmentally friendly. Kitchens have both practical and aesthetic functions in the office as well as the home, especially for businesses that wish to entertain VIP clients in privacy. A welldesigned kitchen can improve quality time by being efficient and easy to clean. Jia is branching out to bedroom, office and bathroom cabinetry as well, offering custommade wardrobes and cabinets to fit every size room. Quality workmanship, unique designs and after-sales customer service make Jia stand out in the market.

JIA INTERNATIONAL LTD. SERVES BOTH HOMES AND OFFICES New concepts of mobility increase functionality and take advantage of modular design innovations

anaging director and project director Almon Au Yeung and her able assistant, Project manager Dora Chow of Jia International Ltd., are both very enthusiastic about their new office pantry system which is composed of mobile, modular kitchen units suitable for multi-national organizations, business centres and the like. With its clever design and the use of a flush sliding system to save space, the new “BOB” system (bedroom, office, and bathroom) unit is a stand-alone, veneer cabinet that has cabinets overhead to hold a coffeemaker and microwave oven, with work space beside the small induction stove and sink. The panel doors open with a slight push, so no handles are necessary. Under the counter, it also has easy, roll-out drawers for coffee and tea cups, water glasses and wine glasses, plates, flatware and cooking utensils. It holds all the equipment usually provided by an office kitchen pantry but takes up less space. An added plus is that it provides storage cupboards on the back side for files, books, papers, other kitchen implements or whatever is needed. “The beauty of this modular kitchen is that when an office relocates, which is often in Hong Kong, this unit can come along with the rest of the office equipment. All it takes is a water hookup and electricity to set it up and the pantry is ready to go,” said Almon. She added

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that the veneer is European layered plywood, which is strong and durable, yet gives the warmth of natural wood patterns. For businesses such as private banking, there are additional modules that allow for private catering to top executives or VIP clients, staff functions, holiday parties and other events. When a dinner is served in an office setting, both staff and clients enjoy absolute privacy and comfort. Using the sous vide (French for “under vacuum”) method of cooking, gourmet catered meals are possible without the muss and fuss of traditional cooking. In sous vide cooking, food is first cooked, frozen and sealed in airtight plastic bags and then put into a water bath for a long time—72 hours is not unusual— at a predetermined temperature much lower than normally used for cooking, typically around 60 °C or 140 °F. All YOU need to do is reheat the food, which retains all its essential flavour, vitamins and appearance, and a gourmet dinner is served. Jia offers the ‘Shock’ freezer and ‘Vacuum Machine’, an oven, a steamer and a plate warmer as a component package for ‘professional pantry’ ensemble. Dora said, “Michelin-star dining is now possible in an office environment because there is no frying or cooking to do. A stove-hood charcoal filter system whisks away the food odours so no exhaust pipe is necessary. We even provide a dual temperature wine

offers a range of exterior finishes that are beautiful, durable and easy to maintain. Always conscious of costs, many ALNO cabinetries are conscientiously designed to cater to finest details such as a beveled edge, so there is no need for costly handles and fittings while providing a clean, modern look. “WOW” kitchens for all Almon recommends using these European goods, Almon is very proud of the expanded showroom in which are mid-range in price, “because if you just go for Causeway Bay that affords the space to set up three price, you will need to redo your kitchen much sooner. fully equipped mock kitchens for families, developWe cater to people with mid-range to high-end budgets ers, home builders and remodelers. Besides serving so that we never compromise on quality. We spend private clients, Jia also often installs kitchens in show every penny on hardware that lasts forever. Jia is also flats at new property developments so that prospecoriented towards the finer details of what a kitchen tive customers can feel the space and see the quality means and what it is used for, and we are also wellworkmanship. regarded for our after-sale services.” All kitchens are the heart of every home, and even the Both Almon and Dora are involved with the research company name “Jia” means “family” in Chinese. The and development of new kitchen ideas and highly recWOW factor is enfolded in every custom design. W for ommend that Jia’s staff be involved from the beginning “wish,” O for “original,” and W for “wonder” encapsulate of a new kitchen, no matter what the size. They are well the feelings Jia wishes their clients to have as they ap- versed with the “open” kitchen concept so they provide preciate their new kitchens. wall units that house a dishwasher, refrigerator, pull-out No matter what kitchen size is needed, Jia has a solu- shelves and bins, storage for plates, flatware, food, and tion. Storage is what matters most to most cooks, yet cooking utensils to reduce clutter. Pull-out units add to the finishes are also important. Jia’s designers use the visual effect of a clean, modern kitchen. only hardware products primarily from Germany. ALNO Almon said, “When a kitchen is not practical, it is not AG, a listed company group renowned for being a con- functional. Jia provides a total solution: the design, suptemporary, high quality, kitchen cabinet manufacturer, ply, installation and after-sale services to make sure it is and is the second largest in the world. The company finished correctly.” refrigerator so that white and red wines are drinkable straight from the unit. We have found that investment or private bankers are especially interested in this ultraprivate way to entertain their esteemed clientele and provide them with top privacy but cosy atmosphere.”

• Jia International was established in 1999 by Almon Au Yeung and her husband • Staff consists of 13 full-time consultants and designers coupled with a group of full & part-time technical draughtsman • The company has clients in Hong Kong, Macau and an increasing number in China, Japan and the US • There are over 1,000 different materials to choose from to suit every budget and design • Installation is done by highly trained craftsmen

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INNOVATIVE FINANCE COMPANY

PRIMECREDIT

This page clock-wise: • Visiting the elderly who live on their own • Cooking for the kids at an intensive care home • PrimeCredit Angels Walk aims to raise funds for charitable organizations including the Hong Kong Alzheimer’s Disease Association, Changing Young Lives Foundation and Christian Action.

FAST FACTS PHILOSOPHY Our vision in PrimeCredit is to be the industry leader in providing the most preferred financial services to our customers. We are committed to: • our customers…as their preferred partner in financial services and to provide them with value added service and care, in good times and bad times, • our staff…to enhance our staff professionalism through training, innovation, and process re-engineering, • our shareholders… to deliver shareholder return via dedication to service excellence, and • our community… to give and serve the people in communities we operate in. Our 35 years of history signifies our dedication to establishing long-term relationship with our customers and our community. We take pride in contributing to the financial development in Hong Kong.

PRIMECREDIT HELPS ITS CLIENTS IN GOOD TIMES AND BAD

EO Susanna Liew, who joined PrimeCredit only three months ago, seems fully up to speed on the company’s operations and plans for the future. Her enthusiasm is infectious and it is easy to see that she loves her work. “Our focus is customer service,” Liew said. “We truly believe that as a company philosophy because we operate in a customer segment that is underserved by the large banks. We cater to a different segment of consumers, the basic salary earners who have family expenses, education fees, own small businesses or even domestic helpers who need a little help with their cash flow. We undertake lending on some mortgages, personal loans and credit cards, even one of our own brand, PC Visa. “We are a Deposit Taking Company, regulated under the Hong Kong Monetary Authority, which can take deposits of HK$100,000 of three months tenor and above, so we are an important part of the greater financial services picture in Hong Kong. In 2004, we were acquired by Standard Chartered Bank who saw us as filling a service gap in its consumer finance; segment, so we are regulated just like the big banks are.” She said the company’s vision is to stand high in the rankings compared to its competitors and be an industry leader by providing professional, reliable and helpful service by raising brand recognition. “We enjoy a large recognition factor already, according to the recent study by Market Probe on brand awareness, PrimeCredit was ranked top among the Consumer Finance companies in the

