MB 93 | January 2012 by Macau Business

EXCLUSIVE INTERVIEW

Macau MOP 35 Hong Kong HK$ 40 Mainland China RMB 35

JANUARY 2012

Photo: Carmo Correia

Politics 24 The 12 Labours of Chui Chief executive faces several challenges this year that could change his political fate

Special 32 Hail the dragon Chinese New Year is also the best time to do business

Property 48 Market watch Preliminary estimates suggest 2011 was one of the best years yet for the sector

CEO Interview 52 Francis Lui Galaxy Entertainment’s vice chairman says he wants an even spread of tables across the city’s six gaming operators

JANUARY 2012

Gaming 60 Billions race Gross gaming revenue growth reaches new all-time high in 2011 62 Stock watch Citigroup says there is still “appreciable upside” for gaming stocks 66 Outer limits Sands China is updating the high-limit gaming area at the Venetian Macao 68 Resort reality check Asia’s casino resorts still rely heavily on gaming for their survival 74 Digital betting The mainland online community is creating tremendous opportunities for local casinos keen on digital marketing 76 The biggest ever ICE Totally Gaming 2012 to welcome over 400 exhibitors

SEPTEMBER JANUARY 2012 2011

MB Report 80 Stubbed out Ban on smoking in most public venues is stirring controversy

Technology 92 Big tech trends Ovum’s main business IT predictions for 2012

Human resources 94 A crisis of creativity A lack of creativity in the workplace in Macau is cause for concern 98 Playing for keeps Is pay the only way to lure and retain talent?

Business 103 Capitalism for a cause Social enterprises have yet to take off in a big way

JANUARY 2012

Opinion 10 From the publisher’s desk Paulo A. Azevedo 13 Editorial Emanuel Graça 21 Follow the leader Bill Kwok-ping Chou 28 Hopeful of change José I. Duarte 78 Champs and chumps Gustavo Cavaliere 91 Should we ban cigarettes? Peter Singer 101 Trouble in paradise Keith Morrison 106 Demystifying the Chinese economy Justin Yifu Lin

JANUARY 2012

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JANUARY 2012

Silence on road safety is deadly A SIGNIFICANT NUMBER OF MACAU’S motorists appear to have no driving skills at all. In any civilized society they would be labelled savages, such is the way they behave on the roads. They do not respect the traffic code, morals or common sense. They are a disgrace to the city’s image. It is one thing if they are poor drivers because they are not prepared properly but when chaos runs wild because the authorities do nothing about it, it is something altogether different. There is an argument that Macau drivers are not inherently bad. They drive poorly because they do not know any better. Some driving schools are sub-standard and the traffic police do not always do a good job. Bad drivers multiply because the Transport Bureau insists it has no tools to change the current situation. Unlike Hong Kong, Macau does not educate drivers through constant road safety awareness campaigns. Efforts aimed at prevention are minimal.

In the end, as is typical here, people are left with a bunch of rules that no one enforces. Accidents caused by disrespecting basic road rules – a pedestrian was hit and killed on a crosswalk just a few weeks ago – should have been long eradicated by education campaigns, greater supervision of the training provided by driving schools and more severe punishments for those who fail to respect the traffic code. Producing more laws while allowing drivers’ attitudes to remain unchanged because those same laws cannot be policed is nonsense. The responsibility must go all the way to the top of the pyramid. It is unacceptable and deplorable to have government secretaries unwilling to bear responsibility for the complete inability of the teams they supervise. How long until the silence of the guilty ends? More importantly, when will Macau witness a change of mindset, which seems frozen in time?

Accidents caused by disrespecting basic road rules – a pedestrian was hit and killed on a crosswalk just a few weeks ago – should have been long eradicated by education campaigns, greater supervision of the training provided by driving schools and more severe punishments

High-speed expectation

Boost to editorial quality

A NEWSPAPER PUBLISHED A REPORT ON THE growing public dissatisfaction towards the city’s sole Internet service provider last month. The report said the number of complaints to the Consumer Council had grown exponentially year-on-year in 2011. Macau’s slow Internet connection speed is nothing new. CTM’s investment in its network is still less than acceptable. For many, fibre-optic broadband connection is but a mirage as the service is not widely available. Every time you call the company to complain about Internet speed, it is quite upsetting to just hear someone on the other end of the line advising you to “switch off the modem and switch it on again”. While it is true that the cost of Internet access is not high, it is also true that the poor service Macau is provided is due to the lax

THE COMPANY TO WHICH Macau Business belongs is about to launch a new editorial project, a business newspaper, to be led by Tiago Azevedo. This year also marks the re-structuring of the group. Soon, the first issue of the newspaper will be out, hopefully fulfilling the growing need for a business daily focused on Macau and the surrounding region. At the same time, Macau Business will intensify its vocation as an investigative news publication, hiring more staff, namely Sara Farr as deputy editor-in-chief. The De Ficção – Multimedia Projects company, publisher of Macau Business and its Chineselanguage sister magazine Business Intelligence, is now part of Project Asia Corporation, which also includes Global Asia Media, the joint-venture that publishes luxury publication Essential Macau; Goldfish creative agency; MBSK Events, which organises the biggest annual local charity golf tournament; and Signature Events, a premium events company.

supervision of regulators. CTM, as a business-savvy company, behaves in the usual Macau way, doing its best to remain “politically correct”. Instead of increasing its investment in such an important area for business, in a world that demands ever faster access to online information, it took the easy way out and dropped prices. Consumers feel they are getting justice – while the service remains slow, at least it is cheaper – and the shareholders are left happy, with annual results surpassing the projected targets. Shareholder happiness is not a problem, nor should it be blindly condemned. What we would like is for CTM, as a provider of a public service, to stop hiding its head in the sand and boost its investment in infrastructure, even if a long overdue liberalisation is looming on the horizon for the fixed-line telecommunication market.

VOL.1 Nº93

Editorial Council Paulo A. Azevedo, Albano Martins, Duncan Davidson Founder and Publisher Paulo A. Azevedo pazevedo@macaubusiness.com

Editor-in-Chief Emanuel Graça emanuel.graca@macaubusiness.com

Assistant Editor-in-Chief Sara Farr sarafarr@macaubusiness.com

Executive Director Business Development Luis Pereira pereiraluis@macaubusiness.com

Senior Analyst José I. Duarte jid@macaubusiness.com

Hong Kong Bureau Michael Hoare (Chief), Anil Stephen michael.hoare@macaubusiness.com

Special Correspondent Muhammad Cohen info@muhammadcohen.com

Beijing Correspondent Maria João Belchior maria_belchior@yahoo.com.br

Manila Correspondent Max V. de Leon maxdeleon_080975@yahoo.com

Assistant to the Publisher Weng Fung weng.fung@macaubusiness.com

Art Directors Connie Chong, Luis Almoster design@macaubusiness.com

Photography António Mil-Homens, Carmo Correia, Greg Mansfield, Gonçalo Lobo Pinheiro, John Si, MSP Agency, Agencies Illustration G. Fox, Rui Rasquinho

Letters to the editor

editor@macaubusiness.com

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Contributing Editors Alexandra Lages, Christina Yang Ting Yan, Derek Proctor (Bangkok), Filipa Queiroz, Helder Beja, Joana Freitas, João Francisco Pinto, José Carlos Matias, Kahon Chan, Kim Lyon, Lia Carvalho, Lois Iwase, Luciana Leitão, Ray Chan, Sara Silva Moreira, Sofia Jesus, Steven Chan, Tiago Azevedo Regular Contributors Branko Milanovic, David Cheung, David Green, Dominique Moisi, Eswar Prasad, Frank J. Fahrenkopf Jr., Gustavo Cavaliere, Hideaki Kaneda, José António Ocampo, José Sales Marques, Joseph Stiglitz, Leanda Lee, Keith Morrison, Kenneth Rogoff, Kenneth Tsang, Marvin Goodfriend, Pan Yue, Paulo J. Zak, Peter Singer, Richard Whitfield, Rodrigo de Rato, Robert J. Shiller, Sin-ming Shaw, Sudhir Kalé, Sun Shuyun, Vishakha N. Desai, Wenran Jiang Advertising Xu Yu, Irene irene@bizintellingenceonline.com

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José Reis

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Media Relations GRIFFIN Consultoria de Media Limitada Translations PROMPT Editorial Services, Poema Language Services Ltd, TLS Translation and Language Services Agencies AFP, Lusa Exclusives Gambling Compliance, Hoje Macau, Project Syndicate Printed in Macau by Welfare Ltd Published every month in Macau. All Rights Reserved. Macau Business magazine is a media product of De Ficção - Multimedia Projects Disclaimer: In Macau Business magazine, the translation of MOP amounts into US$ amounts (and vice-versa) is made at the rate of MOP 8 to US$1 for the purposes of illustration only.

Address: Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, No. 679 Av. do Dr. Francisco Vieira Machado, Macau Tel: (853) 2833 1258 / 2870 5909 Fax: (853) 2833 1487 Email: editor@macaubusiness.com DECEMBER 2011

13 13

Emanuel Graça Editor-in-Chief

emanuel.graca@macaubusiness.com

Make your mind up

One of Fernando Chui Sai On’s main headaches for 2012 will be deciding which casino operator or operators will be given the green light to break ground in Cotai

THIS YEAR IS SET TO BE THE MOST IMPORTANT SO far, politically, for chief executive Fernando Chui Sai On. There are several events that will definitely influence how people judge his performance. One of Mr Chui’s main headaches will be deciding which casino operator or operators will be given the green light to break ground in Cotai. Nobody is expecting further delays to this decision. After more than three years of postponements, the government needs to take a stand on this matter this year, for several reasons. Sands Cotai Central will finally open, ending the first stage of the development of Cotai. As the construction work finishes, hundreds of construction workers will be out of a job and many subcontractors idle. There is a need for big new projects to keep them busy and avert social instability. The casino resort projects in Cotai still awaiting government approval would do the trick. That is, unless officials are expecting to use the laid-off construction workers and idle subcontractors to help build the light rail transit system. Since the government has yet to present anything resembling a comprehensive employment policy, one can only guess. Keeping the building momentum going in Cotai would also benefit Macau’s economic growth during a period of international financial and economic uncertainty. Although growth in gross domestic product is driven by gross gaming revenue, the construction of casino resorts is a big contributor to gross fixed capital formation. It also pumps up inbound foreign direct investment. By failing to issue any casino construction permit in 2012, the government would be sending the wrong signal to casino operators and financiers, since officials have already indicated that all casino concessionaires will be allowed a foothold in Cotai. With no schedule announced yet for the renewal of the gaming concessions – or clear procedure for going about it – such a failure would only rattle

an industry already facing a high degree of uncertainty. Such a failure would also detract from the government’s international credibility, which is already suspect because it lacks a clear strategy and flip-flops in making policy for the gaming industry.

Grand finalists The only question remaining then is: which casino operators will be authorised to break ground in Cotai in 2012? It is unlikely that all projects awaiting approval will be given the thumbs-up this year. The simultaneous construction of four or more mega-developments would not be feasible. All contenders have sound reasons to go first. SJM Holdings Ltd. has built what is the city’s second-most recognisable landmark after the Ruins of Saint Paul’s – the Grand Lisboa. MGM China Holdings Ltd. can point out that the non-gaming expertise of its parent company, MGM Resorts International, would bring added value to Cotai. Wynn Macau Ltd. may highlight that when its peninsula casino-hotel opened, it established new standards for the industry. Even Melco Crown Entertainment Ltd., already present in Cotai, can say to the government that when it acquired the majority stake in the Macau Studio City project it solved a tricky problem for officials. It would be disappointed, to say the least, not to be authorised to undertake the project soon, gaming facilities and all. Adding more drama to the plot, Galaxy Entertainment Group Ltd. and Sands China Ltd. still have land in Cotai yet to be developed. Choosing which company should go first will be far from easy. Whatever the government’s choice, it will be criticised. The only way to blunt the criticism is to ensure that the decision is properly explained and that the process is open to scrutiny. The past practice of suddenly publishing casino land grant contracts in the official gazette without a word of explanation is no longer acceptable. DECEMBER 2011

Parking ticket immunity I don’t understand why motorcycles are allowed to park in the “no parking” area between Macau Square and the Luso Bank Building. Can anyone explain? It seems that motorcycles have some kind of immunity. They accumulate like flies on rotting meat. As soon as one parks illegally others rapidly appear. It’s like some kind of safe haven. Is it because, on the rare occasions when tickets are issued, it takes so long for each one? Safety in numbers?! Surely, if parking is illegal it should be penalised, every time! It happens daily, so it is not difficult to do so. And if it takes too long then take a photograph and send the ticket by mail later. Of course cars do the same, but they get tickets, although it takes the same amount of time to issue a ticket for a car as for a motorcycle. Parking restrictions exist for two main purposes: to maintain space around sensitive areas and to facilitate traffic flow. So, may we have some attention to this matter, please? Of course, one important side effect of this would be to make it easier for government chauffeurs to park illegally in that area of the city, something that already happens. Can anyone explain why so few tickets are issued for illegal motorcycle parking? I don’t understand. Roy Goss

Write a letter to the editor To submit a letter to the editor e-mail editor@macaubusiness.com with the subject “Letters to the Editor”. Letters may also be sent by regular mail to this address: Letters to the Editor, Macau Business, Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, No 679 Av Dr Francisco Vieira Machado, Macau. Please include your full name, address and a telephone number for confirmation purposes. Letters should be 200 words or fewer and all are subject to editing.

Corrections In our December issue, there was a design flaw on the opinion article “Seize the day” by Carlota Proença de Almeida, on pages 76 to 78. The line numbers on the left-hand text column of page 78 where incorrectly placed one line up. We offer sincere apologies to the author and to our readers. JANUARY 2012

GROSS NATIONAL INCOME SOARS Macau’s gross national income (GNI) at current prices amounted to MOP201.88 billion (US$25.2 billion) in 2010, up by 25.0 percent in real terms. In comparison to gross domestic product for the same period, GNI was lower by MOP24.39 billion, with the difference further widening in comparison to the MOP15.34 billion registered in 2009, the Statistics and Census Service said. GNI indicators less than GDP implies that the income earned by non-local investors from Macau was higher than the foreign investment income earned by local investors from abroad.

MINIMUM SUBSISTENCE INDEX ADJUSTED The minimum subsistence index will go up roughly around 7.5 percent starting this month. For a three-member family, the value will be increased to MOP8,160 (US$1,020), from MOP7,340. The minimum subsistence index was last updated in April 2011. It establishes an income ceiling for a minimum living standard in Macau, allowing people under that to apply for government support.

SKY SHUTTLE SELLS HELICOPTERS

GAMING DRIVES ECONOMY

Macau becoming more dependent on casinos, data shows Macau’s economic dependence on gaming further increased in 2010, according to data unveiled last month by the Statistics and Census Bureau. In 2010, the relative importance of gaming to the territory’s gross domestic product soared by 8.9 percentage points year-on-year, to 40.9 percent. Macau is overall becoming more dependent on the tertiary sector, which saw its weight in the local economy increase to 92.6 percent in 2010 from 89.1 percent in the previous year. The relative importance of wholesale and retail to GDP rose to 7.0 percent from 5.9 percent a year before, while the hotel sector’s economic relevance went up by 0.3 percentage points to 4.6 percent. Meanwhile, the relative importance of the secondary sector to the GDP declined to 7.4 percent in 2010 from 10.9 percent a year before.

JANUARY 2012

Sky Shuttle Helicopters Ltd., the sole operator of helicopter services connecting Hong Kong, Macau and Shenzhen, has sold four of its old Sikorsky S76C+ helicopters that were withdrawn from service in 2009 when they were replaced by AgustaWestland AW139 aircrafts, a company source told Macau Business. The buyer was Eagle Copters Ltd., a private, family-owned company from Canada. In 2010, one of Sky Shuttle’s AW139 helicopters had to make an emergency landing at sea shortly after taking off from Hong Kong. The two pilots and 11 passengers were all plucked to safety. In September 2011, the company had to temporarily ground four of its five AW139 helicopters to undergo thorough checks to replace tail rotor blades after emergency airworthiness directives were ordered by several aviation regulators following an accident in Brazil involving a AW139 aircraft. Sky Shuttle is owned by Chan Un Chan, the third wife of Stanley Ho Hung Sun.