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survey of Hong Kong consumers.” According to Liew, consumers are keen to look for a service provider with a good reputation and a willingness to help the client, in good times and bad. They look for a company that will make a commitment to its clients and to the community. They are also aware of companies that are socially responsible. PrimeCredit has been in consumer finance business in HK for almost 35 years. The long history shows our commitment to their clients and community. Liew said, “We have a process for making loans that includes credit counseling first so that our clients are not only aware of the amount of the loan but also its cost so they can plan their repayments in a realistic way. PrimeCredit believes that service does not start with the loan application but prides itself on good customer service throughout the process.” Credit counseling allows the company to understand the client’s entire situation and can tailor the right solutions for each one individually, as such our clients will be able to enjoy the best rate offer. When people get into credit card debt, PrimeCredit works out a plan how the customer can pay off the cards balances in a timely manner without too much sacrifice. The same goes for other kinds of loans. “PrimeCredit can be flexible with trusted clients and base repayment terms on the level of income or even suspend payments for a while so that stress is relieved,” she said. The company also actively gives back to our community by either sponsoring charity events or

supporting the underprivileged directly, such as visiting the elderly in Wong Tai Sin during the Mid-Autumn Festival, and the recent Angels’ Walk walkathon which raised funds for the poor families and children. These charitable organizations are typically those receiving little support from the government. The company also serves domestic helpers who need some financial assistance. Liew said, “PrimeCredit has ways of thanking them for their business. We have organised concerts in Central on Sundays for helpers, as well as BBQ parties and even provide some space in our office premises for their gatherings. These are some of the ways we can show support for our customers, offering them not only financial assistance but also social support.” PrimeCredit’s customer service attitude even extends to its call centre, which won the “Best Inbound Call Centre - Gold Award” for excellent service from the Hong Kong Call Centre Association. For mystery shopper assessment, the company had also won Gold Award two years in a row. According to the KPMG survey of Hong Kong banks in 2010, PrimeCredit was found to be the largest DTC in terms of assets and net profit after tax. “These awards and recognitions give us more confidence

and credibility,” Liew said. The company also was a Service Quality Management certification which again signifies our dedication to service excellence. She points with pride to the impressive 52 percent profit growth between 2009 to 2010. “We stand on three pillars,” she said. “Strong branding, friendly service and professionalism. We believe in the influential power of an individual where we have the philosophy of the 7th to the 7th power; that is, if one customer service representative is outstanding, he or she can be influential over the behaviour of others. We also have a balanced scorecard system that all staff adheres to, and incentive pay is based on this assessment, which is 50 percent based on business performance and 50 percent on customer service. It is not just frontline staff but also management behaviour is assessed too.” All complaints are taken very seriously and each of them will be tabled and discussed by the senior management team to determine what steps should be taken to rectify the situation or whether compensation is needed. PrimeCredit is a leading lender for some very good reasons.

• Founded in 1977 • Wholly owned by Standard Chartered Bank • Recent Awards & Recognitions: • Hong Kong Finance Company of the Year by Asian Banking & Finance, 2011 • Service Quality Management Certification by HKQAA, 2010 & 2011 • Best Inbound Call Centre of the Year 2011– Gold Award by Hong Kong Call Centre Association

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LEADING HOTEL MANAGEMENT

RHOMBUS INTERNATIONAL HOTELS GROUP

This page clock-wise: Guestroom at Hotel de EDGE by Rhombus (Sheung Wan, Hong Kong), Exterior of Hotel Panorama by Rhombus (Tsimshatsui, Hong Kong), Guestroom at Rhombus Fantasia Chengdu Hotel (Chengdu, China), Guestroom at Hotel Bonaparte by Rhombus (Wanchai, Hong Kong) Opposite page: Mr. Calvin Mak – Group Founder and CEO

PHILOSOPHY

To be one of the premier hospitality services providers, operating properties in major International cities and key destinations within China and Europe. Our portfolio consists of quality products which exceed the expectations and needs of our three key stakeholders: owners/investors, guests and employees. We care and are committed to continuously delivering excellence combined with versatile services and products to our owners/investors and guests; while providing vast opportunities to our employees.

FAST FACTS

RHOMBUS INTERNATIONAL HOTELS GROUP HAS BIG PLANS

Expansion into Mainland China and Europe does not slow down the development and construction of the company’s new Hong Kong hotels.

itting in the stylish AVA Restaurant Slash Bar atop Hotel Panorama by Rhombus in Tsim Sha Tsui, it is impossible not to enjoy and savour the stunning views of the Hong Kong skyline. The ambience, warmth and elegance speak volumes about the tone which Rhombus International Hotels Group establishes at all the hotels under its supervision in Hong Kong. Hotel Panorama by Rhombus delivers a genuine style in facilities and accommodations featuring pure comfort and relaxation for both corporate and leisure travellers. AVA Restaurant Slash Bar’s open- plan makes it a perfect venue for weddings, corporate events and other special occasions. Its eight-person private room allows for intimate dinners or exclusive functions. The hotel’s 324 large guest rooms range in themes - Silver, Gold, and Executive Club HarbourView. Each has differing amenities and services including 12 spacious suites. All guestrooms are contemporarily designed and equipped with floor-to-ceiling windows. Unlike traditional hotels, Hotel Panorama by Rhombus’ 40 floors are uniquely designed with an innovative one-sided guestroom corridor. This unique corridor design allows the hotel to maximize its unobstructed views of Victoria Harbour as well as the vibrant city scenes of Tsim Sha Tsui, all basking in natural light. Mr. Calvin Mak is Rhombus International Hotel Group’s Founder & CEO has big plans for the company. A veteran in the hospitality industry, he has worked for three major hotel chains: Hilton Interna-

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tional, Four Seasons and Delta Hotels and Resorts. Now, he heads Rhombus International Hotels Group, which currently operates four hotels in Hong Kong, with more new properties planned in Hong Kong, Mainland China and Europe. Hotel Panorama by Rhombus, Hotel LKF by Rhombus in trendy Lan Kwai Fong, Hotel Bonaparte by Rhombus in Wanchai and Hotel de EDGE by Rhombus in Sheung Wan, which opened in May of 2011, are currently serving corporate groups as well as leisure travellers from all over the globe. Additionally, the company has two more hotels in Causeway Bay on the drawing board, which are scheduled to open in 2012 and 2013, respectively. Not sitting still nor concentrating in only one area, Rhombus will be opening its China flagship hotel, Rhombus Fantasia Chengdu Hotel in early 2012. In December 2011, Hotel Verta by Rhombus was launched in London, England, a property which the group took over and remodeled as its first foray into Europe. Mak says, “Our goals are simple, to achieve Excellence in Service while Maximising Profits and Increasing Asset Values. I will personally recruit all management staff and oversee their training to ensure our standards are upheld. As a company, we expect each and every team member to provide personalised service from the heart and to take pride in serving people. As we expand, our practice is to provide every staff member with opportunities to advance and grow and, whenever possible, we will promote from within. Many of our Hong Kong team will have opportunities

and a choice to work and expand their experience in China and eventually Europe.” “With the London debut being in early December, I am flying back and forth between the UK and Hong Kong, in addition to overseeing the upcoming opening of our Chengdu property, so my schedule is extremely hectic; but it is very rewarding to see the growth and development of our people, our portfolio and the diverse service offerings to our guests.” His company has a proven track record of overseeing and managing hotels, but it also offers services to resorts, private clubs, service apartments, restaurants, extended-stay facilities as well as strata operations. “Rhombus International Hotels Group offers consolidated, realistic and practical turn-key packages for various development projects, including technical assistance and consulting services, advisory and representation services, management contract services, branding, quality assurance programmes and sales and marketing expertise. Our services may be provided as a complete package or customised to meet specific needs,” Mak explained. Always conscious of the return on investment for the owners of the various properties, Mak would rather attack the market than be controlled by its ups and downs. He is always looking for ways to improve the bottom line for owners and stakeholders.

“Our hotels are consistently over 90 percent full, even during the economic downturn. The company has plenty of room to grow, as we are approached all the time by people wishing us to manage their properties. As we expand in Hong Kong, China and Europe, we have our eye on the North American market, so that we can round out our scope”, Mak said. He certainly is an experienced international thinker and planner for the group. Additionally, he is certain that the demand for management expertise and knowledge, that is practical, efficient and customised to meet each property and region’s specific needs and requirements, will continue to be a demand in the hospitality marketplace. Client referrals have facilitated the company’s presence and expansion of operations in Asia within a relatively short period of time while collecting quite a few awards along the way. For example, the group was just named “Hong Kong’s Most Valuable Company 2011” by Mediazone Group, the “Most Progressive Hotel Group of the Year” in 2011 by the Asia Hotel Forum 2011, and the “Best Choice International Hotel Management Company for Investors” at the 11th China Hotel Forum in 2010-11. These are just a few of the awards and accolades acquired by this fast-moving, progressive company, with all the operating hotels winning various awards each.

• Named ‘Hong Kong’s Most Valuable Company 2011’ by Mediazone Group • Awarded ‘Most Progressive Hotel Group of the Year’ at the Asia Hotel Forum 2011 • One of the ‘Best Choice International Hotel Management Company for Investors’ at the 11th China Hotel Forum 2010-2011 • One of the ‘Best 10 Hotel Management Companies’ at the 10th China Hotel

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EXECUTIVE TRAVELLER LUGGAGE

RIMOWA

This page clock-wise: • RIMOWA: Inspiration taken from the sky, RIMOWA Salsa Air Ultralight Cabin Multiwheel® - Only 1.9 kg RIMOWA headquarter, Cologne, Germany Mr. Dieter Morszeck, CEO of RIMOWA and the founder’s grandson

PHILOSOPHY

RIMOWA customers in over 65 countries worldwide appreciate the longevity and lightness of the hard shell suitcases made in Germany. Since its founding in 1898, the familyowned company from Cologne set three basic principles: highest quality, minimum weight and a recognisable design.

A PREMIUM BRAND BACKED BY HISTORY AND TRADITION

or over more than a century, RIMOWA’s products have had a special status in the sector. It is one of the few manufacturers producing luggage in Germany. It is possibly the only manufacturer with such a continuous history and link with tradition – an exception in the industry. For RIMOWA, “Made in Germany” means: Excellent materials, brilliant technology and extraordinary design with the highest quality of workmanship. Pioneering Design The world’s first aluminium travel case, invented in 1937 by Richard Morszeck, son of the company founder Paul Morszeck, was inspired by aircraft aluminium. Then in 1950, grooves were put on the cases for unparalleled lightness and durability. Today these grooved aluminium cases have become iconic symbols of travel. Richard’s son, Dieter, now runs the Cologne-based family company, the third generation to do so. In 2000, Dieter Morszeck introduced another revolution in luggage design by inventing polycarbonate (used in aerospace technology) cases for the brand. Handcraft meets high-tech For quality control, all RIMOWA cases are German engineered and 100% crafted in the four factories in Germany, Czech Republic, Canada and Brazil. Strict attention to detail has always been part of the brand’s history and this year is no different. Around 200 parts are assembled in over 90 processes, with a perfect balance of modern technology and careful craftsmanship. RIMOWA also developed processes such as the polycarbonate casing mold

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to ensure flexibility, strength and an ultra-lightweight product. Achievements in 2011 The RIMOWA Group is expecting enormous growth for the 2011 business year and estimates around 145 million euros in sales, a 45% increase as compared to 2010. This follows an already considerable growth in 2010 for the Group, its biggest in history. The parent company, RIMOWA GmbH, reported increased sales of approximately 40% in 2010 and it is expected to record an increase of a similar scale for 2011. “2011 is absolutely gigantic! We were able to record strong growth once again. We did not expect such great success this year. We are currently doing everything possible to meet the demand, however the quality of our products always comes first, and we cannot simply quickly increase production. Even with increased production, we have to maintain a high standard of quality. Our delivery time is longer than usual due to current orders, but we hope our customers understand that and as soon as we have our production facilities set up, we will be able to meet demand as before,” said Dieter Morszeck, the founder’s grandson and CEO of RIMOWA. In 2011, the RIMOWA Group manufactured over 750,000 cases and sold them through selected retailers, company stores and flagship stores in over 65 countries around the world. “The Group currently employs over 1,000 people and we are pleased that we will probably be able to create even more jobs,” Morszeck added.

2011 Highlights Among the highlights this year were the openings of RIMOWA flagship stores in Los Angeles, Las Vegas, Milan, Prague, Tokyo, Taipei, and Shenyang, China Another milestone in RIMOWA’s history was this year’s RIMOWA JU52 events. RIMOWA is the sponsor of the classic Junkers airplane and organized several retailer events in Europe this summer. “Our relationship with the JU52 is very special. We have found a great partner and are able to tell a common success story. Our company’s history quite clearly began with aviation and we like to think of the JU52 as the first flying RIMOWA aluminum case with grooves. For me, it is always quite special to sit in this plane and to see the world from above”, said Morszeck. Outlook for 2012 For the year 2012, RIMOWA will open more stores and expand its retail spaces in Macau and China. It will be opening its Macau Flagship Store in Venetian Macao by March/ April 2012. The RIMOWA store in Venetian Macao will be expanded, covering an area

of approximately 3,000 square feet. It will be the largest RIMOWA store in Hong Kong and Macau. A new store will also be opening in Galaxy, Macau in the first quarter of 2012. It will be the brand’s fourth store in Macau. RIMOWA also plans to enter new cities in China, including Nanjing and Chengdu. The Group’s existing production facilities are being developed and new ones are being built. A new hightech plant is being built in the Czech Republic to meet the growth. A new construction project is also planned for the plant in Canada. The headquarters in Cologne is being expanded and adapted to meet the growing demand. Many new jobs were created in 2011 and RIMOWA does not yet see an end to this growth. In 2012, RIMOWA is planning to expand its network in Asia in the following markets: Ho Ching Ming City in Vietnam, and the cities of Jarkata and Bali in Indonesia.

FAST FACTS • 1950 The first aluminium suitcase with the characteristic grooves is launched on the market by RIMOWA. • 2000 Dieter Morszeck commissions the first light-weight luggage series out of polycarbonate. RIMOWA becomes the first manufacturer to introduce polycarbonate material to the production of luggage. • 2010 RIMOWA opens flagship store at its headquarter – Cologne, Germany, with an exhibit showcasing the entire history of the company on the second floor in the first RIMOWA museum in the world.

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SA SA INTERNATIONAL HOLDINGS LTD

RETAIL CHAIN This page clock-wise:

Suisse Programme Brand Ambassador - Kelly Lin, renowned Taiwanese actress and model; Largest “Sa Sa” store in Asia located at Albion Plaza, Tsim Sha Tsui.

Opposite page:

Dr. Simon Kwok, BBS, JP, Chairman and CEO

FAST FACTS PHILOSOPHY

Sa Sa uniquely positions itself as a multi-brand “onestop cosmetics specialty store chain” and puts emphasis on consistency in various aspects with the aim of providing quality and personalized services to customers. Sa Sa creates a trendy and comfortable shopping environment and open shelves allow consumers to choose the products of different brands at ease, offering them a brand new shopping experience. In 2010, a brand-new store design was launched as part of the Group’s continuous effort to standardize its store format and enhance its customers’ shopping experience, and to better showcase the brands that Sa Sa carries.

HOW THE ‘LION ROCK SPIRIT’ HAS PROPELLED SA SA INTERNATIONAL INTO A HONG KONG LEGEND

ard work, endurance, and not giving up easily are the words to live by for Dr Simon Kwok, who, together with his wife Dr Eleanor Kwok, founded Sa Sa International in 1978 with little more than a HK $20,000 lease and a dream of building a store devoted to cosmetics. At the time, they could little have known that within a few decades that little shop would grow into a Hong Kong legend. The story of hard work, never giving up, and having the Hong Kong ‘Lion Rock Spirit’, is an exemplar to all and a model to follow. But first, let us look back at how it all began. Dr Kwok and his wife Eleanor took over a 40-square-foot counter in the basement of the President Shopping Centre in Causeway Bay for HK $20,000 in 1978 to sell cosmetics. They were naturally good at it, and grew their loyal customer base such that within a few years that small counter grew much larger and occupied three shop spaces. The Kwok’s days were longer and harder than most. Their store opened at 10 am, but when others closed they kept working to replenish the stock and take care of the back end of the business, often finishing at 3 am. It was back-breaking, grueling work, but the Kwok’s believed that their hard work will surely pay off. But then the first shock came that threatened to undo all the good work they had done happened in 1989. Their landlord did what many landlords do in Hong Kong – he raised the rents, but not by a small amount. He wanted to raise the monthly rent from HK $17,000 to HK $45,000 and only gave the Kwok’s a

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week to make up their minds. Little did they know that the real reason for raising the rent was that a competitor had seen the success the Kwok’s have had with the location, and determined that the location, rather than the Kwok’s hard work and skill, must be the real reason for Sa Sa’s success. By the end of the week, Dr Kwok was given the devastating news. Not only had the store been lost, but their competitor had taken over the lease. This all happened in the days before e-mail and social media, so there was no way to communicate with customers who returned looking for Sa Sa but instead found another shop. So Dr Kwok took the plunge and opened the first stand alone store at street level. It was a bold move, and an expensive one, but he had to save the business. The new store was to be on Lockhart Road in Causeway Bay, near their old counter front in the President Shopping Centre. The problem was how to get all the old customers back. He did a classic guerilla marketing move and sent shop assistants down to the old location with signs alerting old customers to the new location. But would it work, or was location the key to Sa Sa’s success ? Dr Kwok continued to work very hard and impressed customers with his wide range of products and professional services. Word of mouth worked and business was very good. Sa Sa has since attracted a large number of both tourists and local customers. The store has also enjoyed wide media coverage in various countries. For example, some magazines and television channels in Taiwan and Japan ran stories about this supermarket-