JANUARY 2012

DAGONG MAINTAINS MACAU’S RATING China’s domestic rating agency expects Macau’s economic growth to reach 16 percent in 2012

China’s domestic rating agency Dagong Global Credit Rating Co. Ltd. decided last month to maintain the credit rating of Macau at AA+ with a stable outlook. Given strong domestic demand and the relatively stable outlook for gaming, Dagong estimated that the economic growth rate of the city in 2011 would reach 21 percent, dropping to 16 percent in 2012, Xinhua official news agency reported. Dagong expects the fiscal surplus of Macau in 2011 and 2012 will be equal to 22.1 percent and 18.4 percent of domestic gross domestic product, respectively. However, Dagong warned that a lack of core competitiveness, the high dependence of leading industries on external economies and tightening labour conditions are likely to restrict Macau’s growth in the long term.

MONETARY AUTHORITY BOOSTS INTERNATIONAL COOPERATION The Monetary Authority of Macau has become the 20th regulator to join the multilateral memorandum of understanding of the International Association of Insurance Supervisors, it was announced last month. The document governs the basic cooperation requirements relating to the exchange of confidential information and the assurance that such information will only be deployed in the process of supervision. The International Association of Insurance Supervisors was founded in 1994. Its members come from 140 countries covering over 190 jurisdictions.

JANUARY 2012

NEED TO IMPROVE ACCOUNTING STANDARDS Macau needs to improve its audit and accounting standards, upgrading them to match the international standards in this area, the Macau Society of Registered Auditors says. For new standards to be adopted, firms must be willing to reveal more data on their business, said Denis Vong Hou Piu, the association’s chairman of the board of directors, quoted by TDM. “The requirements for international financial standards are higher as more information has to be revealed. In other words, we need more experienced accountants or officers,” he added.

NO MAJOR CHANGES IN CORRUPTION PERCEPTION Macau continues ranked in 46th position in the 2011 Corruption Perceptions Index, issued last month by Transparency International. Macau’s score rose to 5.1 points from 5.0 last year. The SAR is one of only eight countries and regions in Asia awarded a positive mark. Results show that the country perceived as the least corrupt in the world is New Zealand, with a score of 9.5, while Denmark and Finland rank the second, both with a score of 9.4. Singapore ranks fifth, scoring 9.2. Hong Kong and the mainland rank 12th and the 75th, scoring 8.4 and 3.6 respectively. The ranking includes a total of 183 jurisdictions.

19 19

COMING SOON For more information visit macaubusiness.com or write to awards@macaubusiness.com SEPTEMBER 2011

OCTOBER JANUARY 2012 2011

NOT GOOD ENOUGH

Over 50 stores fail Consumer Council’s “Certified Shop” assessment A total of 51 shops included in the Consumer Council’s “Certified Shop” mechanism where found to not be fulfilling all the required standards. According to a press release from the Consumer Council, around 4 percent of the 1,241 adherent shops evaluated to receive the 2012 “Certified Shop” emblem did not pass the assessment, mainly due to unqualified sales policies or the number of complaint cases filed against them. The council indicated that another of the problems identified was the unclear display of prices at shops where payments are accepted in currencies other than patacas, especially when exchange rates are not displayed. The Consumer Council added a five-class grading standard to its assessment system for 2012. Of the 1,190 qualified shops, only nine were included in the top category. The council also launched last month a “Supermarket Price Information Platform” iPhone app. The app provides consumers with retail prices of around 300 kinds of products from over 10 local supermarkets. The price data included in the application are updated monthly and the application can be downloaded for free. The interface and content is available in Chinese, English and Portuguese.

NEW RECORD AT MACAU TOWER After setting the world record of the highest commercial bungee jump fi ve years ago, Macau Tower joined hands with students from the Institute for Tourism Studies to set yet another new Guinness World Record: the largest canvas pieced together as a postcard mosaic. The “Z Generation, One Destination” postcard mosaic puzzling event gathered the efforts of 50 students, combining 20,000 postcards to form a giant canvas reaching 29.6 metres x 10.5 metres in size.

RAINBOW GROUP INCREASES FOOTHOLD AT GRAND LAPA BEST EVER GRAND PRIX The 2011 Macau Grand Prix generated a total revenue of MOP36 million (US$4.5 million), establishing a new record, the organising committee announced. The total revenue included MOP10 million from ticketing, with the rest of the money coming from title sponsors and other sponsorship. The organisers didn’t say how much the previous record was. The Grand Prix also attracted more visitors to Macau. During the four-day period, 454,000 visitors arrived in the city, representing an 18.9 percent increase over the same period in 2010, with hotel occupancy rates reaching 92.3 percent. The 59th Macau Grand Prix will be held from November 15 to 18.

JANUARY 2012

Retail company Rainbow Group is taking over three more shops at the Grand Lapa Hotel, a source close to the deal told Macau Business. The shops are located on the ground floor of the 5-star hotel. Rainbow Group already operates other shops in the hotel’s shopping arcade. “It is a good move for the retail group but will leave the hotel very dependent on one group,” an analyst told Macau Business. Rainbow Group declined to provide information both on the deal and brands that will occupy the shops. The Rainbow Group is Macau’s largest distributor of high-end brand products, holding exclusive dealerships for more than 10 brands in Macau – including Emporio Armani, Cartier, Ermenegildo Zegna and Burberry.

21 BILL KWOK-PING CHOU ASSOCIATE PROFESSOR OF POLITICAL SCIENCE, UNIVERSITY OF MACAU

Follow the leader MACAU’S ECONOMIC INTEGRATION WITH THE MAINLAND IS THE CONSEQUENCE OF BEIJING’S WILL RATHER THAN MACAU’S INCLINATION eijing’s policy toward Macau can be regarded as an extension of its policies toward the mainland’s frontier regions, which emphasises maintaining political control. There are three main reasons for the central government’s preoccupation with ensuring control over those areas. First, frontier regions are usually areas where ethnic minorities live. Owing to stark cultural differences between these minorities and the mainland’s Han ethnic majority, they are generally more reluctant to accept central government authority. Frontier regions are also strategically important for China’s security because they abut neighbouring countries. There is also a concern among those in power that some of these regions will find it difficult to integrate politically with the People’s Republic of China. Some frontier areas became part of the mainland only recently. In certain cases, differences in political systems persist and the sense of belonging to Greater China is weak among citizens of these regions. Economic integration with the mainland is one of the tactics Beijing employs to maintain political control over Hong Kong, Macau and other frontier regions. The central government provides funds, technology, labour and privileged access to mainland markets, and promotes development projects. This way, frontier regions can be helped to achieve economic and social development, weakening any anti-central government sentiment.

Grumpy neighbours To maintain a high degree of autonomy for Macau, Beijing did not vigorously promote economic integration right after the handover. But it did open some doors. For instance, the central government prescribed that, with its own approval and the Macau government’s consent, mainland provincial or municipal governments could establish representative offices in the SAR. Similarly, provincial or municipal governments and Macau could enter into cooperation agreements if these agreements were struck on Macau’s own initiative. However, right after 1999, the Macau government’s focus was on internal affairs. Also, officials had no experience in dealing with the mainland and this was another obstacle to economic integration. With relations between Macau and Zhuhai less than perfect, in the early years the cross-border industrial zone was the only material product of direct cooperation between both cities. As for Hengqin, Macau initially hinted that it hoped to rent the whole island but the Guangdong provincial government and the Zhuhai municipal authorities dragged their feet and this hope, although hotly debated for years, was eventually dashed.

Unintended consequences The turning point came in 2003, when 500,000 people in Hong Kong demonstrated their opposition to a national security bill – a law required by the Hong Kong Basic Law. To weaken opposition sentiment in Hong Kong, Beijing undertook a series of economic integration measures later that year. Those measures included granting mainland Chinese individual visas to visit the city as solo travellers, rather than as members

of tour groups, pressing ahead with the Closer Economic Partnership Arrangement and giving the green light to the Hong Kong-Zhuhai-Macau Bridge project. Eventually Macau got the same treatment, although anti-Beijing sentiment here was far less of a threat than in Hong Kong. Individual visas boosted the rapid development of Macau’s gaming industry and, concurrently, the city’s economy. But it also aggravated problems in the mainland such as money laundering and the propensity of officials to gamble away public funds. In 2008, in view of Macau’s increasing dependence on the gaming industry, Beijing demanded that the SAR take steps to diversify the city’s economy. The Macau government announced that it would not accept any new casino projects – an announcement clearly prompted by the central government. Soon after, the National Development and Reform Commission issued “The Outline of the Plan for the Reform and Development of the Pearl River Delta”, which defined the policy framework for the integration of Macau into the Pearl River Delta region.

All aboard The document clearly shows the central government’s hope to intensify cooperation with Taiwan through the Pearl River Delta region in areas such as trade, high-technology manufacturing, tourism, education and culture. The integration of Macau into the Pearl River Delta region was one more move by Beijing in the complex chess game that its policy toward Taiwan has become. Because an acute shortage of land was hampering the diversification of Macau’s economy, vice-president Xi Jinping declared in January 2009 that Macau and Guangdong would jointly develop 5 square km of land on Hengqin Island. The first project approved was an industrial park for the Chinese traditional medicine business. Macau was also allowed to lease a plot of 1.1 square kilometres on the island for a new campus for the University of Macau. The land will be under Macau’s jurisdiction. The lease runs until December 19, 2049, but is extendable if approved by the Standing Committee of the National People’s Congress. To boost relations between Macau and Zhuhai, the number of cross-border cooperation mechanisms has been increasing. For example, a task force was set up following a joint conference between Guangdong and Macau authorities in December 2008. In April 2009, three sub-groups were established to deal with the upgrade of the cross-border industrial zone, cross-border city planning and traffic, as well as border checkpoint management. All this points one way: after a slow start, Beijing has become the main locomotive of economic integration, following its own political agenda and with a view to reaching its own political goals. The Macau government has just been pulled along behind. The result is a peculiar state of affairs: the economic integration of Macau with the Pearl River Delta region is more of a political undertaking by Beijing in Beijing’s interests than an economic undertaking by Macau in Macau’s interests. JANUARY 2012

FAMILY PORTRAIT The Statistics and Census Service released the preliminary results of the 2011 population census last month. The figures paint a portrait of a society growing in numbers, and where home ownership rate is declining. The full results will be made public in April

2.4%

The annual average rate of population growth in the past 10 years. As of August 2011, the population of Macau totalled 552,500 people (including non-resident workers) of which 52.0 percent were female

EXPORTS UP

Macau’s total merchandise exports for November amounted to MOP651 million (US$81.4 million), up by 14.2 percent yearon-year, the Statistics and Census Service reports. Even so, that growth rate was outpaced by the total merchandise imports, which went up notably by 51.9 percent year-on-year, to MOP6.23 billion.

142,300

The number of people per square km living in Areia Preta and Iao Hon, the most densely populated areas in the world. Overall population density in Macau stands at 18,600 people per square km, up by 10.3 percent in comparison with 2001, when the last census was conducted

36.0 years

The median age of the population, an increase of 2.7 years from 2001. People aged 65 and above represent 7.2 percent of the total population

BANK DEPOSITS POST INCREASE

Total deposits with the Macau banking sector grew 4.3 percent in October from a month earlier to MOP408.1 billion (US$51 billion), the monetary authority announced. Domestic loans to the private sector edged up 0.1 percent on a monthly basis to MOP165.1 billion. On the other hand, external loans rose 0.4 percent to MOP148.3 billion.

41.1%

The percentage of Macau’s population that was actually born here. The majority of the people, 46.1 percent, were born in the mainland while 3.4 percent come from Hong Kong

170,700

Total number of households in Macau, up by 26.5 percent from 2001. The average household size is 3.08 members

70.4%

The percentage of households living in residential units they own, down substantially by 6.1 percentage points in comparison with the 2001 census. One quarter of households live in a rented home, up from less than 20 percent one decade ago SOURCE: STATISTICS AND CENSUS SERVICE

DECEMBER 2011

UNEMPLOYMENT REACHES NEW LOW

Macau’s unemployment rate for September-November was 2.3 percent, down by 0.1 percentage points over the preceding period (AugustOctober) and the lowest ever since at least 1992, when the Statistics and Census Service’s online data starts. This is the second time in a row that an all-time low for the unemployment rate has been set. The number of unemployed in SeptemberNovember decreased by about 300 to 8,100, with 15.3 percent being fresh labour force entrants searching for their first job.

More from less

The value of residential real estate deals rose by one-third on a smaller volume of sales in what was a tumultuous year in real estate

here is no doubt last year was an intense period for Macauâ&#x20AC;&#x2122;s real estate sector, especially after the introduction of the special stamp duty on some residential transactions. Preliminary estimates suggest it was one of the best years yet for the sector. Ricacorp executive director Jane Liu estimates annual turnover for residential properties last year stood at about 17,000 transactions. Should that figure be confirmed when the official data is released later this year, it would represent a year-on-year decline of 5 percent but would be significantly above the figures recorded in 2009 or 2008, when 11,300 and 13,700 homes

JANUARY 2012

were sold. The record was set in 2007, when home transactions peaked at 21,600. The most recent data from the Statistics and Census Service shows the number of residential transactions for the first 10 months of last year stood at about 15,600. While fewer homes were sold last year, their average value was higher. Ms Liu estimates the value of residential transactions reached MOP60 billion (US$7.5 billion) last year. That would set a new record and an increase of about 30 percent over 2010, when the all-time high was set. The value of home sales until last October stood at MOP54.3 billion.

Home prices have also risen in the past 12 months. Ms Liu estimates the average transaction price per square foot for residential units ended up at MOP3,822 a square foot (about MOP41,125 a square metre), a 23 percent increase over 2010. In November, the average price of homes sold fell by 8 percent month-onmonth to MOP38,271 a square metre, according to the latest figures from the Financial Services Bureau.

Tricky conditions Jones Lang LaSalle Macauâ&#x20AC;&#x2122;s head of residential property Jeff Wong says the market performed far better in the first half than the second, when the

49 Total number of buyers in residential transactions in the first 10 months of 2011:

Residential units sold as per record of stamp duty*

21,044

Year

Month

Year

Month

2010

January

2010

January

Proportion of buyers

13% 87%

Non-Residents

Residents

Total value of residential transactions in the first 10 months of 2011:

2011

54.3 billion 26% 74%

Non-Residents

Residents

Source: DSEC

Proportion of buyers

Number of Transactions 1,297 February 1,084 March 1,503 April 2,202 May 1,627 June 1,543 July 1,204 August 940 September 1,505 October 1,312 November 1,818 December 1,954 January 1,541 February 788 March 2,225 April 3,485 May 2,402 June 2,368 July 878 August 645 September 671 October 606

Value of residential units sold as per record of stamp duty*

February March April May June July August September October November December 2011

January February March April May June July August September October

* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty paid during the reporting month.

JANUARY 2012

Value (MOP million) 3,140 1,995 2,806 6,180 4,281 3,319 2,642 1,889 3,687 3,421 7,569 5,010 3,790 1,918 7,704 19,244 7,902 6,114 2,359 1,744 1,815 1,661

Property | Market Watch

Average transaction value of residential properties as per record of stamp duty Value (MOP thousand) 6,000 5,000 4,000 3,000 2,000 1,000 0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2010 2011

* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty paid during the reporting month.

Average transaction price of residential units per square metre (MOP) 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2010 2011

* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty bill issued during the reporting month. 3. Some residential units may not be included in the data made available by the Financial Services Bureau for privacy reasons.

SKYLINE VOTED ONE OF THE WORLD’S BEST M

acau’s skyline is among the best in the world, according to Emporis, an online database of properties worldwide. The territory is positioned at number 20 on a list headed by Hong Kong and followed by New York at number two. Emporis ranks cities by the visual impact of their skylines. The total points for each city are calculated based on the number of completed buildings with at least 12 floors registered in the Emporis database. Each building is assigned points based on its floor count. According to Emporis, Macau has 564 high-rise buildings. The online database says there are 29 skyscrapers in the territory, which is to say buildings at least 100 metres high or with at least 40 floors, putting Macau in spot 56 worldwide. Hong Kong is the leader in this category, with a total of 1,221 skyscrapers.