like cosmetics outlet; and some guidebooks in Japan even listed Sa Sa as a place to visit in Hong Kong. To fuel its growth, Sa Sa listed on the Hong Kong Stock Exchange and entered China in 2005. Sa Sa has also lead the industry with many innovations that others copy, imitation being the kindest form of flattery. For example, in the 1980s, Dr Kwok noticed that an open layout and product display were very appealing to cosmetics shoppers, so he turned part of his shop into an open-shelf, self-service cosmetics store – a pioneering move which quickly attracted many copycats. In 1997, Dr Kwok turned Sa Sa International Holdings Limited into a listed multinational corporation, with himself as the Chairman and Chief Executive Officer, and the company has grown fast and far. Today there are more than 80 Sa Sa stores in Hong Kong and Macau, and around 240 retail points all over Asia. Sa Sa is the largest cosmetics specialty store in Asia in turnover, and the company’s market capitalization has exceeded HK $12 billion. Sa Sa was also an early adopter of the internet, setting up their first web site to sell cosmetics in 2000 and they now have customers in 210 countries. But in many ways, Dr Kwok has proved that with the right attitude and spirit, success and happiness is within everyone’s grasp. One thing that Dr. Kwok does invest heavily on is training. Many employees are not just trained in cosmetics, which have turned Sa Sa’s staff into more confident beauty professionals, but also in Putonghua to better serve mainland clientele. Sa Sa’s beauty consultants are well known for their helpful attitude and professional services, and other shops are keen on employing staff trained by Sa Sa. Sa Sa’s sales staff act as personal consultants to customers for their beauty needs. They require an in-depth knowledge of both products and customer requirements in order to provide tailor-made beauty

advice. Therefore, Sa Sa offers professional training programmes to its beauty consultants in different areas including product knowledge and sales technique. The cosmetics retail industry changes very rapidly, therefore Sa Sa’s staff are required to catch up with new trends and the evolving needs of customers. Sa Sa also sponsors many events such as the “Sa Sa Ladies’ Purse Day.” 2011 was is the seventh year that this glamorous race meeting was jointly presented by The Hong Kong Jockey Club and Sa Sa International Holdings Limited at the Hong Kong Jockey Club. The company also was the title sponsor of the 2011 Hong Kong International Dragon Boat Races, celebrating the 21st anniversary of the International Dragon Boat Federation. Dr Kwok has earned many awards in the past few years. He was awarded the HKSAR Bronze Bauhinia Star, and the Director of The Year Award in the category of Executive Directors of Listed Companies (SEHK – Non-Hang Seng Index Constituents) from The Hong Kong Institute of Directors (2011). He was appointed a non-official Justice of the Peace by the HKSAR Government (2008). He was the winner of the Owner-Operator Award at the DHL/SCMP Hong Kong Business Awards (2007) and received the World Outstanding Chinese Award from the World Outstanding Chinese Association and World Chinese Business Investment Foundation (2007). He was also the Retail Category winner in Hong Kong of the Ernst & Young Entrepreneur of the Year China (2006) (one of 11 winners in Hong Kong and mainland China) and received the Chinese Business Person of the Year (2005) Award from World Executive Weekly; the Distinguished Contribution Award for the Beauty Industry (Cosmetic & Retail) from the International CICA Association of Esthetics, CIDESCO Section China (2005); the Man of the Year (2004) Award from Hong Kong Business.

• Founded in 1978 with a 40 square-foot “Sa Sa” counter in Hong Kong • Listed on the Stock Exchange of Hong Kong in 1997 with an oversubscription of more than 500 times • Opened the first stores in Taiwan, Singapore and Macau respectively in 1997 • Opened the first store in Malaysia in 1998 • Launched sasa.com, an e-commerce platform, in 2000 • Tapped into the China market with its first store in Shanghai in 2005 • Opened the largest “Sa Sa” store in Asia (covering 10,000 sq. ft.) in Tsim Sha Tsui, Hong Kong in 2009 • Awarded Medium-Cap Corporate of the Year in Hong Kong in Asiamoney Best Managed Companies 2011 Awards • Currently has around 240 “Sa Sa” stores and single-brand stores/ counters in Asia

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STANDARD CHARTERED BANK (HONG KONG) LIMITED

RETAIL BANKING This page clock-wise: Standard Chartered Hong Kong main office building; Newly opened flagship branch in Lan Kwai Fong area. Opposite page: Basker Rangachari, Chief Marketing Officer, Hong Kong and North East Asia Consumer Banking, Standard Chartered Bank (Hong Kong) Limited.

FAST FACTS

PHILOSOPHY

Consumer banking in Hong Kong is a dynamic competitive environment serving both retail and SME segments, across a wide range of banking products and services. Standard Chartered’s consumer banking business serves multiple segments, from private banking, priority banking, preferred banking to small/medium businesses operating in Hong Kong and delivers a wide range of products including cards, loans, mortgages, investments, insurance etc. Standard Chartered Hong Kong is committed to lead the way across the industry in becoming a customerfocused organization.

THE OUTSTANDING RETAIL BANK

asker Rangachari, Chief marketing officer, Hong Kong and North East Asia, Consumer Banking, Standard Chartered Bank (Hong Kong) Limited says that the bank’s senior leadership team and all its staff are transforming banking services to deliver what it takes to win customers’ trust. According to Rangachari, The 2008-2009 financial crisis has redefined banking forever. Banks once perceived as too big to fail collapsed and sparked off a domino effect that dealt a heavy blow across the global financial system. Few banks that adopted a prudent approach to manage their businesses and focused on the basics of banking, liquidity, capital and customer services not only survived, but thrived.” “As a result of the crisis, customer expectation and willingness to trust have changed. Customers who were once drawn to high-risk, high-reward, short term opportunities now seek long-term safety and security, whilst desiring to optimize yield on their investments. Customers now want a bank that can be their trustworthy partner and advisor, and not just a bank chasing after the latest fads and trends.” In a recent review of ratings across the banking sector, Standard & Poor’s (S&P), the global ratings agency, upgraded the credit rating of Standard Chartered Bank to “AA minus” on 1 Dec 2011. “This upgrade sets us apart from the crowd,” Rangachari said. “Under the new methodology by S&P, we are one of the few international banks to

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have been upgraded by S&P. In fact, several large international banks were downgraded or remained unchanged, including many of our peers. This also makes us the only major international bank to have been upgraded by all three global ratings agencies – S&P, Fitch and Moody’s – since the beginning of the financial crisis. This endorsement by the rating agencies helps our customers feel much more comfortable with our business management capability, and builds trust in our consumer banking franchise”, he said. Building trust has to go well beyond a new slogan or a slick marketing campaign, according to Rangachari. Winning a customer’s heart requires a sensible brand promise supported by solid execution and a true commitment to customer centricity. “At Standard Chartered Hong Kong, we stayed open for business through the best and worst times in the last 150 years, showing customers that we are a reliable partner through thick and thin. We reinforced this principle with our ‘Here for good’ brand promise, which reflects the bank’s core DNA.” Word-of-mouth unprompted referral in spontaneous situations is the genuine testament of how great the products and services of an organization truly meet the needs of customers. To achieve this, the bank launched a ‘Customer Charter’ anchoring on three pillars: Service, Solutions and Relationships. To make it come alive, several strategic initiatives were completed, including:

• hands-on training for all employees to understand what it takes to deliver the brand promise in their respective roles; • transformation of internal processes to deliver friendly, fast and accurate service; • enhancing performance metrics to incorporate a customer point of view; • transforming solo products into needs-based financial solutions, for example a home bundle versus a mortgage. Rangachari said, “To ensure our customers know the seriousness of our commitment to provide worldclass service, we rolled out several first-in-market service guarantees. These include our guarantees on 8-minute teller service, 5-minute personal loan approval, 1-day mortgage service and, 48-hour business loans. These initiatives are testaments of our commitment to our brand promise ‘Here for good’. “We have also invested significant sums in Hong Kong to retrofit all our branches to meet customer expectations,” Rangachari says. “We recently opened a flagship branch in a prime location in Central, offering a new banking experience that aims to please all five senses of a customer. We continue to reiterate our community commitment through iconic programs such as Standard Chartered Hong Kong Marathon, our ‘Seeing is Believing’ eyesight restoration program,‘Arts in the Park’ and other communityfocused events.” Rangachari believes that “to build trust with the consumer of the future, the banking industry has to transform yet again.” People in general are leading an increasingly hectic life, leading to less personal time

in this multi-tasking world. As such, a bank’s marketing and business strategy should be designed to bring 24x7 transaction convenience to customers. The bank has to go to the customer, not the other way around. Rangachari said, “We tasted early success when we launched world-class online banking and mobile banking apps that make ‘Banking a Breeze.’ The Breeze family of Apps we launched for the iPhone became the # 1 downloaded App on the Apple Store within a few weeks of launch. This shows that a well-designed solution that meets a customer need, can deliver instant success.” Does this spell the end of brick-and-mortar banking? Rangachari thinks not. Despite growing popularity of non-face-to-face channels, many important financial decisions cannot be made through remote interactions. Direct conversation with a financial professional is vital in designing one’s financial future. “With this in mind, we design our strategies so that our mortgage masters, loan ambassadors, and relationship managers can meet customers anytime, anywhere to discuss their needs,” Rangachari says. Each banking professional business is supported by experts around the world, who can provide tailor-made solutions that meet customers’ needs - regardless how simple or complex it may be. In short, the banking industry has changed, and will continue to do so in response to ever changing customer needs. But what will forever remain is our commitment to the markets we operate in, and how Standard Chartered as a bank will always be here for customers.

• SCBHK has played a key role in establishing Hong Kong as a global financial centre. • Listed in Hong Kong since 2002, Standard Chartered is headquartered in London. • SCB’s history in Hong Kong dates back to 1859. In 1862, Standard Chartered started to issue banknotes in Hong Kong and has become the oldest note-issuing bank in Hong Kong.

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STARWORLD HOTEL AND CASINO

LEADING HOTEL AND CASINO This page clock-wise: StarWorld Suite, Temptations, Whisky Bar Al-fresco Terrace, StarWorld Macau Exterior, StarWorld staff activities Opposite page: Mr. Gabriel Hunterton, Chief Operating Officer of StarWorld Macau

FAST FACTS PHILOSOPHY

With its customeroriented focus and Asian heritage, StarWorld Macau is dedicated to providing world-class integrated leisure, entertainment and gaming facilities with an Asian Heart. Since its launch in October 2006, StarWorld Macau has provided unsurpassed guest experiences. The staffs act with deep personal respect for every individual that connects with StarWorld Macau. The properties ongoing success is due to a strong management team and highly trained staff. Corporate citizenship is a priority and StarWorld Macau prides itself on contributing to Macau’s all around development through employment opportunities, social events and community service.

STARWORLD MACAU PLEDGES ‘STAR’ TREATMENT FOR GUESTS

ecently celebrating the 5th year of establishment, StarWorld Hotel and Casino (“StarWorld Macau”) has taken pride in providing “Star Rated Accommodation”, “Star Rated Restaurants”, “Star Rated Entertainment” and “Star Rated Service” to every guest that walks in to stay the night, be entertained, or simply to enjoy a memorable meal. The 39-storey StarWorld Macau, a flagship property of Galaxy Entertainment Group, embodies distinct Asian characteristics in its design with a premium set of standard under its “Asian Heart” service philosophy that helps make the complex to be one of the leading hotels and casinos in Macau. The unparalleled services provided by StarWorld Macau has garnered over 30 prestigious awards in the past five years since its opening, including the “5Star Diamond Award” from the American Academy of Hospitality Sciences for five consecutive years and the “Top 100 Hotels of China” by the China Hotel Industry Summit, to name a few. “Star” Team Members is the Key Mr. Gabriel Hunterton, chief operating officer of StarWorld Macau attributes all the success to the team members he works with, and expresses that service is the most important aspect of the hospitality business. “It’s our service that makes StarWorld Macau stand out in this competitive market, and the most important part of our service delivery is definitely our team members.”

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Dedicated to providing a friendly working environment, different fun-filled activities and training to its team members, StarWorld Macau has managed to retain over 60 percent of the 4,000 employees who have worked since the opening five years ago. The low turnover rate not only indicates the high recognition the employees receive from the hotel, but also ensures that service is consistently maintained at a high level. In other words, guests can always be assured of an enjoyable and “star-rated” stay at StarWorld Macau. In addition to over 500 fully-equipped guest rooms and suites, StarWorld Macau also features an array of “Star-rated restaurants” which have earned reputation both locally and internationally. Temptations provides a wide selection of international menu and themed buffets, Inagiku has over 100 years of history in Japan which is inarguably one of the leading Japanese eateries in Macau. The highly acclaimed Jade Garden serves authentic Shanghainese food, and the renowned Laurel restaurant is famous for its traditional Szechuan and Hunan dishes. Sensations inside the casino offers efficient and mouth-watering meals while the Whisky Bar is known to be the chic venue for whiskies, cocktails, fine wines and cigar. Continuously dedicated to Service Excellence StarWorld Macau is dedicated to provide new and enhanced services through different refinement

projects to meet the needs of the customers nowadays. Recently, the property has opened a brand new terrace at its Whisky Bar which provides a fabulous panoramic view of the city and a cozy alfresco sitting area for its guests. In future, Mr. Hunterton expresses that he and his team will continue to strive to provide excellent service to its guests to maintain its leading position. In view of the robust economy of China and the increasing popularity of Macau, Mr. Hunterton believes that StarWorld Macau will continue to post a steady growth in its performance and embrace even more glorious five years to come.

StarWorld Hotel and Casino Address: Avenida de Amizade, Macau Telephone:(853) 2838 3838 Email:enquiries@starworldmacau.com Official Website: starworldmacau.com Facebook: facebook.com/starworldmacau Sina Weibo: weibo.com/starworldmacau

• Won over 30 awards since it opened in 2006, including being honoured by American Academy of Hospitality Sciences as 5-Star Diamond Award for the 5 consecutive years (2007-2011). • Renowned for Star Rated quality in hospitality, entertainment, accommodation and restaurants, • Opened in 2006; more than 500 guest rooms and suites designed for guests who expect discreet luxury and modern functionality • Owned and operated by Galaxy Entertainment Group

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THE CITYVIEW

BUSINESS HOTEL This page clock-wise: Top-notch accommodations, Function room, and inviting Cafe and Restaurant of The Cityview Opposite page: Alex Wu, General Manager of The Cityview

FAST FACTS

PHILOSOPHY

The Cityview strives to attain higher and higher standards through genuine personal service and attention to detail, including environmental issues. After our conversion into a four-star hotel in 2008, we have attracted travellers from all over the world, keeping the ‘international’ flavour of our former brand while upgrading the facilities. The high percentage of repeat customers and the number of prestigious awards indicates that the hotel is meeting its objectives satisfactorily. We also treasure our staff, offering continuing training and job monitoring to ensure that staff is working with a profession attitude and to the best of their ability.

CITYVIEW HOTEL’S BIGGEST ASSET REVEALED

he Cityview in Yau Ma Tei is on a famous site in Kowloon, the place where the Waterloo Road YMCA facility used to be. When it was still called “YMCA International House”, many young backpackers and independent travellers often chose it as the first stop when coming to Hong Kong because of its location and low costs. At September 2008, the YMCA management has renovated the place to a four-star hotel called “The Cityview”, trying to rejuvenate the hotel by upgrading both hardware and software to make it more welcoming and a fantastic location for travelers especially business and corporate clients. Now guests will be impressed by the intimate atrium lobby that offers a laid-back friendly atmosphere with a bright skylight and comfortable chairs. All the staff are smiling and greeting guests with warmth. Still part of the YMCA group, the healthy image associated with the brand of YMCA gives the clients more confidence and they believe the hotel is capable of serving them with good quality and reliable service. Alex Wu, general manager of the hotel, said, “After completing our renovation since 2008, we keep on generating stable and high yield business by exploring profitable market segments and now we can have a good balance of 40 percent business guests and 60 percent leisure travelers from all over the world. We are also very proud of the mix of nationalities that come to our hotel, around 13 percent from Europe and the same percentage from the USA mingled with the 27 percent of folks from South and South East

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Asia. We get a fair representation of guests from Taiwan, China, Australia and New Zealand too.” He stressed that the staff has contributed to the success of the hotel business. He said, “Our biggest asset is our staff, who receives many guest compliments for their personal and friendly service. Some businessmen come and stay here year after year as the hotel staff begins to feel like family to them. We train our employees and managers to love their work and to show more than the professional hospitality ‘smile’ but rather how to express feelings from the heart.” He added, “To make our guests feel like home when staying in hotel, we must firstly make hotel as staff’s second home and so they are able to serve guests with warmth. To enhance staff’s sense of belonging, we arrange regular company activities like football matches, birthday parties, annual dinners and outings to maintain good staff relationships. In between, we encourage feedback from our staff and ensure two-way communications, like conducting an annual staff survey and see what difficulties they are facing. There is also a ‘Talk to GM’ meeting carried out regularly to encourage our staff to express their opinions directly to me.” “We engage our staff in charity and community services as well, not only for brand building but also provide our staff with personal growth. For example we set up a volunteer team that is committed to a charity walk or donation activities”, Wu added. After years of business, the hotel is now one of

the official hotels for conventions and exhibitions that works with Hong Kong Trade Development Council and is a sponsor hotel for many events hosted by the city, so the hotel is usually very busy. In addition, the young and retired visitors are growing in number, especially since the hotel offers packages along with big airlines such as Cathay Pacific, Qantas, China Airlines and British airways that represent good deals. There is also quite an increase in mainland visitors as well. Wu said that the package travellers also get free breakfast and the hotel usually serves around 300 people their morning meal every day. Ideally nestled above Tsim Sha Tsui and adjacent to the bustling Nathan Road, The Cityview, is only a one-minute walk to MTR’s Yau Ma Tei Station that interconnects popular shopping and commercial districts as well as many tourist attractions in Hong Kong. It is convenient to other transportation as well, served by city busses, public light busses and many taxis. Since it is close to Temple Street with its famous Night Market, and the Ladies’ Market in Mong Kok, guests can experience the older parts of Hong Kong to get a feel for the city’s past. The 25-storey hotel features 413 modern guestrooms and suites with a full range of in-room amenities, including a personal safe, large-screen