JANUARY 2012

Source: DSEC

government introduced a special stamp duty on residential unit transactions to curb speculation. This year, he is less certain of how the market will perform, predicting Macau will feel the impact of the economic crisis in Europe. “There will be uncertainties,” Mr Wong says. But he sees a strong market and an increasing number of expats boosting property rentals. The number of sales may, however, be on the low side. “Most buyers are end-users and not many people are confident in the outlook of the economy,” Mr Wong says. But for Midland Macau chief executive officer Ronald Cheong Yat Fai, next year the property market will be saturated. “Property prices will be stagnant,” he says, adding that if anything prices could drop slightly between 10 percent and 15 percent in the first half of this year. The second half, Mr Cheong says, will depend on the overall sentiment of the market. Several developments are moving towards sale. These include Nova Park in Taipa, M Residencies on the peninsula and the new phase of One Oasis Cotai South in Coloane, all of which are under construction. Although the government had promised to introduce a bill to legislate the sale of unfinished properties by the end of December, the Legislative Assembly is yet to receive a draft proposal. The government’s own data shows more than 3,300 residential units are under construction or have been given the go-ahead by the government.

Source: Financial Services Bureau

Property | Market Watch Notable residential property transactions - 16/11 to 15/12, 2011 District

Property

Unit

Macau Macau Macau Macau Macau Macau Coloane Taipa Macau Taipa Macau Macau Macau Taipa Taipa Macau Macau Macau Macau Taipa Taipa Taipa Taipa Taipa Macau Taipa Macau Macau Macau Macau Taipa

One Central Jardim da Penha Victory Plaza One Central One Central One Central One Oasis Cotai South Prince Flower City One Central Nova City The Bayview Wan Yu Villas The Bayview Nova City Treasure Garden Dynasty Plaza Grandeur Heights Dynasty Plaza The Riviera Nova City The Pacifica Garden Nova City Nova City Nova City Edf. Kam Yuen Nova City The Praia The Praia Villa De Mer Luen San Square Edf. Chun Leong

Block 3, M/F, unit B M/F, unit M/F, unit J Block 7, H/F, unit B Block 7. H/F, unit B Block 7, M/F, unit A Block 2, M/F, unit D H/F, unit A Block 7, H/F, unit D Block 7, H/F, unit C Block 1, H/F, unit A L/F, unit Q Block 5, H/F, unit E Block 15, L/F, unit D Block 3, M/F, unit K M/F, unit Z M/F, unit F Block B, M/F, unit Y H/F, unit N Block 14, M/F, unit F L/F, unit H Block 4, M/F, unit E Block 10, H/F, unit E Block 8, H/F, unit E M/F, unit A Block 8, H/F, unit E Block 2, H/F, unit G Block 4, M/F, unit W Block 2, M/F, unit F Block 2, M/F, unit Q Block 1, L/F, unit F

Source: Ricacorp & Midland

Floor area (sq. ft) 3,006 2,624 2,803 1,272 1,272 1,269 1,781 1,665 1,176 1,974 1,582 1,810 1,603 1,556 1,726 1,647 1,372 1,800 1,188 1,340 1,205 1,318 1,314 1,314 1,700 1,314 1,099 979 821 950 768

Sale price (HK$)

Price per sq.ft. (HK$)

24,000,000 13,800,000 13,000,000 8,260,000 8,260,000 8,250,000 8,010,000 7,720,000 7,291,200 7,200,000 6,650,000 6,330,000 6,060,000 5,900,000 5,380,000 5,060,000 4,980,000 4,700,000 4,680,000 4,560,000 4,500,000 4,500,000 4,480,000 4,200,000 4,180,000 4,100,000 3,985,730 3,450,000 3,420,000 2,450,000 2,280,000

7,984 5,259 4,638 6,494 6,494 6,501 4,497 4,636 6,200 3,647 4,204 3,497 3,780 3,792 3,117 3,072 3,630 2,611 3,939 3,403 3,734 3,414 3,409 3,196 2,459 3,120 3,627 3,524 4,166 2,579 2,969

Note: L/F - Low floor; M/F - Middle floor; H/F - High floor

Notable residential property rentals - 16/11 to 15/12, 2011 District

Property

Unit

Macau Macau Taipa Macau Macau Macau Macau Taipa Taipa Macau Taipa Taipa Taipa Macau Taipa Taipa Macau Taipa Taipa Macau Macau Taipa Taipa Taipa

One Central One Central Kings Ville Wan Yu Villas Edf. Walorly The Riviera The Praia Kings Ville Nova Taipa Garden La Baie Du Noble Nova Taipa Garden Nova City Nova City La Cité The Greenville Nova City Edf. Kam Yuen Jardim Dragão Precioso Edf. Kinglight Garden Classic Bay The Riviera Edf. Nam San Edf. Lei Man Edf. Lei Man

Block 4, H/F, unit B Block 2, H/F, unit B Block 1, M/F, unit B M/F, unit L M/F, unit AB M/F, unit I Block 1, H/F, unit C Block 2, M/F, unit E Block 23, H/F, unit E Block 3, H/F, unit M Block 21, M/F, unit A Block 12, L/F, unit E Block 10, M/F, unit D Block 3, L/F, unit C Block 1, L/F, unit B Block 12, H/F, unit C M/F, unit I H/F, unit G H/F, unit E M/F, unit E H/F, unit C Block 3, M/F, unit H M/F, unit S M/F, unit F

Source: Ricacorp & Midland

Floor area (sq. ft) 2,585 2,267 1,801 1,290 1,750 1,086 1,558 1,901 2,500 2,095 2,167 1,318 1,045 1,524 1,400 1,318 1,270 1,200 1,238 1,591 880 1,600 450 550

Rent price (HK$) 39,000 37,000 18,000 17,000 15,000 14,000 13,500 13,000 13,000 12,500 12,000 11,000 10,500 10,000 9,800 9,500 9,000 8,000 7,800 7,800 7,600 7,500 5,900 5,200

Price per sq.ft. (HK$) 15.09 16.32 9.99 13.18 8.57 12.89 8.66 6.84 5.20 5.97 5.54 8.35 10.05 6.56 7.00 7.21 7.09 6.67 6.30 4.90 8.64 4.69 13.11 9.45

Note: L/F - Low floor; M/F - Middle floor; H/F - High floor

JANUARY 2012

EXCLUSIVE CEO INTERVIEW

â&#x20AC;&#x153;I keep saying that concentrating only on who has the higher market share is the wrong approach. I see the market growing so rapidly that we can barely catch up. What we need is good products that continue driving additional business into Macauâ&#x20AC;?

JANUARY 2012

“TABLES SHOULD BE MORE EQUALLY SPREAD”

Galaxy Entertainment Group Ltd. has no fear the opening of Sands Cotai Central will hurt performance at Galaxy Macau. In an exclusive interview with Macau Business, Galaxy vice-chairman Francis Lui Yiu Tung says the government cap on live gaming tables is needed but wants an even spread of tables across the city’s six gaming operators. Mr Lui also confirms the gaming operator will offer three-star accommodation to attract more middle-class mainland visitors and look to expand into new Asian markets. In between, he accuses some competitors of wanting “to milk every dollar” from Macau BY PAULO A. AZEVEDO

PHOTOS CARMO CORREIA

re you worried that with the opening of Sands Cotai Central later this year, business will shift to Cotai’s main road, where City of Dreams, Four Seasons and the Venetian Macao are, leaving Galaxy Macau less able to take advantage of any potential spillover of customers? Francis Lui Yiu Tung - No. We are 550,000 square

metres and growing. We already have the critical mass to be very successful. We have designed Galaxy Macau to be a complete experience. You don’t have to step out of the building and go across the road to eat. Everything you want – entertainment, food and beverage, shopping – we have it all here. I don’t need to be concerned. The whole of Cotai will be the entertainment centre in the future. If you want to talk about where the centre of gravity is going to be, I feel we are growing, we have only used one third of our land. Wynn Macau Ltd. will be on the other far side; SJM Holdings Ltd. will be there too. Cotai will be expanding and I don’t feel there will be a problem. We are actually the first property you see when you come from the Sai Van bridge, be it by car or by the upcoming light rail transit system.

JANUARY 2012

“We have never spiked credit liquidity to get market share. If you take a look at our margins, actually they have been going up. We don’t need to get into a desperate scheme. What’s the point?”

EXCLUSIVE CEO INTERVIEW 55 Sands Cotai Central represents no threat at all?

I don’t see any major threats. I don’t mind growth. When you see an explosive market growth rate of 40 percent-plus for 2011, why should we be afraid? I have never been concerned about gross gaming revenue market share. We are more after profit volume. I keep saying that concentrating only on who has the higher market share is the wrong approach. I see the market growing so rapidly that we can barely catch up. What we need is good products that continue driving additional business into Macau. Take a look at Galaxy Macau. We actually moved the needle. Since we opened, nobody has been doing less than before. We have a good property and of course we are growing faster than the others. I’m sure if somebody comes up with a good product they will grow just as fast or even faster. As long as nobody cannibalises the market, it’s all right. The market is too big. By 2010-end, Galaxy Entertainment had a 10 percent gross gaming revenue market share. Now you have double that percentage, closing in on market leader SJM Holdings Ltd. Are you aiming to become the number one?

Market share has never been on the top of our list. This is only a way of measuring how good you are doing. Every property has a different business model. Another way of measuring is to see who has the biggest earnings before interest, taxes, depreciation and amortisation or who has the best offer, how many visitors a day. There are many ways of measuring the success of a company. Market share is not the only way, although it’s a very measurable and highly sensitive indicator. Ten percent or 20 percent, of course it means a lot to us but at the same time, as long as business is profitable and we are not cannibalising any other people’s market, nor spiking up commissions to get the 20 percent, that’s the most important thing. We have never spiked credit liquidity to get market share. If you take a look at our margins, actually they have been going up. We don’t need to get into a desperate scheme. What’s the point? Not only that. If you are getting those market share numbers by spiking commissions, what do you think competitors might do? They would do exactly the same. The challenge is making sure that everyone tries to provide more diversity and better products. Then, everybody will do well.

MASS MARKET GROWTH Not long ago, you predicted mass-market gaming would grow to represent a bigger share of the pie, while VIP gaming would lose part of its overwhelming influence in Macau’s casino industry. We are still not there, are we? What is missing?

“It’s going to take some time for the mass market to catch up because we all know that the VIP market is such a big, big part of the total market”

Again, we are falling into a trap by actually talking about percentages. VIP turnover in Macau is very high, a very big base for comparison. No matter what you do in the mass market or with non-gaming revenue, it is not going to move the needle that much. Another way of looking at it would be just measuring how fast the mass market is growing year-on-year, how fast the non-gaming and hotel revenue are growing year-on-year. That is probably a good indication to see if we are doing the right thing or not. It’s going to take some time for the mass market to catch up because we all know that the VIP market is such a big, big part of the total market. You are correct by saying that, in terms of the relative percentage, the mass market and the VIP market co-relationship is being kept at the same levels. But a lot of people are putting more emphasis into non-gaming and the mass market. Recently, there were media reports about your company being interested in pushing ahead three-star accommodation targeting mainland, middle-class visitors. Can you confirm those plans?

Most of the new products coming into the market are aiming at the high-end of it. I believe that those middle-class mainland Chinese would have more opportunities to travel and visit Macau once they are taken care of and provided with suitable and comfortable accommodations. Three to four-star hotels are something that will definitely have to be provided. We have a big area of land and sometime in the future we will look into that.

SECOND PHASE You still have two thirds of your land plot in Cotai to develop. What are you planning for there?

Galaxy Macau has been in operation for only six months. Soon, we will probably have a good perspective of what does and doesn’t work for us and how we can do better. We have never stopped working on the master layout plan. I have never looked at Galaxy Macau as an isolated plan but as part of the bigger picture. Of course I have a pretty good idea of what we have to do in phase two. I come from an engineering background, so all these visions and ideas that I have, I still want them to be reconfirmed on a piece of paper first to be sure that I am doing the right thing. I don’t even know how big the hotel rooms should be nor how many. Soon we will look at the numbers and check, for instance, whether people could afford a longer stay at each one of the hotels at Galaxy Macau. Or which hotels’ guests gamble more and less. Or whether they are actually non-players. All these questions must have an answer before I can come up with a plan that will suit our batch of customers. Are you planning to add more VIP rooms to Galaxy Macau?

We can have more VIP rooms but that very much depends on the market. We, of course, have the space. We always have space. If you are asking me if we are going to have more gaming products at Galaxy Macau, the answer is ‘yes’, both in the mass market and in the VIP market, but it very much depends on the customers and on the market. JANUARY 2012

EXCLUSIVE CEO INTERVIEW 56 Do you have any plan for the future of Galaxy Entertainment’s so-called City Clubs, namely Waldo, Rio, President and Grand Waldo, which are third-party managed casinos?

That’s a sensitive question because we all know that the fully integrated resorts actually have taken up much of the market share. I believe this is what the future is going to be, integrated resorts. The smaller casino hotel facilities have to work a little bit harder to be able to compete in the future. They have to personalise services and make an effort in connecting with customers. In a large property like Galaxy Macau, we need to take care of 50,000 customers a day, whereas in smaller properties a more personal relationship with customers could work wonders. If they do it right, they can still be very profitable. Take a look at the City Clubs in the peninsula area. Not all are doing poorly. Some are actually growing too. As long as there is commitment and as long as these guys are thoughtful, they can be competitive. The gaming business in Macau has always had high margins. If you didn’t manage your operations as tightly as you should, you still earned a lot of money. Nowadays, when you are competing in the big league, the high-margin business casinos enjoyed before, is not there anymore. This has now become a tight-margin business where you have to look into every detail so that you can drive revenue and at the same time save costs. Smaller casinos can survive and they can be profitable too but these guys need to know that this is not a high-margin business anymore. They have to work hard.

MILKING CASH COWS What is your view on the government’s decision to impose a 3-percent annual growth cap on the number of live gaming tables starting next year? Sands China Ltd. chairman, Sheldon Adelson, has criticised it.

Gaming is part of the entertainment offering but it’s not everything. For Macau to grow, to actually go up in the food chain, we have to realise that the city is a first-class entertainment destination. It’s not just a casino hop anymore. The city has high ambitions. Our citizens have asked for more. Ten or 20 years ago, people would have loved to have had just gaming because they could get a job. Nowadays, so much has been invested, so much has been done that Macau’s ambition is to become a first-class entertainment centre. Some people might not want to work in a gaming environment any more. They might want to pursue other careers. Somehow there should be a certain degree of control on how gaming should be allowed. We have to use gaming as a catalyst but gaming is not everything.

“Three to four-star hotels are something that will definitely have to be provided. We have a big land and sometime in the future we will look into that” DECEMBER 2011

I could ask Mr Adelson: ‘Look, why don’t we just open 6,000 tables at your home, where all your relatives will have only one career path, which is gaming. Would you like it?’ We are free people and the citizens of Macau have the choice to say ‘no’ and choose a healthier environment and society. We have just 30 square kilometres of land and half a million people. What can we do? We have to find a way to make use of the gaming business to make sure that we grow as a whole. Everybody is entitled to his or her own view. I see gaming as a catalyst for a better society where Macau citizens will be happier in the future. Others just want to milk every dollar. I think growth should be moderate. Another thing is the number of tables should be more equally spread between the six gaming operators. That way we can compete on a more equal ground. There are some historical reasons regarding the issue of who should have more or less tables. I respect that but the numbers can’t be as far apart as they are today. The difference between the operator with the most tables and that with less is enormous. Just last month, Galaxy Macau opened its new cinema complex. How much revenue can it generate?

This is a facility that has taken too long to come to the market. Ten years have passed since the last cinema house was built in Macau. During these 10 years, a lot has happened in terms of new technology and innovations in the cinema industry. We are the first ones to bring world-class international standards to Macau. The cinema complex will be able to do a couple of things for us. The first one is to provide our customers more choice. When people come here for the weekend, hopefully they will stay longer with us because they can bring families as well. Second, I’ve been told that Macau people had to make a ferry trip to Hong Kong to watch the latest blockbusters. Not anymore, because we will be showing them here as well. We are also happy to have created a beautiful movie theatre where we will have a lot of movie premieres, a lot of red carpet events to showcase Macau and Galaxy, of course.