TV with many channels, bathroom items, mini-fridge and much more. Guests can enjoy fine dining at The Balcony offering Chinese cuisine or taste delights in international buffet at City Café, or just unwind at the Atrium lounge with a drink and a snack. The open kitchen at the café creates an interactive dining experience, while The Balcony is renowned for its exquisite Cantonese dim sum, seasonal dishes, double-boiled soup, and more favourites. A variety of recreational facilities such as an indoor swimming pool, fitness room and sauna are also included. The ballrooms were designed with contemporary features to be suitable for many special occasions including special dinners, large conferences and incentive events. The business centre located at the lobby offers a full range of supporting services and plans are underway to allow access to Wi-Fi throughout the hotel by June of 2012. “Our future plans include going ‘green’ as much as we can. Plastic, used cooking oil and paper recycling and water conservation measures are already underway and next year we plan to join ‘EarthCheck’ and work towards our environmental certification and we encourage our partners, i.e. our guests and suppliers, to help us reach our goals. We love to make business but we have to love our earth,” Wu concluded.

• Dec 11- Golden Pearl Award awarded the Cityview as The Best Economical Hotel 2011 in Guangdong Hong Kong Macau • Nov-11 City Cafe received recognition of “2011-12 Discount Catering Yearbook Awards – International Buffet Restaurant – Seafood” • May 11- Chef Awarded Gold in Hong Kong International Culinary Classic 2011 • Jun-11 City Cafe acquired the Quality Tourism Services (QTS) qualification administered by Hong Kong Tourism Board

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BOUTIQUE HOTEL

THE MERCER

This page clock-wise: One Bedroom Suite living area, iPod dock in all rooms, Bedroom in One Bedroom Suite, The Mercer @ night Opposite Page: Rebecca Kwan, General Manager of The Mercer

FAST FACTS PHILOSOPHY

Hotel business is all about passion and enthusiasm. These are even more vital for boutique hotels; you also need to be creative, flexible and able to multitask. The Mercer is a new challenge for me and my team as it is located in the up & coming area in Sheung Wan, where even taxi drivers are not familiar with the location. We are excited to learn about all the compliments and look forward to see this hidden gem being explored. “Don’t believe what you see. When you believe it, you’ll see it. This has always been my philosophy.” General Manager Rebecca Kwan said.

ALLURING STYLE, LUXURIOUS SERVICE A boutique hotel in a gritty area of Sheung Wan is an award-winning architectural wonder and is uplifting the neighbourhood.

The Mercer Hotel is located on Mercer Street, a tiny road off Jervois Street in Sheung Wan, surrounded by metal recycling centres, sign shops, apothecaries, herbalists, coffee and tea sellers and many other small businesses, but just around the corner are hulking high-rises, The Cosco Tower and The Millennium, forecasting the changes to the area that are already underway. Already new restaurants and bars are opening near-by to cater to the guests of this striking new hotel and there are Michelin-starred eateries within walking distance for the guests. Officially opened in April 2011, The Mercer Hotel is the latest offering of the Boutique Series by Kosmopolito. In Central, the group also runs Central Park Hotel on Hollywood Road and Lan Kwai Fong Hotel @ Kau U Fong in SoHo. The new boutique hotel houses 55 spacious and luxuriously furnished rooms and suites, catering for stylish business and leisure travelers who appreciate design, technology and personalized service. General Manager Rebecca Kwan, who manages the three hotels in Central, is the consummate hospitality professional, yet never failed to overlook even the smallest detail. She personally chooses and takes care of the flower and plant presentations in the hotel and searches around for the deluxe and refreshing amenities, such as a Sicillian blood orange extract to ensure a ‘pampering’ guest experience, exhibiting a care and attention that carries through all her duties. Passion and enthusiasm are her core beliefs in being successful in hospitality industry.

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“It took me quite a while to choose the right Chinese name for this hotel because we want the name to be unique but easy to remember for a luxury, independent boutique hotel in this up and coming location. The English name is the name of the street, Mercer. For the Chinese one, we chose a name with same pronunciation as the district, Sheung Wan, but with another depth in the meaning of the characters. “尚 pronounces as Sheung” signifies exclusivity and luxury and “圜 pronounced as Wan” indicates environment, surroundings” and that is the impression we wish to give to this luxury boutique hotel property, a pampering boutique hotel experience. Fortunately the owner was very supportive with the idea.” “This hotel is in a very interesting location, as new art galleries, designer boutiques and restaurants opening in between the older, more traditional types of shops and industries. Guests are also attracted to the near-by Man Mo Temple, the Cat Street open markets, Hollywood Road antique shops, Herbal Medicine Street, the Dry Seafood Market, and the Ginseng and Bird’s Nest Market are all within 10 minutes walk. The hotel will bring in more tourists to this heritage district, where our guests can see a version of old Hong Kong and feel the local history,” she said. That’s no wonder why the hotel was introduced in New York Times as soon as it opened and the Sheung Wan district was described as akin of New York’s meatpacking district. This fascinating location matches exactly with the idea of boutique hotels and also the concept of new generation of luxe traveler. Apart from being pampered, they are also looking for entertainment and

stimulation in their travel experience. They demand authenticity and want to be immersed in culture. They prefer less ostentatious places, off-the-beaten-track destinations and areas that have preserved fascinating cultures and traditions. Boutique hotels and design hotels are becoming an indispensable segment in the hospitality industry. Before there were mainly small and independent owners of these properties, but recently even international hotel chains have started to brand series of hotel lines as “boutique” to cater for this fast-growing market. Each has its own characteristics; all trying to add an X factor in the standardized hotel formula. “It is really amazed to see the growth of boutique hotels, especially in China.” Kwan said. “For guests in The Mercer, we provide the luxury of an alternative; we ensure they are well taken care of by providing hassle-free service with free wifi, breakfast buffet, local calls and minibar. Every room is equipped with a DVD player and an iPod dock. There is also a coffee machine, and a microwave in the One Bedroom Suites. The hotel also has a select DVD library. The staff is constantly updating our website especially designed for in-house guests with timely information about events, attractions and what’s happening in town.” Kwan added. “We try to provide everything at their finger tips, so that guests feel more at home here.” Except for the tiny balcony off the hotel dining room, the entire hotel is non-smoking as people are more concerned for their health. The non-smoking policy can ensure every guest has a refreshing experience. “The Mercer, because of its proximity to the Sheung Wan MTR and Macau Ferry Terminal, is a favourite of art dealers and wine distributors, along

with many of the staff from the auction houses who come to Hong Kong in spring and autumn. People in finance are within walking distance of Exchange Square and ifc, and other big banks and financial institutions,” Kwan added. She said, “However, we try to keep a balance of around 65 percent business and 35 percent leisure travellers and always strive for an international clientele that reflects the reality of Hong Kong.” The hotel won the “China’s Most Successful Design Award” prize this year for Barrie Ho, a local Hong Kong architect who’s vision of dividing the exterior into blocks, demarcated by extended floors on different sides of the building, a bit like stacked dice, was carried through with a black and white colour scheme. Also the lowest blocks are brightly lit at night, making the neighbourhood glow. The lowers floors offer cozy deluxe rooms, and the upper floors hold the spacious one bedroom suites. “The hotel has done really well since its opening,” Kwan said. “We have already gained quite a few reviews on the web. Guests comment The Mercer is a gem in the city, with good value of money, friendly service, everything is well taken care of so we have gained lots of referrals already.” “We are planning to work more closely with the surrounding restaurants, galleries and shops. At the moment, we have joined HKHA charity steps for Unicef, and we will work with some restaurants who are supporting the local charities. Also, in order to enrich the guests’ experience, we are looking into adding new elements, like yoga class in the room package to ensure their unique experience get extended during their stay at The Mercer,” she said.