HIGHER AMBITIONS When do you hope to recoup the investment made in Galaxy Macau?

We are very happy with our performance over the last six months, which actually exceeded our initial expectations. Can we do better? Absolutely. We should be able to do a lot better. The first quarter results gave us a reasonable perspective for return on our investment. We have all the reasons to be optimistic. Galaxy Macau still has areas under construction like the sky casino. When will everything be ready?

I don’t know how to answer that question because we keep on changing and improving. Even now, after just six months, we are already improving some of the facilities. I would expect such a big property like this to continue to evolve. However, most of our products will be ready by early 2012. What has been the most successful bet on this property?

Well, the fact that my vision for Galaxy Macau as a destination resort is running like a clock. Before us, nobody would give the destination resort concept a chance in Macau.

â&#x20AC;&#x153;I have never looked at Galaxy Macau as an isolated plan but as part of the bigger picture. Of course I have a pretty good idea of what we have to do in phase twoâ&#x20AC;?

DECEMBER 2011

EXCLUSIVE CEO INTERVIEW 58 Some people would say Macau is too densely populated, the sky is not blue enough, there is no white-sand beach but the fact is we have created a destination resort setting at Galaxy Macau. We did it and we did it with success. Take a look at our resort, at our architecture, at the landscaping we put around the property. I think no one would argue that this is a destination resort, a successful one too. I take pleasure saying that we did it. We were the first ones to entitle Macau with a destination resort. That gives me a lot of satisfaction. What would you select as the elements that still need fine-tuning at Galaxy Macau?

I constantly see things in need of improvement. Right now, I have to say service. We have been open for only six short months, it’s a big property and we have now 10,000 workers [in Macau]. So, service, human resources, talent, leadership, good people, are still a challenge, a big challenge. We ought to do better if we want to serve customers better but it takes time. Initially there were fears that Galaxy Macau could cannibalise StarWorld’s revenue but that has proven not to be the case. Are you relieved?

The more I walk around Galaxy Macau, the clearer Starworld’s competitiveness is. StarWorld has a great location, no question about it. It is a compact property where everything is so convenient; everywhere you go is just at a push of a button away. When we designed Galaxy Macau, we ideally wanted to avoid people having to walk great distances. We have been successful and praised for that. Nevertheless, StarWorld has the charm of you just having to go up and down the escalators. StarWorld is going to continue to be very successful. The target customers for Galaxy Macau are different from those that go to StarWorld. The customers that come to Galaxy Macau are people who want to stay a little bit longer and enjoy the integrated resort sensation, whereas the people that go to StarWorld are more attracted by its easy accessibility.

BUILDING A FUTURE A topic that has been hotly debated recently is the potential relocation of Macau’s main ferry terminal from the Outer Harbour on the peninsula to Pac On in Taipa, and much closer to Cotai. What is your preference?

We have properties on both sides, so it’s indifferent. Either way works for us. What needs to be taken into account is that the ferry is not only serving casinos but also the local people. So, the question must be asked to Macau citizens. There’s another question, which is what will be the role of the ferry terminal in the scope of the coming bridge connecting Hong Kong to Macau. Does it make that much of a difference the location of the terminal? By the time the bridge is in operation, buses will take a lot of pressure from ferries. At the end of the day, the question is how you serve people better. If the light rail transit system is taking so long, maybe the bridge could take another decade at least – hopefully not. The bridge has already been waiting for 10 years. It’s not that we dream of this idea today. We are talking of 25 million visitors [to Macau in 2010], 15 million more than 10 years ago. It needs to be built. JANUARY 2012

“I see gaming as a catalyst for a better society where Macau citizens will be happier in the future. Others just want to milk every dollar. I think growth should be moderate”

You just mentioned one of the several changes Macau has undergone over the last decade. What about your expectations regarding the gaming industry? How different are they today from a couple of years ago?

Not much. In our annual report, we always state on page one that we have a vision to be one of the leading entertainment and gaming operators in Asia. That has always been our aspiration and an ambition since the day we started this company. You asked me if I have changed my expectations. No. Iâ&#x20AC;&#x2122;m doing just what needs to be done towards achieving that vision. United States-based gaming operators are all now eyeing expansion into Asia. What about Galaxy Entertainment Group, are you looking to enter other Asian markets?

A major part of our strategy would still be in Macau, no

question about it. If you asked me that question some years ago, I would have said we wanted to concentrate 100 percent in Macau because we needed to establish a base and be successful. Now, I can say we have a good base, we have been working together as a team for eight years, we have a loyal, strong and very capable management team. If the right opportunity comes along, we would look at it on a case-by-case basis. Much closer to Cotai, how important can Hengqin Island be to Macau and your company?

Take a look at Shenzhen and what it has done for Hong Kong and expect that same kind of impact in Macau. If Macau really aspires to be a world-class tourism destination, Hengqin is going to play a major role. Hopefully we will be a key player in this process. JANUARY 2012

Gaming | Billions Race

Shifting gear

The outlook for growth at Macau’s casinos over the next 12 months is less bright despite record revenues in 2011 he champagne corks flew as December ended. The casinos were toasting a year to remember after setting a new gross gaming revenue record. Last month’s numbers also confirm that a slowdown in growth is underway that is likely to last throughout the year. To those celebrating, that should not come as a surprise. Analysts and gaming executives had already warned it was coming. Macau’s gaming industry ended last year with MOP267.9 billion (US$33.5

billion) in casino gross gaming revenue, according to data from the Gaming Inspection and Coordination Bureau. The previous record had been set just a year before, when Macau’s casinos took MOP188.3 billion. In December alone, the casinos posted MOP23.6 billion in gross gaming revenue – a 25 percent increase yearon-year. The number itself is healthy but it also represents the slowest yearon-year growth rate since August 2009 and it highlights a slowdown that began in November. Last year’s rate of

Gaming Results: Gross Revenue

In Million MOP (1HKD:1.03MOP)

28,000 26,000

24,306

24,000 22,000 20,000

18,883

18,571

Dec 2010

Jan 2011

growth of 42.2 percent year-on-year is a significant decrease from 2010, when the city’s gaming market expanded by 57.8 percent. For the next 12 months the industry consensus for gross gaming revenue growth stands at about 15 percent. “Our base-case forecast for the Macau gaming market is growth in gross gaming revenue of 10 percent to 15 percent in 2012,” Standard & Poor’s Ratings Services credit analyst Joe Poon wrote last month. While growth in Macau will decline, Singapore is forecast to be hit

19,863

20,087

20,507

Feb 2011

Mar 2011

Apr 2011

24,212

26,851

24,769

23,058

23,608

21,244

20,792

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

JANUARY 2012

May 2011

Jun 2011

Jul 2011

Aug 2011

Sep 2011

Oct 2011

Nov 2011

Dec 2011

Gaming Results: Market Share Per Operator 2010

2011

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec *

SJM

30%

31%

34%

30%

32%

29%

28%

27%

29%

26%

27%

Sands China

17%

18%

16%

17%

16%

15%

14%

16%

Galaxy

10%

11%

13%

15%

19%

20%

21%

20%

Wynn

17%

14%

15%

14%

17%

13%

15%

13%

12%

13%

14%

MPEL

15%

14%

17%

14%

16%

15%

16%

15%

13%

14%

MGM

12%

11%

12%

11%

10%

11%

TOTAL

100%

SJM

Sands China

Galaxy

Wynn

MPEL

MGM

Dec 2010

Jan 2011

Feb 2011

Mar 2011

Apr 2011

May 2011

Jun 2011

Jul 2011

Aug 2011

Sep 2011

Oct 2011

Nov 2011

* estimated

(Figures are rounded to the nearest unit, therefore they may not add exactly to the rounded total)

harder by global economic uncertainty. The same report sees net gaming revenue in Singapore to grow by “5 percent to 10 percent” this year. What will grow at a clip is regional competition, with Singapore and Macau facing off against each other, as well as casinos in new markets, which are likely to accelerate their plans to develop licensed integrated casino resorts to spur growth, the report said.

King’s crown Citigroup says Macau will further consolidate its position as the world’s biggest gaming market this year and forecasts MOP321 billion in gross gaming revenue. The bank revised its forecast for annual growth upwards to 20 percent from 15 percent previously. In the Lion City, the bank expects a 13 percent year-on-year increase in casino revenue to US$6.9 billion. PriceWaterhouseCoopers presents the most bullish of the analysts’ predictions. Its latest estimates see Macau’s casino gross gaming revenue growing at close to 30 percent this year and at a compound annual rate of 21.5 percent between 2011 and 2015, when annual revenues collected by the casinos will top US$62.17 billion.

PriceWaterhouseCoopers has the most bullish of the analysts’ predictions. Its latest estimates see Macau’s casino gross gaming revenue will grow at close to 30 percent this year

There was little movement in the market shares of the Macau-based players last month. SJM Holdings Ltd. leads the market with a 27-percent market share, followed by Galaxy Entertainment Group Ltd. with its 20-percent share. Sands China Ltd. held onto third position, with a 16-percent market share, now followed by Melco Crown Entertainment Ltd. with a 14 percent. Wynn Macau Ltd. has dropped to fifth, with a share bellow 14 percent. MGM China Holdings Ltd. has a 9-percent share. In the increasingly important mass-

Dec 2011*

market segment, Sands China retains its lead with a weighted market share of 34.3 percent, according to the most recent data from Union Gaming Research for October and November. Even so, the gaming operator was down 110 basis points in comparison with data from August and September. SJM was second at 30.8 percent, followed by Galaxy with 19.4 percent. Wynn came in at a distant fourth with a mass-market share of 6 percent, ahead of MGM China with 5.6 percent and Melco Crown with 4 percent. Union Gaming said those shares were broadly inline with previous standings. In comparison with the company’s August-September survey, the biggest net winner was Galaxy, which improved by 210 basis points. By property, the top three were unchanged, with the Venetian Macao holding a 20.3-percent share, followed by SJM’s Grand Lisboa and Lisboa with 16.1 percent, and Sands Macao with a 13.9-percent share. Union Gaming estimates each operator’s and casino’s mass market share by counting casino shuttle bus passengers at the Outer Harbour Ferry Terminal and Macau Border Gate. Combined, they accounted for 78 percent of all tourist traffic in 2010. JANUARY 2012

Gaming | Stock Watch

Future shock Gaming stocks will take some knocks this year but investment houses forecast some brighter news as Cotai continues to grow BY RAY CHAN

weakening international outlook and tighter economic conditions in the mainland are shaping up to be the key obstacles to Macau’s booming gaming industry this year. Industry executives say gross gaming revenue is likely to slow to about 15 to 20 percent annual growth this year from last year’s 40 percent plus growth. That is destined to impact on valuations. Citigroup says there is still “appreciable upside” for gaming stocks. A recent report noted that the Macau casino stocks are trading at 8.7 times the bank’s target Enterprise Value/ EBITDA this year, significantly less than the 10.3-times historical average and reflecting concerns around growth this year. One segment that may see growth is gaming operators waiting for land grants in Cotai. SJM Holdings Ltd. (0880.HK) and Wynn Macau Ltd. (1128.HK) appear closest to finalising

JANUARY 2012

land deals. Expect to see a boost in share prices if the government gives the go-ahead. Last month, SJM announced it had received a letter from the government saying it would be granted a land parcel in Cotai. Officials were quick to comment that no final decision had yet been made. “We got a letter saying that it [the government] will grant the land to us but we haven’t been given any further notice about, for example, the premium payment,” SJM Holdings Ltd.’s chief executive Ambrose So Shu Fai told TDM. Mr So expects the grant process to be completed this year, with SJM ready to invest up to MOP16 billion (US$2 billion). Back in September, Wynn announced it had formally accepted the government’s terms and conditions for control of a 20-hectare plot of land in Cotai. In a filing to the Hong Kong

exchange, the company said it would pay a land premium of MOP1.55 billion for an initial term of 25 years. Again, the government replied the application was still being reviewed and that no final decision had been made yet.

Central story It is a similar story for Macau Studio City, the stalled development that Melco Crown Entertainment Ltd. (6883. HK, MPEL.US) bought a majority stake in last year. Secretary for economy and finance Francis Tam Pak Yuen said the government had not yet received an application from Melco Crown to include gambling at the revamped project. Mr Tam said if an application was filed, the Gaming Inspection and Coordination Bureau would consider it according to the relevant legislation. What is confirmed to take place this year is the opening by Sands China Ltd.

Photo: Carmo Correia

(1928.HK) of its Sands Cotai Central complex. It will be the last significant property to open its doors anywhere in Macau before 2015, analysts say. The project’s first phase is set to open in March and will include a 9,850 square-metre casino with VIP gaming areas. The company expects to open a second casino by the third quarter. When work is complete, there will be more than 5,800 hotel rooms on the site. Sands China’s stock price rose about 28.5 percent last year, the third best performance by Macau gaming stocks listed in Hong Kong. In comparison, the benchmark Hang Seng Index gave up close to 20 percent. Citigroup favours stocks with exposure to Cotai. The investment bank estimates that 51 percent of the EBITDA from the city’s casino industry will come from properties located in that area as early as next year. The bank deems Sands China “could

Ticker

Name

Share price performance (HK$/US$) 52-week high 52-week low

Change (%)

31/12/2011

2011 return

0880.HK

SJM Holdings Ltd.

21.00

10.22

12.68

5.04

0027.HK

Galaxy Entertainment Group

22.45

8.69

14.24

61.82

1128.HK

Wynn Macau Ltd.

27.48

14.81

19.50

18.09

1928.HK

Sands China Ltd.

26.60

14.90

21.95

28.51

0200.HK

Melco International Develop.

10.76

4.30

5.77

29.96

6883.HK

Melco Crown Entertainment Ltd.

26.40

22.40

24.50

MPEL.US

Melco Crown Entertainment

16.15

6.46

9.62

51.26

2282.HK

MGM China Holdings Ltd.

18.20

8.05

10.16

HSI.IND

Hang Seng Index

24,468.60

16,170.30

18,434.39

-19.97

LVS.US

Las Vegas Sands Corp.

51.05

36.05

42.73

-7.01

MGM.US

MGM Resorts International

WYNN.US

Wynn Resorts Ltd.

PENN.US

Penn National Gaming Inc.

INDU.IND

Dow Jones Indus. Avg.

SPX.IND

S&P 500 Index

16.94

7.40

10.43

-29.76

165.49

101.02

110.49

12.29

44.29

31.68

38.07

8.31

12,928.50

10,362.30

12,217.56

5.53

1,370.58

1,074.77

1,257.60

0.00

JANUARY 2012

Gaming | Stock Watch easily support a healthy dividend in 2012/2013” which could comfortably reach HK$0.55 a share.

To the movies

Share price performance of Hong Kong-listed gaming stocks (Rebased as HK$100) 300 250 200 150 100 50 1-Jan 2011

1-Feb 2011

1-Mar 2011

1-Apr 2011

1-May 2011

SJM Holdings Ltd. Melco International Development Melco Crown Entertainment

1-Jun 2011

1-Jul 2011

1-Aug 2011

1-Sep 2011

1-Oct 2011

1-Nov 2011

1-Dec 2011

Sands China Ltd. MGM China Holdings Ltd.

Wynn Macau Ltd. Galaxy Entertainment Group Ltd. Hang Seng Index

Share price performance of U.S.-listed gaming stocks

(Rebased as US$100) 300 250 200 150 100 50 1-Jan 2011

1-Feb 2011

1-Mar 2011

1-Apr 2011

Las Vegas Sands Corp. Penn National Gaming Inc.

1-May 2011

1-Jun 2011

1-Jul 2011

1-Aug 2011

Wynn Resorts Ltd. Melco Crown Entertainment-ADR

1-Sep 2011

1-Oct 2011

1-Nov 2011

1-Dec 2011

MGM Resorts International S&P 500 Index As of December 23, 2011

JANUARY 2012

Galaxy Entertainment Group Ltd. (0027.HK) was the strongest casino stock in 2011, gaining 61.8 percent. Last month, its Galaxy Macau property officially inaugurated a 3-D cinema complex, UA Galaxy Cinemas, with an area of about 16,000 square metres and a 1,000-seat capacity. The opening of its China Rouge hybrid private membership club, performance theatre, bar and restaurant is expected to take place this year but no schedule has been announced yet. Galaxy Entertainment chairman Lui Che Woo has forecast the company would continue “to provide attractions and facilities that have never been available in Macau before”. Wynn Macau Ltd. saw its shares rise 18.1 percent last year, while SJM Holdings Ltd. posted a more moderate growth of 5 percent. In early December, Melco Crown Entertainment Ltd. was listed on the Hong Kong exchange by induction – in other words, by listing shares already issued instead of issuing new ones. Melco Crown Entertainment was the first company ever to hit the gong at its own listing ceremony in Hong Kong’s financial history. This was an “important milestone” for the gaming operator, cochairman and chief executive officer Lawrence Ho said. “A dual listing in Hong Kong broadens Melco Crown Entertainment’s investor base and creates an added growth driver for the company.” The company’s shares continue to also be traded on the Nasdaq. The share price of Melco Crown Entertainment Ltd. in Hong Kong eventually fell bellow its listing price of HK$26.40 a piece to HK$24.50 by the end of the year but Melco Crown International Development Ltd. (0200.HK), which owns about one third of the company, saw its share price soar by 30 percent last year. MGM China Holdings Ltd. (2282.HK) commenced trading in Hong Kong last June after pushing ahead with an initial public offering. Its shares ended the year at HK$10.16 each, well bellow the offer price of HK$15.34.

MGM SUES HIGH-ROLLER MGM Grand Paradise, a subsidiary of MGM China Holdings Ltd., is suing VIP junket agent and North Korean tour operator Wong Sing-wa, according to a report from the South China Morning Post. The Hong Kong newspaper reported that Mr Wong failed to repay part of a HK$10 million (US$1.29 million) debt. Mr Wong allegedly drew down HK$10 million on a credit line and eventually lost it while gambling in September 2008. The court case has been filed in Hong Kong. Mr Wong has reportedly been involved in the operations of Sociedade de Turismo e Diversões de Macau’s Pyongyang casino.

APPT ADDS SEOUL TO SCHEDULE The PokerStars.net Asia Pacific Poker Tour (APPT) announced the addition of Seoul, Korea to its Season 5 schedule from March 7 to 11. The Seoul leg will be hosted by the Paradise Walkerhill Casino. The five-day, five-event poker festival will feature a 3 million won (MOP$20,000) buy-in main event. This marks the return of the tour to Korea after a four-year break.

GOVT INKS NEW CONTRACT WITH NEWPAGE Gaming consultant company Newpage Consultadoria Ltda will continue to provide consultancy services to the government in 2012. A contract is expected to be signed soon, according to the official gazette. The amount to be paid to Newpage was not made public. Newpage Consultadoria Ltda was formed in June 2010 and is headed by David Green. The company was first awarded a contract for gaming consultancy services in August 2010 and a new deal valid for 2011 was signed in February 2011. Mr Green has provided consultancy services to the Macau government in the gaming area since 2000, first as a representative of accounting firm Arthur Andersen and then as PriceWaterhouseCoopers’ Macau director of gaming practice. Mr Green is also a regular contributor of Macau Business.

SJM ANNOUNCES SALARY INCREASE Gaming operator also to pay bonus and improve welfare system After several workers’ protests, SJM Holdings Ltd. has announced a pay rise for 2012 of 5 to 10 percent. The percentage of the increase is based on salaries, with employees with lower wages getting higher raises. All SJM workers are entitled to the salary increase. All employees will also receive a bonus for the year of 2011. Those

with a monthly salary of MOP10,000 or below will receive 150 percent of a month’s salary. Other employees will receive a bonus of one month salary which will not be less than MOP15,000. Other welfare optimization measures and a new rewards system will also be implemented starting this month. These include an increase in annual leave entitlement, meal allowance and

rewarding employees that don’t take any sick leave. “With the implementation of the salary increase, bonus payout, welfare optimization and new rewarding system, we express our gratitude towards our employees and enhance the team spirit and loyalty,” said Louis Ng, SJM’s director and chief operating officer.

JANUARY 2012

Gaming

Outer limits

Sands China is updating the high-limit gaming area at the Venetian Macao to boost play

he Venetian Macao is launching its refurbished high-limit gaming area this month, ahead of Chinese New Year. The resort’s management says the MOP120-million investment (US$15 million) will better serve an increasingly important segment of players. Andrew Billany, senior vice president of Paiza and Plaza operations for the Venetian, says the remodelled area, with its focus on luxury, “will cater to our premium

mass gaming guests and will set a new standard for a high-limit gaming experience in Macau”. It is part of the process the Venetian hopes will create a competitive advantage led by innovation in products, design, style and personal amenities. “A baccarat table is just a baccarat table. It is all the periphery services that come into play ... that is what makes a really good experience,” Mr Billany told Macau Business.

The revamped high-limit gaming area includes a main gaming hall, improved levels of privacy, a slots area and lounge. Both the number of gaming tables and slot machines have been increased, with the venue holding 66 tables and 156 slot machines. Mr Billany says the Venetian moved to renovate the high-limits area because of Macau’s competitive gaming landscape, the age of the previous fit-out and as a response to customer needs. “Obvi-

NEVER MIND THE GAP S

ecretary for economy and finance Francis Tam Pak Yuen says the remaining number of live gaming table licenses available under the 5,500-table cap should be enough for Sands Cotai Central to operate successfully. Mr Tam said last month there were about 5,300 licensed live gaming tables. The first phase of Sands China Ltd.’s Sands Cotai Central development is set to open in March and will include a 9,850 squaremetre casino and VIP gaming areas. The company expects to open a second casino there by the third quarter. Sands China officials allegedly told Royal Bank of Scotland representatives the property would have 540 gaming tables, although some were considered “temporary”, according to a report by GamingCompliance. The comments were included in a RBS report dated December 12 written by analysts Philip Tulk and Frank Hung, following an RBS investor conference with Sands China Ltd. officials on December 9. Sands China said it would receive a total of “400 new tables from the government”, with “the balance shifted from other JANUARY 2012

[Sands China Ltd] properties”. “Management maintained that ‘temporary’ or loaned tables would allow one to reconcile the government’s table commitments to Sands at [Cotal Central] and its 5,500 table cap.” To meet those commitments, Sands China Ltd. would need to manage tables not included in the 5,500 cap. Government sources contacted by Macau Business said they were unaware of any agreement that would allow Sands China to breech the table cap.

ously changes in the market place drive the thinking but also listening to our customers, what do they want the most and how can we respond successfully to their changing needs,” he says.

Attractive play The high-limit market is a growing segment, with higher profit margins for casino operators than VIP play, since there are no junket operators involved. Overall betting volumes are much lower. Mr Billany says the definition of a high-limit player is related to table limits where they typically gamble. “It is usually the [higher] table limits. It can be HK$3,000, HK$5,000, HK$10,000 limit tables. Once they get to about HK$20,000, they may turn to go to the premium programmes that exist.”

High-limit players represent roughly the top 10 percent of the mass market, according to some estimates. “It is a sizeable number, that is very profitable and extremely loyal. That is why they are extremely important to our business. They stay longer, they play longer,” Mr Billany says. “We have to build a better business model to target that segment. They are much more sophisticated, both the players and their demands.” Sands China began targeting highlimit players in a more systematic manner at the Plaza casino at the Four Seasons. “It had great success,” Mr Billany says, adding revenue for this segment there has been growing ahead of the overall market. He is not expecting the revamped

high-limit area at the Venetian to cannibalise business at the Plaza, since they have different customer bases. Most high-limit players at the Venetian are from the mainland. At the Plaza, close to two-thirds are from Hong Kong. “I know it is going drive growth,” Mr Billany says. “It is going to better yield the square footage that we have in terms of asset utilisation and it is going to drive loyalty and share of wallet.” The new high-limit gaming area is not the only recent innovation from Sands China. Last month, it introduced a HK$50-million payday it is calling “Asia’s biggest jackpot” to launch a new series of MegaBucks slot machines. About 140 new machines will be in operation at the Venetian Macao, Sands Macao and Plaza casinos.

BRIDGES CROSS COTAI DIVIDE

HONG KONG DROPS SANDS INQUIRY

he government has approved the construction of the first pedestrian flyover connecting two casino resorts in Cotai. A source from the Lands, Public Works and Transport Bureau told Macau Business the license to build a pedestrian flyover connecting Sands Cotai Central and the Venetian Macao was approved in October. Sands China Ltd., which owns both properties, submitted the project for approval in 2008, a source within the company told Macau Business. The flyover will be equipped with lifts, regular stairs, escalators and air-conditioning. The flyover will also have direct access to the street on both sides. The construction of a second flyover has also been already agreed upon between Sands China and Melco Crown Entertainment Ltd., to connect the Venetian and City of Dreams. The project has been submitted to the government and is awaiting approval.

he Securities and Futures Commission of Hong Kong has concluded its investigation of Sands China Ltd., the gaming operator announced last month. The regulator has decided not to take any measures against the company. Sands China was being investigated for alleged breaches of regulations of the Securities and Futures Commission but neither the company nor the regulator disclosed further details on the nature of the investigation. Sands China is also being investigated by the Nevada Gaming Control Board, the United States Securities and Exchange Commission, the Department of Justice and the FBI regarding alleged improper practices by the company and its parent, Las Vegas Sands Corp., in Macau, following a court case filed by Sands China’s former chief executive Steve Jacobs. In the lawsuit filed in a Nevada court, Mr Jacobs alleged he was wrongfully fired. In the court filings, he accused Sands China and Las Vegas Sands of using improper leverage against Macau government officials.

JANUARY 2012

Gaming

Resort reality check No matter what features a casino resort development brings to the table, gaming dominates in Asia BY MUHAMMAD COHEN IN SINGAPORE

JANUARY 2012

69 esorts World Sentosa is an apt prototype for the 21st century Asian casino resort, combining gaming with an array of lodging, dining and entertainment options, minutes from downtown Singapore. The S$6.59 billion (MOP40.5 billion) complex features the only Universal Studios theme park in Southeast Asia. A ride creator from the park teamed with a renowned New York designer to craft a one-of-a-kind maritime museum. Resident stage spectacle “Voyage de la Vie” headlines an entertainment menu that runs from classical concerts to mixed martial arts. The four hotels – two more will open this year along with a destination spa and the world’s largest oceanarium – range from the global Hard Rock brand to unique, boutique Hotel Michael showcasing the mad genius of artist Michael Graves. Convention space in the 49-hectare complex can accommodate up to 12,000 delegates and includes Asia’s largest column-free ballroom. Dining options span from French celebrated chef Joel Robuchon and Japan’s Michelin starred culinary maestro Kunio Tokouka to international and regional chains. There are more than 45 retail outlets, from leading international brands to convenience shops. These bountiful choices are available in part because the Singapore government’s bidding process for gambling licenses challenged applicants to provide world-class, non-gaming facilities and amenities. The rules limit casino space to 15,000 square metres, aiming to compel the operators to find other ways to draw crowds and make money. The Singapore government wanted at least half of their casino resorts’ revenue to come from non-gaming activities, and even planned to enforce that with tax penalties on gaming revenue in excess of 50 percent. Resorts World Sentosa and its rival Marina Bay Sands have won acclaim as true resorts that branch beyond gaming, in contrast to Macau’s casino-centric resorts.

Numbers count

SkyPark - Marina Bay Sands

Resorts World Sentosa revenues totalled S$788.7 million last quarter. With all of its investment and effort beyond the casino floor, non-gaming revenue represented 16.3 percent of total revenue, 2.4 percentage points below the Venetian Macao’s 18.7 percent non-gaming revenue. JANUARY 2012

Gaming

Talk about resorts in Asia tends to focus on iconic architecture, vast convention and retail spaces, and entertainment spectacles. In reality, Asia’s casino resorts rely on gaming for their survival, a situation that is unlikely to change in the foreseeable future. That’s the consensus of industry executives and other experts interviewed by Macau Business. It is also what the numbers say. On the Las Vegas Strip, casinos get more than 60 percent of their revenue from non-gaming sources. In Macau, nongaming revenue represents 11 percent of total revenue, according to operators’ latest financial reports, ranging from less than 1 percent for gaming market leader SJM Holdings Ltd. to 14.2 percent for Sands China Ltd. In Singapore, even with gaming revenue restricted by the government’s refusal to license junket operators, non-gaming registers 22.4 percent of the total. “Gaming is what drives integrated resorts in Asia financially but not operationally,” former Marina Bay Sands chief executive officer Thomas Arasi says. Marina Bay Sands with its 120,000-

Talk about resorts in Asia tends to focus on iconic architecture, vast convention and retail spaces, and entertainment spectacles. In reality, Asia’s casino resorts rely on gaming for their survival plus square metre of convention space, 300-store shopping mall, resident and touring shows, six celebrity chef restaurants, and more than 2,500 hotel rooms, derives 24.4 percent of its revenue from non-gaming sources.

Attractive arithmetic Given the skewed revenue numbers, it is worth asking whether casino resorts are

Club Cubic nightclub - City of Dreams

CotaiArena - Venetian Macau JANUARY 2012

the right model, particularly for Macau. SJM Holdings Ltd. remains sceptical. While Las Vegas has become a majority non-gaming market, “Macau hasn’t changed,” SJM director of operations development Niall Murray says. “We’re not going to spend millions on entertainment, for example. Energy on the gaming floor has to be free. We don’t want to drag players off the floor for 90 minutes,” he says. Integrating a resort represents a major challenge for operators, particularly aligning the non-gaming components to support the casino. “Non-gaming attractions create the premium envelope for the gaming activities to fit into,” Melco Crown Entertainment Ltd. co-chief operating officer for operations Nicholas Naples says. “This is the real differentiator between casino resorts since most of the games within the casinos are similar.” “Keep in mind that even if only 20 percent of revenue [at Marina Bay Sands] is from non-gaming, that’s still S$772 million,” says Mr Arasi, now president and chief executive of United States-

71 based Harbinger Advisers. “On its own, that’s a multimillion dollar company.” Mr Arasi cautions against integrating resorts too deeply. “Some people don’t want to be part of some environments,” he says. “The gaming elements are ring-fenced in Singapore.” In contrast, the Venetian Macao follows Las Vegas custom, so it is almost impossible to avoid walking through the casino to get around the resort. Non-gaming attractions also broaden the appeal of a casino resort. “The high roller might not go to Universal Studios but his wife and kids might,” Resorts World Sentosa central zone operations director Jason Horkin says, noting that the theme park hosts VIP visits daily. “If I’m a high roller, I want to be left alone to gamble. If you have more offerings for my family, maybe I play longer. Maybe I come more frequently.”