• Kosmopolito Hotels International Limited is a fastgrowing developer, owner and operator of value, midscale, upscale and boutique hotels in Hong Kong, Malaysia, Singapore and China. • KHI owns and manages 24 hotels, of which 7 seven are under development. • Kosmopolito Hotels International Limited was set up in January 2007 and listed on the Hong Kong Stock Exchange in October 2010.

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THOMAS, MAYER AND ASSOCIES

LAW FIRM This page: 15th anniversary party of TMA with clients and friends Opposite page: Partners Eric Mayer (left) and Eric-Jean Thomas (right) celebrating their 15th anniversary

FAST FACTS PHILOSOPHY

Our approach is to focus on making a valuable contribution to the progress of our client’s business in a potentially complicated international environment. We develop longterm relationships built on mutual understanding and trust.

THOMAS MAYER & ASSOCIÉS GRANTS SCHOLARSHIP IN FRANCE

s they celebrated their 15th birthday, the lawyers of Thomas Mayer & Associés (TMA) decided to do something unprecedented - they announced a scholarship for French and legal studies for a student from Hong Kong. The French law firm’s senior partner Eric-Jean Thomas and managing partner Eric Mayer were hosting 180 guests, friends and well-wishers at the celebration on October 12 at the Kee Club, when they made the announcement of the Semester in France scholarship that will be awarded to a student of the law in a Hong Kong university. Consul-General of France in Hong Kong Arnaud Barthelemy was among invitees who gathered to toast the milestone of the law firm, which also is the legal adviser to the Consulate General. “This has never been done before,’’ Eric Mayer says, referring to the scholarship, adding that it represents the French law firm’s commitment to Hong Kong and its aim to nurture future legal talent. “A scholarship recipient will spend a semester studying French language and French law at a university in France. And then the student will get three to six months training in our firm. This is open to a third year law student in Hong Kong.’’ This firm of French lawyers has demonstrated its staying power for 15 years in Hong Kong and in Paris, where it operates a subsidiary. The Hong Kong

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firm was established in 1996, and the Paris office opened in September 2010. The firm assists Chinese investors in France and provides initial advice to French investors who explore business and investment opportunities in Asia, especially in Hong Kong and China. TMA Paris is registered with the Bar to the Court of Appeal of Paris. “Our partners have continued from the beginning,’’ says Eric, noting that this demonstrates the firm’s resilience and its growth over the decade and a half. “We have more than 30 staff in Hong Kong and Paris.’’ Eric says that with strong bonds developed over the years, the firm felt it was time to make a contribution. Offered in conjunction with the Consulate General of France in Hong Kong the TMA Scholarship in French and Law is intended to promote the learning of French as a foreign language and to introduce students to French law, whose civil law principles are radically different from Hong Kong’s common law. “The recipient will live with a French family for two months in Vichy, and take a crash course in French in a reputable institution specializing in intensive teaching,” says Eric. This means the scholarship recipient will have the chance to embrace and absorb the French way of life, before studying a semester in the third year bachelor program from September to December taught in French.

The language lessons involve eight weeks of intensive study and will allow them to improve their French so they have the skills to enter a French university with confidence. Eric-Jean, the senior partner, underlines that all expenses including air fare, tuition fees and pocket money are covered by the scholarship. The student will join the final year undergraduate law programme at the French partner university of their home university for one semester before starting on a three-to-six-month internship with TMA. This intern may thus one day join TMA and become a part of its team providing legal advice in business law. “We are the lawyers to large French groups as well as SMEs that are developing their business in Asia”, says Eric-Jean. “We serve French clients in retail, in high fashion, and food and beverage, as well as technology and the industrial sectors.’’ TMA also advises SMEs that have big operations. Whatever they advice on and whoever they advice, TMA forms a bridge between many French and continental European entrepreneurs and companies trading with and investing in Hong Kong, China and the Asia-Pacific. International business law, merg-

ers and acquisitions, joint ventures, company and commercial law, international tax law, international arbitration, private international law, and immigration law, are its practice areas. Eric points out that some clients have built up long-term relationships with the law firm because the services are adapted to their diverse requirements and depending on the scale of their operations. One critical factor is that the firm’s clients can be assured of its experience from the local environment and its extensive network of contacts in Hong Kong, China and the Asia-Pacific region, as well as from its close relationships with leading financial institutions in Asia. For example, companies that plan to set up in Hong Kong, in China, or more in Southeast Asia can rely on the expertise of TMA to incorporate a new company or enter into a merger or an acquisition process. In some cases, they may need the advise of TMA to set up joint ventures in China. In situations such as this, TMA offers the clients its local and international contacts, and its experience with international and local laws, to advise on all operations relating to the legal and financial strategy of the company concerned.

• The practice celebrated 15 years • Paris office, a subsidiary, opened in September 2010 • 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.

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UNIVERSAL AUDIO & VIDEO CENTRE

AV SHOP This page: Universal AV’s products; Universal AV Pacific Place branch; Universal AV Landmark branch Opposite page: Helen Lip Yee, Director

FAST FACTS PHILOSOPHY

Going the”little extra mile” to please our customers is our company’s motto. We pride ourselves in applying our expertise in selecting the right products for our clientele and offering a “through train” service from product advices, delivery, installation to repair services. Ensuring our customers their peace of mind is the key to our long term relationships with our clients.

EVERYTHING DIGITAL WITH A SMILE Good service and smart inventory keeps Universal AV not only alive but thriving

igh-end audio and video equipment, flat-screen televisions, laptop and tablet computers, digital cameras and fancy smart phones plus dozens of accessories all sit companionably together in the Universal AV Centre shops, luring in business people from Hong Kong and travellers from all over the world. Universal AV Centre opened its first store in Hong Kong’s prestigious mall, Pacific Place, in October 1990. Now with a second store in another Central premium shopping area, the Landmark, and a third store in Tsim Sha Tsui’s Miramar Shopping Centre, Universal AV has been serving customers loyally for 21 years and is now established as one of Hong Kong’s most popular “boutique” AV stores. Clientele has been changing over the last 10 years with 9/11 and the crash of 2008 but the stores are still doing well. Director Helen Yip Lee said that mainland Chinese customers, who are a sizable percentage of tourist sales in recent years, are rapidly becoming more sophisticated and go for newer electronic inventions and not just the brand names. “Chinese clients now like high-end cameras rather than the digital “point and shoot” variety and they often ask for superior lenses. My staff will help them figure out what is appropriate for their level of skill and purpose. Some mainland clients will come in and buy entire

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entertainment systems from us. We take care of everything for them, shipping, paperwork, taxes and installation by our trained staff. They buy from us because they trust us and know the system will work correctly once it is installed.” she said The secret to success is the team of knowledgeable sales staff and the quality of service it provides. Director Helen Yip Lee said, “We are completely devoted to establishing long-term relationships with our customers and are always prepared to go that ‘little extra mile’ to please our customers. “We were very proud of being among the first recipients of the Quality Tourism Service label here in Hong Kong and we have just received a special certificate this year for being one of the first batches of Hong Kong merchants who have been accredited for 10 consecutive years under this scheme.” “The shops serve a special type of client, Mrs. Lee explained. “Being quite small, we do not try to go for the lowest prices. We keep a much smaller, well-selected inventory so that nothing in the store is outdated. Our staff is very well-informed about the latest trends and our customers count on us to have the newest products with the most features,” she said. The Universal staff has to keep on top of all the developments in several technologies. Lee said, “The advent of so many digital products has blurred the lines between products. So many

smart phones have good cameras and are easier to use, so some people are abandoning compact cameras, or upgrading to larger formats and lenses for special shoots. TVs are beginning to merge into the Web or are controlled by computers. Apple and Google are working on computer televisions so technology is always evolving. There is even a bit of a retro movement towards larger cameras and oldfashioned telephones”. Lee adds, “Our trained staff takes the time to analyse the customer’s true needs. Some folks just like to buy the latest product out, such as 3-D TVs. One customer wanted two, one for the living room and one for the bedroom. Our staff talked him out of the bedroom unit as it would be a waste of money for him since he is not a real fan of 3D movies. Customers know we are honest and are not always trying to upsell.” Since the staff is so knowledgeable, the clientele doesn’t have to be. Interior designers are beginning to incorporate plans for home IT in their designs so that there is one docking station and all the compo-

nents can be controlled from there as seamless unit. The Universal AV staff has to know how to work with modern design and integrate all the pieces for them. “We count on our local customers and feel almost like one of the famous Swiss watchmakers, which advertises their watches are passed from generation to generation. Some of our customers are the sons or grandsons of our early customers, which shows respect for the Universal AV brand and a loyalty that surpasses common commercial transactions,” she said. Universal AV staff has been known to make house calls for customers who are having trouble with their home entertainment system, and they are always willing to help with their customers’ repair needs. When people move house, the Universal AV staff will help the client set up their entertainment system in the new place, replacing old cables and reconnecting all components of the system. This type of special service builds up stable customer relationships, so people return to the same shop for upgrades. That “little extra mile” really pays off for Universal Audio