Bottom line, not headlines The attention won by components in resorts is not necessarily indicative of their importance to profitability. It is not theme parks and big ticket shows but

“Voyage de la Vie” resident show - Resorts World Sentosa

CREATING A GLOBAL DESTINATION A

fter arriving from Las Vegas, Melco Crown Entertainment Ltd. vice-president for customer relationship management, loyalty and profit optimisation Steven Pinchuk thought of the legendary Land of Oz when he saw the non-gaming numbers in Macau. “We’re not in Kansas anymore,” Mr Pinchuk realised. City of Dreams, home to the US$250 million (MOP2 billion) House of Dancing Water show, three hotels, nightspot Club Cubic, and an array of events and meetings and incentives, clocks in with 8 percent non-gaming revenue. Mr Pinchuk believes he knows why. “An integrated resort needs to be in a major international destination market to succeed,” he says. Tourist numbers due later this month will likely show Macau set a record with more than 27 million visitors last year but tourists are still overwhelmingly from Greater China, with the concentration growing as mainland arrivals surge. The city remains a regional rather than an international destination. A major global travel destination offers a diverse visitor base to patronise the range of attractions casino resorts offer, plus the infrastructure to support large scale conferences and exhibitions, a key to boosting non-gaming revenues, according to experts. Singapore’s resorts record nongaming revenues of 22 percent, compared with 11 percent for all Macau operators, according to the latest financial reports. Singapore’s higher number is the product of government policies to promote non-gaming revenue multiplied by its longstanding status as an

international travel hub, even though it registered about 13 million visitor arrivals last year, less than half of Macau’s total. “The resorts are part of a larger tourism eco-system supported by a vibrant and pro-business environment and reliable infrastructure,” Singapore Tourism Board executive director for resorts Carrie Kwik tells Macau Business. “Other upcoming projects such as the international cruise terminal, Gardens by the Bay, the world’s first river safari, and the National Art Gallery, will complement the integrated resorts by further expanding our repertoire of offerings, deepening our value proposition and attracting new and repeat visitors to Singapore,” she says. Despite those advantages, plus a local market that is ten times the size of Macau, Singapore’s percentage of non-gaming revenue is still far from the 60 percent-plus of Las Vegas. Melco Crown co-chief operating officer for operations Nicholas Naples acknowledges a “resort is much more likely to succeed in a destination that is already known as a major international travel destination”. His job is to make City of Dreams – and in the future a second casino resort at Macau Studio City – succeed in Cotai. “In the case of Cotai, we will require other infrastructure before it can compete with other established international destination resorts,” Mr Naples says. “Rome was not built in a day, even Las Vegas and Atlantic City had to go through this process to get to where they are today.” JANUARY 2012

Gaming

Casino - Galaxy Macau

MICE (meetings, incentives, conventions and exhibitions) and hotels that contribute most to non-gaming revenue, experts say. Retail and food and beverage can help under certain circumstances but nothing else moves the needle significantly. Part of Macau’s failure to diversify its revenue is the limited impact of MICE, with the number of events held dropping last year. “The numbers were supposed to come from Hong Kong or China,” SJM’s Mr Murray says. Last year, Macau and Beijing authorities agreed on the creation of a list of MICE events taking place in Macau for which visa application processing will be made easier for mainland trade visitors. MICE supports hotel occupancy, usually the highest profit margin item per dollar spent on the resort menu. But rooms need to be held in reserve for gamblers, creating potential operational conflicts. “Rooms have to be seen as strategic assets,” Melco Crown vice-president for customer relationship management, loyalty and profit optimisation Steven PinJANUARY 2012

chuk says. “The difference in demand is dramatic between weekends and weekdays.” Weekends are the most popular time for leisure travellers, as well as gamblers. Operators have to make tough choices, choices that become easier if the resort has a massive inventory of rooms, best supported by MICE during non-peak periods, which leads to the Las Vegas model.

Tempting menu “Integrated resorts won’t be the same in every market,” Mr Pinchuk says. “If you have the wrong elements, you’re trying to shift demand. Instead, put the product where demand is.” Galaxy Entertainment Group Ltd.’s Galaxy Macau has enjoyed outstanding early success with limited MICE and retail components. The resort features Asian hotel brands, Japan’s Okura and Southeast Asia’s Banyan Tree, not previously found in Macau or Hong Kong, consistent with the property’s focus on Asia travellers. Galaxy’s signature nongaming attraction, the sky top wave pool and beach, arose from research showing

tropical Hainan island was the top tourist destination for mainland Chinese and that they paid premium prices to stay there. Last month, Galaxy Macau opened a cineplex, appealing to mainland tourists who have a limited selection of imported films at home, as well as the Macau market. Profits may be slim, but IGamiX Management and Consulting managing partner Ben Lee notes that the movies, plus retail and dining options geared to the mass market, create traffic, giving Galaxy Macau the buzz Chinese gamblers like at a property. “Build with flexibility to turn toward what the market wants,” Mr Murray says. But as with ships, the bigger the resort, the harder it can be to turn. About this report: This article grew out of a panel discussion on casino resorts at the recent Asian Casino and Gaming Congress in Singapore. Panellists were Mr Arasi, Mr Murray and Mr Pinchuk. Macau Business special correspondent Muhammad Cohen moderated the panel and supplemented the article with additional reporting.

BETTING ON ‘CASH-SUCKING BLACK HOLES’

efore Singapore opened its casino resorts, restaurant and catering group Menu managing director Devin Kimble worried they could become “black holes”, sucking in consumer dollars. As the resorts approach their second anniversaries, Mr Kimble says his fear has come true. “My hope is eventually that will change,” he adds. He also echoes a complaint heard in Macau: along with spending, the casino resorts suck in labour, making the situation more difficult for other employers. Mr Kimble says Menu closed two outlets of its Brewerkz microbrewery chain due to insufficient manpower. Entertainment complex Saint James Power Station chief executive officer Dennis Foo campaigned for legal casinos for more than decade to boost Singapore’s tourism. Since the resorts opened last year, visitor arrivals have risen an estimated 40 percent while visitor spending is up more than 70 percent. But Mr Foo admits he should have been more careful about what he wished for. For the most recent fiscal year, Saint James reported a loss of S$1 million (MOP6.1 million). In a statement, the Singapore-listed company blamed the

resorts, “as many of the target audience in the nightclub industry have found casinos an alternative form of entertainment”. “The integrated resorts have come up with different schemes to encourage you to come in,” Singapore International Chamber of Commerce chief executive Phillip Overmyer says. Aside from casinos, where Singapore citizens and permanent

residents need to pay S$100 (MOP615) to enter, “the rest is very popular with residents.” “To me, the litmus test of it all is this: is the home market proud?” Marina Bay Sands’ first CEO Thomas Arasi says. From the Singaporeans guiding visitors around the resort, the answer appears to be a resounding “yes”.

JANUARY 2012

Gaming “The audience is there but the casino industry [in Macau] is not. In the U.S., the level of opportunity is nowhere near where it is in Asia, but the U.S. is far more developed.” He argues that as long as there is no specific mention of gaming, there is room to manoeuvre. “It’s especially easy if the property includes hotel, food and beverage, and other amenities. You just stress the non-gaming benefits. Everybody knows there’s a casino, you just don’t say it.”

Leading followers

Digital betting Casinos are missing a chance to engage savvy online consumers in the mainland with digital marketing techniques, expert says

BY MUHAMMAD COHEN

he mainland has the world’s biggest online community at 485 million strong and expanding, creating tremendous opportunities for local casinos keen on digital marketing. “Growth now is ridiculous,” says Macau-based digital marketer Chris Wieners. Mainland net users’ interest in tourism presents huge opportunities for Macau’s gaming operators. Two-thirds of outbound tourists use the Internet, and 79 percent of that segment reserve their hotel room online, says Mr Wieners, the vice-president of operations for Hogo Digital, a boutique marketing firm

JANUARY 2012

that targets high net worth consumers. Hogo was launched last year in Hong Kong by Faye Ho, a granddaughter of SJM Holdings Ltd. founder Stanley Ho Hung Sun. The company has offices in Macau, Guangzhou and Shanghai. While advertising for gaming is banned in the mainland, there are ways to reach consumers online, but gaming operators are missing the connection. “There’s a mismatch between what users want and what most companies are delivering,” Mr Wieners says, speaking to Macau Business following a presentation at the recent Asian Casino and Gaming Conference in Singapore.

Mr Wieners is the former director of digital marketing at Sands China Ltd. He began his career in hotel operations in 2001 but his marketing experience has been almost exclusively in the digital area. Digital marketing “is a baseline marketing tool that should be looked at separately from the traditional marketing channels. While it’s vital that these departments do have active, open communication between them, it’s important to distinguish that the digital channels are unique in both the way organisations send and receive, and therefore respond to and with their customers,” he says. Mr Wieners advocates integrating social networking directly into websites, each localised for mainland users. “If you give people a reason to follow you on social networks, they will,” he adds, which means going beyond simply copying the website to a new platform. “You need to give them unique content or special offers.” The challenge is for casino operators to provide users with incentives to join their networks. Tweet-ups, shortnotice invitations to special events, are one inducement that is popular in the United States. If casinos can get customers to join their social networks, they create a communication channel, gaining access to the surprisingly large volume of information people are prepared to share online. Follower-only pages can also attract and keep certain types of customers, such as wine connoisseurs. But creating content and communicating regularly means committing manpower to the job, Mr Wieners says. “I haven’t seen anybody [in Macau] use Facebook effectively,” Las Vegasbased Gaming Market Advisors chief

75 executive officer Andrew Klebanow says. “I haven’t seen it work. All I’ve seen it do is give employment to people who sit on the web all day.”

If casinos can get customers to join their social networks, they create a communication channel, gaining access to the surprisingly large volume of information people are prepared to share online

Relevant and local The first step to reaching the mainland market is localisation. “You can’t just translate your online material from English,” Mr Wieners says. Beyond language, changes range from having the Chinese page served as a standalone site, separate from other pages, to accepting mainland design and usage patterns, and further localising content to take into account geography and demography. “Western-branded casinos are at the forefront of digital marketing [in Macau], specifically because they have large teams in the U.S. that are able to help build strategy and learn from past mistakes,” Mr Wieners says. “Sometimes, though, what these organisations don’t take into account is the importance of a unique message when speaking to Chinese consumers. I look at the work Galaxy Macau did prior to its opening, including the digital postcards and animated mascots that were shown across Chinese media. These gained huge traction across the Hong Kong and mainland audiences.” Mainland netizens have bypassed some Western patterns of use, such as

the use of portals, in favour of social media. Mainland users prefer content rich pages where they can find information located in one place, although leading portal Sohu is moving towards a more graphic style. Mainland users also prefer to click more, but type and search less. Clickthrough rates for online advertising run as high as 2.3 percent, Mr Wieners says, in a field where 1.2 percent is con-

sidered very strong. The click-through metric is the number of clicks on an ad in relation to the number of times it is seen.

Full spectrum Reaching the mainland market also means understanding the unique equivalents of key social networks. The equivalents to Facebook are Kaixin001 and RenRen, YouTube is Youku, and Twitter is Sina Weibo. Mr Wieners says social networking is heavily segmented with many narrowly targeted networks. Marketers find P1.cn the most intriguing niche community because of its restricted membership of individuals with a monthly income of at least RMB8,000 (MOP10,055). “Go mobile,” Mr Wieners encourages casino marketers. “I believe this will be the way forward in China and much of Asia.” Of the mainland’s 485 million Internet users, 318 million accessed the Internet from a mobile device, while the number of home computer netizens stood at 390 million as of June last year, according to the latest survey from the China Internet Network Information Centre. Some experts believe that mobile Internet use via smart phones and tablets will overtake access via computer before the end of next year.

SOCIAL MEDIA HOPE FOR LOYALTY BOOST O

ne dilemma for casino marketers in Macau remains the reluctance of players to sign up for loyalty marketing programmes. These reward schemes are the backbone of casino marketing in the United States, enabling casinos to identify and target their best customers by tracking player behaviour and other spending habits. The payoff for customers is that tracking lets casinos personalise services and offers to their individual preferences. In the U.S., loyalty programme participation reaches as high as 85 percent of players for Caesars Entertainment, the owner of Caesars Golf in Macau, according to Gaming Market Advisors chief executive Andrew Klebanow. In Macau, the estimated card penetration ranges from 10 to 40 percent, with Mr Klebanow suggesting 25 percent is a realistic figure. At Singapore’s two casino resorts, card penetration is estimated at 20 to 30 percent. Socalled “uncarded play” leaves a big hole in marketing plans and financial projections. Social networking and mobile apps could help bridge the chasm, according to Hogo Digital vice-president for operations Chris Wieners. Mainland Internet users are keen social networkers and mobile Internet use is growing explosively. To reach mobile users more effectively, Mr Wieners suggests applications such as way-finding and game-finding for exploring property features. Those activities could be integrated with loy-

alty programmes to enable people to check and even earn points by smart phone or get special promotions while on the property. Tracking technologies could help properties identify which followers are on-site, where they are, and where they spend most of their time, information companies seek via their loyalty programmes. “It’s a natural,” Mr Wieners declares. “The reason it’s not being done, no operator is taking the lead.” JANUARY 2012

Gaming

The biggest ever ICE Totally Gaming 2012 to welcome over 400 exhibitors

his month’s ICE Totally Gaming will be the largest ever, according to figures released by show organisers Clarion Events. The event will be held from January 24 to 26 in London. The news comes following confirmation that over 22,000 square metres of stand space have been contracted to gaming exhibitors, a record high for an edition of ICE. Over 400 exhibitors, from more than 50 countries, have already confirmed their presence. “Not only is ICE Totally Gaming the only exhibition to bring together the online and offline worlds, it is also the only event to boast so many represented countries on the show floor,” says Matthew Appleby, marketing communications manager at Clarion Events. “Unlike other events our exhibitors are not drawn from one narrow gaming sector and they’re not from one region. Instead they embrace every gaming discipline and platform and are drawn from every corner of the globe.” At this year’s show, International Game Technology (IGT) will present an array of new titles such as ‘Elvis The King’ multi-level progressives, ‘Breakfast at Tiffany’s’, ‘Sex And The City Fabulous’ and ‘Ghostbusters Who Ya Gonna Call’.

JANUARY 2012

“Visitors will also see IGT Cloud, a breakthrough casino management service solution that empowers operators to optimise their operations and floors using cloud computing technology,” IGT’s Craig Churchill, senior vice president of international sales, says. Novomatic will be showcasing two new cabinets – one for the existing Novo Line platform and another catering to all AGI gaming platforms. The company will also be unveiling new games within its Novo Line category, a variety of new jackpot themes and a new automated single player roulette game, Tiger Roulette.

World premieres Making their world premiere at ICE Totally Gaming are two new solutions from JCM Global, the iPro and iPro-RC bill validators. iPro combines advanced SMLED sensors with anti-fishing technology while iPro-RC has an added recycling feature to reduce operational costs. ICE will also mark the premiere of JCM’s new BlueWave Deluxe software uploading tool that enables casinos to upload software upgrades at a faster speed. As for Aristocrat Technologies, they will be showing their largest number of

games in recent years at the forthcoming ICE show. Aristocrat brought forward European release schedules for several games after they received a good response when previewed at G2E Las Vegas in October. William Wilsnagh, managing director for Europe and Africa, said Aristocrat had listened to the European operators who attended the Las Vegas show. “So many of the new games on show at G2E created such an impression with European operators, we’ve made their advanced roll out in Europe a priority,” he said. An example is Reel Tube, one of two new standalone gaming categories being showcased at ICE. Offering bidirectional rotation of the reels, it allows for unique bonusing features. Reel Tube will roll out in Europe with two distinctly different flavours; the chemically charged 100 line game ‘Mad Professor’ and the ancient Egypt-inspired ‘Pharaoh’s Prize’. Spielo International too is featuring a comprehensive portfolio of content, products and systems solutions at the 2012 ICE Totally Gaming show. Spielo International is the new name of former sister companies Atronic and Spielo. This will be its first appearance at ICE as a fully integrated entity.

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78 GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT - gustavo.cavaliere@gmail.com

Champs and chumps THE QUALITY OF MACAU’S HOTELS AND RESORTS IS VARIABLE AND THE OFFERINGS DIVERSE, WITH SOME PROPERTIES STANDING OUT, EITHER FOR ALL THE GOOD OR FOR ALL THE WRONG REASONS s 2011 has just come to a close, this is the perfect moment to assess where Macau stands in the ranks of hospitality service, and which hotels and resorts can be regarded as winners. With the opening of Galaxy Macau, the city now has 26 five-star hotels, many managed by international hospitality groups. Guests are entitled to expect all to give excellent service, matching the level offered by their sister-hotels abroad. Unfortunately, my experience as a hospitality consultant shows me that this standard has yet to be reached in Macau. Most of the five-star hotels here offer great rooms – some are lavish - so service is even more important to set a hotel apart from the competition. In this regard the Hotel Okura Macau and the Banyan Tree Macau, both opened last year, stand out. The quality of their staff is ahead of the pack and they make guests feel quite welcome. Even so, both hotels have shortcomings, notably in the way they check guests in and out. It is disappointing for arriving guests to be kept waiting, sometimes for hours, for their rooms to be made ready. It is quite the opposite when it is time to check out, with the staff betraying an urgent need to have room keys back. This “please leave” attitude is unacceptable and makes customers feel uncomfortable. Hoteliers should be more sensitive to this problem. As an industry professional, I understand that hotels here are short of manpower and that this makes the process of getting rooms ready for arriving guests all the slower. I also know that hotels are often fully booked and so need departing guests to check out as soon as possible to vacate their rooms for arriving guests. But these are not a guest’s problems and should not detract from their stay.

Shows and no-shows The standards of room cleaning at both the Hotel Okura and the Banyan Tree Macau are higher than elsewhere in Macau. Even so, I strongly advise their housekeeping departments to give more attention to detail.

Is there a point to listing the winners and losers in this industry? Yes, there is: to set standards for all hotels and resorts to match or surpass. With a new year, a new opportunity arises for hoteliers to think again about how they do things JANUARY 2012

When it comes to free in-house entertainment, the city has three clear winners and one big loser. Galaxy Macau and StarWorld offer the best free in-house live entertainment shows. The resorts, both managed by Galaxy Entertainment Group Ltd., have done excellent work in selecting outstanding performers from around the world to offer their guests non-stop shows. It is remarkable how many different live performances they present each day. But Galaxy Macau has tremendous room for improvement in other areas, even allowing for its massive dimensions. The resort is full of restaurants but has very little else for tourists to do apart from watch shows. The recent opening of its cinemas is good news. The Venetian Macao is the other winner in the field of free in-house entertainment. Besides offering the breath-taking spectacle of its interior, the Venetian shows that its marketing department understands how to entice the masses with special events and live acts. Across the street, City of Dreams also amazes me, but for all the wrong reasons. I find it a monotonous place, with barely any free live entertainment – at least on the scale one would expect from such a big resort. I would love to meet the management of City of Dreams to ask them what they were dreaming of. The resort is the big loser in this field.

Year zero Turning to casinos, and food and drink, the variety on offer is huge. It is hard to pick a clear winner and probably unfair to do so. All hotels have at least one extraordinary restaurant and most gaming areas give customers what they are looking for: a range of games to play and chips to play with. That said, Wynn Macau sets itself apart from the rest. Inside its casino, one can find the best customer service in Macau, at least on a gaming floor. There is still work to be done on employee attitude but without a doubt Wynn Macau’s staff are the best trained in town. Is there a point to listing the winners and losers in this industry? Yes, there is: to set standards for all hotels and resorts to match or surpass. With a new year, a new opportunity arises for hoteliers to think again about how they do things and improve the quality of their service. Will 2012 be the year when, finally, we will see the revolution in service that Macau is crying out for? Will this be the year when, finally, all involved in the tourist industry come to realise the need to start building a better workforce? Will this be the year when employees start performing responsibly, with a view to excelling in the performance of their duties? I still have high hopes for the future. The evolution of the industry depends simply on a change of attitude among those that work in it – a change that would eventually allow Macau to call itself an “international tourist destination” without a hint of irony or trace of wishful thinking.

Hospitality

Photo: Luís Almoster

HOTEL ROOM RATES ONLINE

NEW RECORD FOR TOURIST ARRIVALS

Data up to November shows Macau has already surpassed the previous all-time high set in 2010 Macau will post a new yearly record in tourist arrivals in 2011. In the first 11 months of the year, Macau has already surpassed the previous record, set in 2010, when the city welcomed 24.97 million visitors. Tourist numbers due later this month will likely show Macau set a record with more than 27 million visitors last year. From January to November, Macau welcomed 25.46 million visitors. Information from the Statistics and Census Service indicates that the total visitor arrivals for November increased by 20.1 percent year-on-year to 2.42 million.

The Macau Government Tourist Office last month started to publish the room rates of local hotels and guesthouses on its website on a permanent basis. The body said that for guests who reserve rooms directly with the hotels, the price cannot exceed the limit of the rates published. If bookings are done through any other channels, the room rates published on the website can only be taken as a reference, as prices offered are likely to also include commissions. Currently, all hotels and guesthouses need to inform the Tourist Office of any revised room rates. During the May 1 Labour Day holiday last year, the Tourist Office published the room rates of hotels and guesthouses online for the first time. This measure was also implemented during the National Day holiday and the Macau Grand Prix.

LESS MICHELIN-STARRED RESTAURANTS Michelin last month launched the fourth edition of the bilingual “Michelin Guide Hong Kong Macau”. The latest guide includes 51 establishments in Macau (35 restaurants and 16 hotels). Robuchon a Galera remains the only three-Michelin star restaurant in the territory. The city has overall seven restaurants with stars, two less than a year ago. Aurora at Altira, Il Teatro at Wynn Macau, and Jade Garden at StarWorld, are no longer on the list. The only new entrant is Golden Flower, at Wynn Macau, with one star. The Michelin guide Hong Kong Macau 2012 costs HK$188.

PROMOTING INDIAN TASTES The Institute for Tourism Studies and the Macau Government Tourist Office last month co-organised a Muslim cuisine seminar and cooking demonstration workshop. The goal was to help hospitality and food and beverage professionals understand Muslim cuisine and identify non-Halal ingredients that are forbidden in Muslimfriendly menus. According to a press release from the organisers, “the increase in visitors from India and Muslim countries is obvious”. The Tourism Office says this has translated into increasing demand for halal gastronomy, but adds there are currently only a few chefs in Macau who are able to provide food that complies with Muslim food regulations.

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mbreport SMOKING BAN 82 There is no official estimate whatsoever on the economic impact the ban will have on businesses, on government revenue from the tobacco tax or the savings to the public’s purse from reduced health costs. The Health Bureau has created the Tobacco Control Office, staffed by 40 full-time inspectors and 80 paid volunteers, to enforce the smoking ban and promote anti-smoking campaigns. Over the first 19 hours of the ban, more than 350 venues were inspected, with nine people issued fines. Penalties range from MOP400 (US$50) to MOP600 but offenders receive a 50-percent discount if they settle the fine within 15 days, aping the system in place for payment of driving fines. Fines under the ban are smaller than the penalties imposed in Hong Kong where the single, fixed fine for anyone who lights up in non-smoking areas is HK$1,500. The director-general of the Smoking Abstention and Good Health Association, Johnny Au, believes most smokers are concerned about being banned from smoking inside restaurants. He applauds the government promotion campaigns leading up to the ban’s launch, saying the population was aware of it. “It was advertised and posters were put up in most places,” he says.

Message misfiring The approval of the tobacco control bill last April created plenty of time to prepare for the smoking ban. The tobacco control law took more than three years

Over the first 19 hours of the ban, more than 350 venues were inspected, with nine people issued fines. Penalties range from MOP400 (US$50) to MOP600 but offenders receive a 50-percent discount if they settle the fine within 15 days to prepare, plus another 15 months for its passage through the Legislative Assembly. Mr Au admits the thousands of tourists that enter Macau daily may not be fully aware of the tobacco ban. Of the nine people issued fines on the first day of the new law, four were tourists. “If we talk about travellers, I’m concerned,” he says. “The new law should be well promoted and cross over to every sectors of the community.” Promotion should be reinforced in tourist entry points in Macau, he says. The Health Bureau admitted in a press release “difficulties and challenges are to be expected” while enforcing the smoke ban. The body adds however it is confident its team of inspectors will be up to the task. While the smoking ban is con-

A DYING BREED S

moking rates for Macau residents older than 14 years increased by about 1 percent from 2009 to last year to reach 16.9 percent of the city’s population. The results were included in a report by the Statistics and Census Service that was released ahead of the new ban’s introduction. More males light up than women, with about one in three males smoking compared to less than 4 percent of females. Tobacco is especially popular among men aged from 35 to 44 years old, where a staggering 41 percent were regular smokers. The report concluded that more than one quarter of the city’s smokers have tried unsuccessfully to quit. The report also highlighted a high rate of exposure to secondhand smoke of 93 percent at Macau restaurants and 53.6 percent at work. Smoking among minors is also a grave concern. A 2010 survey by the Health Bureau concluded that one out of every 10 children aged less than 15 years smoked. The government has sponsored tobacco cessation counselling. The first service was established in Areia Preta in 2006. The Health Bureau says about 1,300 people have attended counselling, with a success rate of 36 percent. Some unique solutions have also been introduced with the government organising a competition for quitting the habit in 2008. Smokers who were able to quit stood to win a prize of MOP50,000 (US$6,250). About 350 people took part. JANUARY 2012

sidered a big step for Macau, Mr Au believes there is room for improvement once complementary legislation is enacted. He mentions graphic antismoking images on cigarette packets depicting the effects of smoking. “It’s a very effective way to alert people not to smoke.” Mr Au is also in favour of higher taxes on tobacco, although they were raised last month, ahead of the ban. He says data shows those who consume cigarettes the most are people on low wages, which could be more sensitive to a big increase in price. If you add a more effective health-warning model to a tax raise, it will lead to a drop in tobacco consumption, Mr Au says. Overall he is satisfied with the new tobacco control law and believes it will improve the community’s health. “In Macau, it is very significant for social harmony. We are very close to each other. We have to take breakfast or eat outside every day,” Mr Au says. “If we are exposed to second-hand smoke, it may cause serious harm to our health.”

Enforcement blues The director-general of the Smoking and Health Life Association, Samuel Chan, believes enforcement of the smoking ban will be difficult, considering lax tobacco enforcement in the mainland. “The enforcement of a similar law there is really bad,” he says. A nationwide ban on smoking was introduced there last May, making smoking in some public indoor venues illegal, including hotels, restaurants, bars and public transport waiting rooms. Offices and factories were excluded. Mr Chan is disappointed by the promotion of the law by the Macau government. He says there are a lot of people – smokers included – who are still not fully aware of the new rules. There is also a concern that smokers will not take the new law seriously. “Smoking a cigarette takes just a few minutes. By the time the inspectors arrive at the facility, the cigarette has already been smoked,” Mr Chan says. He is not confident that restaurant owners will uphold the ban should a customer light up indoors. “Owners believe not allowing customers to smoke will hurt business,” he says. There are potential positives in the law for the hospitality industry. Mr Chan can see more customers moving

LIGHTS OUT: VENUES WERE SMOKING IS FORBIDDEN

(1) SMOKING IS ALLOWED OUTDOORS, IN DESIGNATED AREAS (2) SMOKING IS ALLOWED IN HOTEL ROOMS (3) SMOKING IS ALLOWED INDOORS IN DESIGNATED ROOMS (4) THE SMOKING BAN COMES INTO FORCE ON JANUARY 1, 2015 (5) THE SMOKING BAN WILL BE ENFORCED FROM JANUARY 1, NEXT YEAR AND THEY MAY CREATE SMOKING AREAS COVERING UP TO HALF OF THE GAMING FLOOR

BANNED INDOORS AND OUTDOORS - HEALTH CARE FACILITIES - DRUGSTORES - NURSERIES - KINDERGARTENS - SCHOOLS - YOUTH CENTRES - UNIVERSITIES (1) - CONTINUOUS LEARNING CENTRES (1) - SHOPS THAT SELL INFLAMMABLE PRODUCTS - SERVICE STATIONS - SPORTS VENUES - PUBLIC SWIMMING POOLS BANNED INDOORS - WORKPLACES - LEGISLATIVE ASSEMBLY - COURTS - GOVERNMENT BUILDINGS - CANTEENS - ELDERLY CARE FACILITIES - CARE CENTRES FOR DISABLED PEOPLE

- COMMUNITY CENTRES - HOTELS (2) - RESTAURANTS - BANKS AND ATMS - SUPERMARKETS - RETAIL STORES - SHOPPING MALLS - AIRPORT (3) - FERRY TERMINALS - CINEMAS AND THEATRES - MUSEUMS AND LIBRARIES - GYMS - HAIRDRESSERS AND BARBERSHOPS - BEAUTY SALONS - CYBERCAFÉS - ELECTRONIC GAMES ROOMS - BOWLING ROOMS - INDOOR PARKING LOTS - BARS AND NIGHTCLUBS (4) - SAUNAS AND MASSAGE PARLOURS (4) - CASINOS (5)

OTHER RESTRICTED VENUES - PARKS AND GARDENS (1)

- BEACHES (1) - BUS STOPS

AND TERMINALS

- LIFTS - FOOTBRIDGES - PEDESTRIAN TUNNELS - BUSES - TAXIS - FERRIES - CABLE CARS - AMBULANCES JANUARY 2012

mbreport SMOKING BAN 84 through restaurants more quickly. Families will be more willing to bring their children when they dine out, boosting sales, and smokers who may have been prone to remain seated at a table while lighting up, will move on more quickly, freeing up tables. The issue for restaurant owners is what to do if a customer refuses to stop smoking if they are asked to. The Health Bureau says restaurant owners should call the Tobacco Control Office or the police. The office says it will schedule more frequent checks on restaurants that have had more than five smoking complaints.

Significant exceptions The tobacco control law includes some significant exceptions. Most frequently highlighted is an exception for casinos. They are the only businesses in town allowed to set-up smoking areas that occupy up to half of their gaming floor. What is more, they will be exempt from the ban for 12 months. Bars, nightclubs, saunas and massage parlours will enjoy an even longer exemption period – three years. By the end of 2014, they too will have to comply with a full smoking ban without the luxury of designated smoking areas which casinos can install. Lawyer Leonel Alves, an indirectly elected legislator who represents the professional services sector, supports the smoking ban, saying it promotes the overall health and well-being of the population. Mr Alves, who is also a legal adviser for gaming operator Sands China Ltd., says the casino exception is a response to Macau’s own unique characteristics. “I hope these exemptions are transitory,” he says. Government-appointed legislator Tommy Lau Veng Seng believes the smoking ban can assure a “clean environment” for the general public. Adjustment might be hard at first but, overall, he says it is a change that “is going to do a lot of good to public health and is a way to respect nonsmokers”. Mr Lau admits the ban will be difficult to enforce, especially given the number of Chinese tourists coming to Macau every day. “For those who have come here before, they could smoke everywhere. And now? They have to adjust to the new system and may not be happy with it,” he says. JANUARY 2012

EXPENSIVE ADDICTION S

mokers’ luck has run out. They face a widespread smoking ban and increased prices for tobacco products, with a tax increase approved by the Legislative Assembly last month and already in force. The tax on a packet of 20 cigarettes has increased 150 percent to MOP10 (US$1.25) from MOP4 before. The tax increase in cigars was more than 400 percent. The last increase in the tobacco tax took place in 2009. The tax increase was approved unanimously but some lawmakers expected a bigger hike. Directly-elected lawmaker Lee Chong Cheng questioned the government’s commitment to reducing tobacco consumption among youths. Mr Lee, a member of the Macau Federation of Trade Unions, asked for “more substantial” tax increases. Other legislators are concerned with tobacco smuggling but secretary of economy and finance Francis Tam Pak Yuen pledged to reinforce border controls. In 2010, more than 650 cases of tobacco smuggling were detected. Mr Henry Lei Chun Kwok, an assistant professor of business economics at the University of Macau, says the tax increase is steep enough. He wants the

tax matched by tighter regulation on duty free tobacco products to prevent smokers going across the border to supply themselves with cheaper cigarettes. “An increase in the tobacco tax together with a signifi cant cut on duty-free cigarette quotas is believed to be more effective than the current arrangement,” Mr Lei says. That is the model adopted by Hong Kong. Besides charging a tobacco tax of HK$35 on each pack, duties must be paid by anyone entering the city with more than a full packet of cigarettes. The director-general of the Smoking and Health Life Association, Samuel Chan says a tobacco tax increase in Macau should be more significant to have a real impact on the number of smokers. “According to World Health Organisation recommendations, the tax should be at least 75 percent of the retail price,” he says. The Health Bureau said “there are several steps to encourage smokers to quit” and increasing the tobacco tax was one method. The bureau highlights other new measures included in the tobacco control bill such as a ban on tobacco vending machines and tobacco-sponsored public events.

Handled with care Allowing casinos to convert up to half of their gaming floors into smoking areas is divisive, either for being too strict or because the ban is not tough enough BY LUCIANA LEITÃO

he special treatment offered to the gaming industry is the most controversial part of the new ban on smoking. Casinos have another year before complying with the new rules. Their tobacco ban starts on January 1, next year. They will be able to offer huge

indoor smoking areas, up to half of the gaming floor. In comparison, restaurants or cafes are not permitted to have smoking areas, nor will bars, nightclubs, saunas or massage parlours be exempt, once their ban begins in three years. The exemption for casinos was borne from the fear that full prohibition would have drastic, negative economic effects. Raymond Yap, senior vice-president for international premium marketing development at Galaxy Entertainment Group Ltd., admits “it is hard to say” what impact the partial smoking ban might have on casino operations. “We must be pragmatic on this issue, because a [full] smoking ban could adversely impact the industry’s businesses and, therefore, local employment opportunities,” he says.