• Universal AV was founded in 1990 • There are now 3 branches: Pacific Place in Admiralty, The Landmark in Central and Miramar Shopping Centre in Tsim Sha Tsui • The company employs 30 staff and trains them to serve the customers from purchase through installation • Clients come from all over the world • Most of the best brands of televisions, smart phones, digital cameras, audio and video equipment and other electronic gadgets is available

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ZCHRON

DESIGN GROUP This page clockwise: Concept Designs Opposite page: Nison Chan, Chairman and Chief Designer of Zchron

FAST FACTS PHILOSOPHY

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. We cater to the residential, retail and corporate markets. By being designer, project manager and main contractor, we are able to manage each project effectively and efficiently by coordinating with all the suppliers and sub-contractors.

WHAT YOU NEED TO KNOW ABOUT ZCHRON

chron’s Nison Chan, chairman of the group and chief designer, said, “Our clients, who include the top companies and high-net-worth individuals in Hong Kong, know that we keep our promises to complete projects and bring them in on time”. Many large companies, such as SaSa, publically listed Poly (Hong Kong) Investments Ltd. and Carlsberg have come back and hired the company again to refresh shops and head offices in 2011. Chan said “Poly Investments have a large office in Admiralty with over 100 staff. It needed to overhaul the office to accommodate more I.T., big screens, computers, servers and other technology to improve efficiency and workflow.” Even sections of the Hong Kong government are listed as clients of this architecture and interior design company started in 1994 by Nison Chan, chairman of the group and chief designer. Chan said he has developed an innovative project management system to make sure all the company’s projects are delivered on time and on budget. “We treat our customers’ money as if it were our own, and we treat our customers as our friends whom we don’t want to let down. We take care of everything, from brainstorming to planning to designing and building each project. We also manage the subcontractors, who have to go through the same process as our own designers and workers. “The construction process guide allows us to monitor every project down to the last detail on a daily basis.

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Our process book explains how to do everything, from large residential flat and home flooring and bathrooms to large-scale commercial and office designing or remodeling, and how to order and use the correct materials. Our customers trust us to make the designs harmonious and functional, whether residential or commercial. “We have learned from our mistakes and realize that discipline is very important for every project. We take photographs of our progress and send one every week to our customers so they can see what is happening. We must finish on time because we know the inconvenience that is caused by delays and overruns,” he said. He proudly displayed the thank-you and referral letters that the company has accrued over the years. “All our business now comes from referrals, from show flats to private homes, from commercial businesses to large property developments. More than half our clients are from the Mainland now, and business is booming,” Chan said. One of the jobs of which he is particularly proud is the Consulate General of Kuwait’s residence in Hong Kong, which was put to world-wide tender. Zchron won the bid against all the other designers from the USA, Japan and Europe. Zchron specialises in large luxury properties, starting around 3,000 sq. ft. “The bigger, the better,” according to Chan. In the beginning, Krishom’s clients were mostly from the commercial and retail market sectors. Its impressive portfolio of commercial clients reads like the

listings on the Hong Kong Stock Exchange, ranging from supermarkets chains to fashion to beauty outlets as well as banks and department stores, and show flats for developers to demonstrate clever use of space along with good design. Repeat customers for show flats include Cheung Kong (Holdings) Ltd., Henderson Land Development Company Ltd., Hysan and K.Wah International Holdings Ltd. Retail and office clients include, but are not limited to, Hang Seng Bank, The Hong Kong Jockey Club, JCDecaux, Escada, Polo Ralph Lauren Sourcing Pte Ltd., Max Mara, Emporio Armani, SaSa, Toys’R’Us, The Body Shop, Starbucks, Fortress, 3M, adidas, AIG, DKNY, Carlsberg, Wellcome and ParknShop. This list shows the range and scope of the projects that Krishom undertakes and completes satisfactorily. Chan decided to expand the company by adding another subsidiary, Zchron Design, which is dedicated to the luxury residential arena. The residential projects range from luxury developments such as High Cliff, May Road, Manhattan Hill, Villa Bel Air on the Peak to Regalia Bay. This year, the company finished three huge projects, one big house in Repulse Bay, one over 10,000 sq. ft. in Clearwater Bay and a duplex in Century Tower in Midlevels. Chan was happy that many of his new clients come by referral from earlier clients. “Our clients are so happy with our work that they do not hesitate to recommend us to their friends, especially for the high-end jobs”. Chan said, “Quality in every field and aspect of the whole process, from implementation to completion,

is the key to our success. Our clients feel that with our high integrity and years of professionalism, they can depend on us, even when it comes to choosing the style, colour and texture in materials that will perfectly match the design, from bed sheets to wallpaper. “Since we have a factory in China, we have also been asked to make the furniture and fixtures as well as bathroom and kitchen fittings,” he added. “We pay the same amount of attention to the factory production in China as we do to our Hong Kong clients’ jobs.” Chan feels comfortable about the future. As people wish to move up in their societies, they want a more gracious lifestyle and are willing to hire firms with good reputations. He sees more luxury residential properties coming on line, and more prestigious commercial clients wishing to upgrade industrial or business properties. In conclusion, he adds, “In order to maintain our current position in both the commercial and residential fields in the interior design industry, we need to continue performing to the highest level of quality in design and building. This is the secret of our success. Our ‘design and build’ concept has proven highly successful so far.” By being innovative and not restricting itself to design only, Zchron’s concept of ‘design and build’ has transformed perception into reality. Its emphasis on a whole range of capabilities and a reliable system that demands attention to detail, dedication and careful project control has placed Zchron in an enviable position in a very competitive field.

• 1994 -- Nison Chan starts Krishom Design Group to cater to clients in both the • commercial and residential markets, providing design and project • management to completion • 1994-2011 – 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 • 2006 – Started Zchron Design to cater strictly to the residential market,

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Index STATISTICAL TABLES AND CHARTS FOLLOWING AN ALPHABETICAL LISTING OF THE STATISTICAL TABLES AND THE PAGES WHERE THEY APPEAR Average Monthly Salaries of Selected Occupations ............................................................................................................. 64 Average Wage Rates for Employment up to Supervisory Level .......................................................................................... 65 Statistics on Labour Force, Unemployment and Underemployment .................................................................................. 67 Vital Events ............................................................................................................................................................................. 67 Producer Price Indices for Industrial Sector by Selected Industry Grouping (Year 2008=100) ......................................... 68 Real Estate Project Statistics ................................................................................................................................................. 68 No. of Establishments, Persons Engaged and Vacancies (Other than those in the Civil Service) Analysed ...................... 69

hong kong’s high flyers OUTSTANDING ENTERPRISES 2011 AIA Pension & Trustee Co. Ltd ................................ 69 ABN AMRO Private Banking .................................. 78 AGEAS Insurance Company ................................... 80 Air Pacific ............................................................... 82 Altruist Financial .................................................... 84 Group Limited

HSBC Insurance (Asia-Pacific) ................................ 104 Holdings Limited Jia International Ltd ............................................... 106 PrimeCredit ........................................................... 108 Rhombus International Hotels Group ................... 110 RIMOWA .................................................................. 112

Bose ........................................................................ 86

SA SA International Holdings Limited .................... 114

Canadian International .......................................... 88 School of Hong Kong

Standard Chartered Bank ...................................... 116 (Hong Kong) Limited

Bao Gallery by Crystallize•Me ............................... 90

Starworld Hotel & Casino ...................................... 118

DHL Global Forwarding (HK)Ltd ............................ 92

Sound Concepts Ltd ................................................ 120

Dormirest ................................................................ 94

The Cityview ............................................................ 122

Frey Wille GmbH & CoKG ....................................... 96

The Mercier ............................................................ 124

Fuji Xerox (Hong Kong) Limited ............................ 98

Thomas, Mayer & Associes .................................... 126

Godiva Chocolatier .................................................. 100

Universal Audio & Video Centre .............................. 128

Henderson Real ...................................................... 102 Estate Agency Ltd

Zchron Design ......................................................... 130

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