Galaxy is waiting for the government to release technical rules on the establishment of smoking areas inside casinos. “We are closely monitoring the related regulations which are to be released by the government so that we can refer to its standards when we make plans about the smoking and nonsmoking zones in our properties,” Mr Yap says. Chief executive of MGM China Holdings Ltd., Grant Bowie, told Macau Business the tobacco control law created “a fair environment where smokers have the freedom to smoke and for nonsmokers to be away from the secondhand smoke”. In the MGM Macau non-gaming areas already covered by the smoking ban, such as restaurants or the hotel, non-smoking signage is in place. In other areas, including the property’s

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mbreport SMOKING BAN 86

three bars, the tobacco ban comes into play in 2015. “With the presence of anti-smoking signs and enforcement of non-smoking protocols, MGM Macau aims to provide a clear and consistent message about the smoking regulation and the smoking ban,” Mr Bowie says.

Clashing research A spokesperson for Wynn Macau said the gaming operator supports all government initiatives aimed at turning Macau into an international destination. It added the company would be introducing a detailed information campaign to better inform patrons about the new rules. Judy Patterson, senior vicepresident and executive director of the American Gaming Association, says smoking bans in United States casinos have negatively impacted gaming revenue. The assistant professor of the University of Macau’s Institute for the Study of Commercial Gaming, Davis Fong Ka Chio, says casino revenues may drop immediately after the prohibition is implemented but revenue eventually returns. The introduction of full JANUARY 2012

The issue of allowing smoking in casinos has particular relevance to Macau. The majority of players are from the mainland. The country’s population of smokers now numbers 300 million people, according to the central government

TRUMP CARD M

orton’s The Steakhouse has claimed a special place in the hearts of meat-eating smokers. It has an expansive forecourt where smokers can enjoy a cigarette – the Venetian Macao casino. It is a competitive advantage not enjoyed by most food and beverage outlets located inside a resort or shopping mall, which typically do not have an outdoors sitting where people can smoke. Since Morton’s is adjacent to the casino, where smoking is allowed and will be partially permitted after this year, that will make customers’ life much easier, says David Martin, regional director of operations at Morton’s. “It will be very easy for our patrons to go outside, have a cigarette and come back in as well.” The restaurant also has outdoor tables, where smoking is permitted. For Morton’s, implementing a smoking ban is nothing new. The chain has previously experienced similar bans in the United States. “It’s just the way the world is going, it’s something we’ve seen before,” Mr Martin says. A potential decline in business is not a concern. “In the United States, we didn’t have any impact in revenues but what we do feel is people leave earlier from the tables. People tend not to stay so long.”

87 smoking bans in other gaming jurisdictions has led to an average 20-percent decrease in gross gaming revenues in the first year, he says. In Macau’s case, where a partial ban is in place, with the establishment of sizeable gaming areas for smokers, Mr Fong does not forecast a significant drop in revenue in the first year. “For the other years to come, gross gaming revenue will recover, increasing above the numbers of the year before the ban,” he says, mentioning the cases of some gaming jurisdictions in the U.S. and Australia. Mr Chio says the ban will create a new segment of players, the nonsmokers, who can eventually make an important contribution to gaming revenue. In Singapore, the Marina Bay Sands “underestimated new gamblers, particularly non-smoker gamblers,” he says, adding the property is changing its layout to better cater for demand. Ms Patterson is pessimistic. “When you implement a ban, partial or full, you do see a decrease on revenues,” she says. Comparing Macau to the experience of casinos in Atlantic City, Ms Patterson estimates there will be a drop in revenue, even with a partial ban. “They [Atlantic City] had a partial ban, the economy then went into recession and they delayed the implementation of the full ban as a result. Which again is a recognition that it will impact revenues.” Recent news reports mention the weak enforcement of the partial ban at Atlantic City’s casinos. In the U.S., the scope of smoking bans varies significantly between jurisdictions. Only four of 14 states with commercial gaming industries have banned smoking entirely. Eight of the 14 states have no smoking restrictions on the casino floor.

inside casinos. Mr Chao explains that he is satisfied with the strength of the current measures but highlights the health dangers casino workers face from second-hand smoke. More than 47,000 people work in Macau’s casino industry, making it the city’s biggest employer. About 21,000 work as dealers. It is unclear what will happen if a worker refuses to work in a smoking zone. Legislator José Pereira Coutinho agrees with the concerns regarding the health of dealers. Smoking areas “will continue to be polluted and a lot of people, given the working relation-

ship, have to work there and are forced to inhale second-hand smoke, which is clearly unfair,” he says. “I don’t believe the separation [of the smoking and non-smoking areas] will be enough.” Government-appointed legislator Tommy Lau Veng Seng says allowing for both smoking and non-smoking areas in casinos is a compromise solution. He notes that even a partial ban as planned will not be easy to apply. “It will take an effort to enforce the law in casinos. There are a lot of tourists from the mainland and most of them are smokers,” he says. A full smoking ban in casinos has

Second-hand smoke The issue of allowing smoking in casinos has particular relevance to Macau. The majority of players are from the mainland. The country’s population of smokers now numbers 300 million people, according to the central government – roughly the population of the United States. The president of the outspoken New Macau Association, Jason Chao Teng Hei says his group will continue the fight to ban smoking completely JANUARY 2012

mbreport SMOKING BAN 88 not been ruled out in the long term. The tobacco control law states the Health Bureau has to issue a report every three years evaluating on the enforcement of the new rules and its impact on casinos. Changes can be proposed.

Workers aligned The director-general of Smoking and Health Life Association, Samuel Chan, says the solution that satisfies the casino operators’ interests is unsatisfactory for their staff. He also doubts whether the ventilation systems in most casinos will be able to successfully extract the smoke generated in smoking areas. Pessimistic about the exemption enjoyed by casinos, Mr Chan’s association plans to carry out a survey among gamblers to get their views. The president of Macau Gaming Industry Employees Association João Bosco Cheang Hong Lok agrees with the compromise ban. “I agree, because most of the customers, especially big ones, have smoking habits,” says Mr

Cheang, the head of the territory’s biggest casino workers union. He believes most casino employees also agree with the partial ban but hope for a full prohibition in the future. A 2009 research report backs his claim. It concluded that most casino workers support a hybrid ban that establishes smoking and nonsmoking areas. The study, by Penny Wan, from the University of Macau and Paul Pilkington, from the University of the West of England, interviewed 377 workers face-to-face and the majority – 54 percent – favoured a mixture of smoking and nonsmoking customer areas. The study also found that 42 percent and 40 percent of the casino workers reported being “nearly always exposed” and “often exposed” to second-hand smoke at work, respectively. Also, 49 percent rated the intensity of their exposure as “heavy”.

RESIGNED TO CHANGE B

ars, nightclubs, saunas and massage parlours need only worry about implementing the smoking ban in three years’ time. Even so, industry players are hoping for changes before 2015. Paolo Cheng owns Mugs Talk bar in the Praia Grande area. He accepts the ban with resignation, believing it will have a negative effect on revenue. “My personal opinion is that it will be difficult to follow these instructions,” he says. Mr Cheng will for now wait and see what happens over the next three years. “Now, in Mugs, people can still smoke. I have a bit more time to arrange everything, I will have to adjust,” he says. Looking ahead, to 2015, Mr Cheng admits he will eventually have to ask clients to smoke outside. He is afraid that may displease some customers – a significant part of his clientele smokes. “I think about the possibility of arranging outside areas for ashtrays. Maybe they can sit outside just for the cigarettes.” Francisco Coelho, owner of nightclubs D2, D3, Playmate and the Jai Alai Show Palace, is concerned about the impact the smoking ban will have on clubs and discos. He would much rather set up indoor smoking areas, just as the casinos will be permitted to do. Mr Coelho says his venues will be ready to comply with the law by 2015. The full ban is likely to hurt his business in the beginning but business will normalise within two years, he says. Sky 21 Bar & Restaurant, at AIA Tower, officially re-opened last month and is ready to comply with the new tobacco control law. Spokesperson Joe Saree Xongmixay explains all indoor areas are non-smoking. “We will not encourage or advise customers to smoke and if they smoke within our premises we will ask them not to,” he says. “We want to promote a [healthy] lifestyle.” An alternative might be to light up on the Sky 21 terrace. JANUARY 2012

Some Hong Kong club owners and restaurateurs still wish for a time before the ban, when premises had both smoking and non-smoking areas

Three-decade struggle Hong Kong took 30 years to kick the habit and ban smoking in public but some hospitality businesses want the situation reversed BY MARY ANN BENITEZ IN HONG KONG

ong Kong’s tobacco control policy is at a crossroads. Since becoming one of the first cities in Asia to ban smoking in most public places in 2009, Hong Kongers are used to eating, drinking and shopping without smokers lighting up. But some club owners and restaurateurs still wish for a time before the ban, when premises had both smoking and non-smoking areas. Floor manager of Infusion bar and restaurant, Olivia Luk, says more people prefer to sit on the tables in the outside area where they can smoke. “Actually more people prefer smoking areas. Basically every night inside will not have that many guests. Inside it’s not fun because if you sit outside you can check out people walking around and they can smoke. Indoors they are not allowed to smoke,’’ she says. Ms Luk however says “the smoking ban has not affected our business that much because guests can walk outside and smoke”. Kat, the manager of Hong Kong Brew House, says the smoking ban was “a big disaster” for the pub. “So many customers like to drink and smoke but right now they can only drink here, unlike before. So they find a place where they can smoke and drink.” Restaurants with outdoor areas enjoy better business than those establishments without such amenities, she says. “We are affected by the ban,” Kat adds, admitting it is hard to say how many customers the venue has lost. “Now it’s better because people are used to it. But still it has affected us a lot. It’s not as good as before.” “It’s not helpful for the people’s health. If they don’t smoke here they can still smoke outside. So people won’t stop smoking if there is a ban. I don’t think it’s a good policy.” She says her customers were happier with a combination of smoking and non-

smoking zones in use before 2009. “If the government wants, they can ask restaurants to have a non-smoking area rather than the whole area as a non-smoking area.”

Revenue neutral The manager of El Rincon restaurant in Hong Kong’s night-time party zone Lan Kwai Fong says the ban has not helped much. “Usually people in Hong Kong, especially Chinese, smoke a lot. So they will find places outdoors, but in Lan Kwai Fong we are not allowed to bring tables out,” says the manager, who gave his name as Roger. “If you say ‘Don’t smoke’, they will leave.” He believes the government should not have banned smoking from bars. Restaurant receipts have not been affected by the ban. The business sectorfriendly Liberal Party said in 2007 that any ban would lead to drastic financial losses and unemployment, recalls James Middleton, chairman of Clear the Air, a charity organisation committed to improving Hong Kong’s air quality. Statistics from the Census and Statistics Department show that restaurant receipts have increased steadily from HK$61.9 billion (US$8 billion) in 2006 before the expanded smoking ban was enforced to HK$83.957 billion in 2010, a year after the full ban. The value of bar receipts increased from HK$1.3 billion in 2008 to HK$1.4 billion in 2010, according to the Department of Health. In the first three quarters of last year, restaurant receipts were HK$65.69 billion and were projected to reach HK$87.59 billion this year. “So, in 2011 the first three quarters of the year, receipts were HK$3.79 billion more than the whole of pre-smoking legislation 2006. On year 2006 to projected year 2011 comparison, 2011 will be 41.5 percent higher in restaurant receipts than pre smoking ban 2006,” Mr Middleton says.

Long struggle It took 30 years for Hong Kong to create a smoke-free city, with the Department of Health taking a progressive and multipronged approach to implementation. The government first enforced smoking bans in 1982 and by 1997 the ban was extended to cover lifts, public transport, cinemas, concert halls, airport terminal and escalators. By July 1998, the ban was expanded to include shopping centres, department stores, supermarkets, banks and game arcades. The 1998 legislation required JANUARY 2012

mbreport SMOKING BAN 90 restaurants with more than 200 seats to designate at least one third of the seats as a “no smoking area”. Proposals to restrict smoking in restaurants were opposed by the tobacco industry and many restaurant owners who said smoke-free policies would hurt business. In June 2001, proposals were created for smoke-free restaurants and bars. They became law in 2006 and enforcement began on July 1, 2007. The tobacco ban was extended to bars, nightclubs, clubs, massage parlours, bathhouses and mahjong venues on July 1, 2009. To reduce the impact of secondhand smoke and safeguard public health, the government’s approach has been to combine education, legislation, enforcement, taxation and promoting smoking cessation. Since September 2009, anyone who smokes or carries a lit cigarette, cigar or pipe in any designated no-smoking area is liable to a fixed penalty of HK$1,500. Those issued notices must pay within 21 days or face a heavier penalty. By the end of last October, more

than 31,000 summons and fixed penalty notices had been issued by Hong Kong’s Tobacco Control Office. Mr Middleton would like to see more government action. The Tobacco Control Office has about 90 officers to police a population of 7.2 million people and another 36 million tourists that arrive every year. “This means they cannot patrol, only target written and phone-in complaints,’’ he says, adding smoking in banned establishments is “rampant”.

Prevention, cure As the primary enforcing unit of antitobacco laws, the control office started with a staff of 30 inspectors in 2007. With the extension of non-smoking areas, the number of inspectors has grown. Mr Middleton says the law must change to put the onus on liquor license holders to enforce the law or lose permission to serve alcohol, as is the practice in other countries. The law currently targets individual smokers, not the managers or owners of the premises.

The Department of Health says there is no need to change. “The venue managers of nonsmoking areas are empowered under the Smoking (Public Health) Ordinance to request a smoker to extinguish his lighted cigarette and, if the smoker refuses, to request him to provide his name, address and proof of identity, or to leave,” the bureau says. “Moreover, according to the existing mechanism in approving licence renewal, the Liquor Licensing Board would take into account of previous smoking offences in the premises when renewing liquor licence.” In the short-term, Director of Health Lam Ping Yan said the priority was to introduce more smoking cessation clinics and redouble efforts at clinics already in operation. The department currently runs six clinics on its own or jointly with other agencies. Plain-wrapped cigarette packets are also being looked at in Hong Kong. The department said it would observe and monitor the introduction of plain packaging in Australia and elsewhere.

To reduce the impact of second-hand smoke and safeguard public health, the government’s approach has been to combine education, legislation, enforcement, taxation and promoting smoking cessation

91 PETER SINGER PROFESSOR OF BIOETHICS, PRINCETON UNIVERSITY

Should we ban cigarettes? CIGARETTES, NOT GUNS OR BOMBS, ARE THE DEADLIEST ARTEFACTS IN THE HISTORY OF CIVILIZATION .S. President Barack Obama’s doctor confirmed last year that the president no longer smokes. At the urging of his wife, Michelle Obama, the president first resolved to stop smoking in 2006, and has used nicotine replacement therapy to help him. If it took Mr Obama, a man strong-willed enough to aspire to and achieve the U.S. presidency, five years to kick the habit, it is not surprising that hundreds of millions of smokers find themselves unable to quit. Although smoking has fallen sharply in the U.S., from about 40 percent of the population in 1970 to only 20 percent today, the proportion of smokers stopped dropping around 2004. There are still 46 million American adult smokers, and smoking kills about 443,000 Americans each year. Worldwide, the number of cigarettes sold – six trillion a year, enough to reach the sun and back – is at an all-time high. Six million people die each year from smoking – more than from AIDS, malaria and traffic accidents combined. Of the 1.3 billion Chinese, more than one in ten will die from smoking. Last year, the U.S. Food and Drug Administration announced that it would spend US$600 million (MOP4.8 billion) over five years to educate the public about the dangers of tobacco use. But Robert Proctor, a historian of science at Stanford University and the author of “Golden Holocaust: Origins of the Cigarette Catastrophe and the Case for Abolition”, argues that to use education as one’s only weapon against a highly addictive and often lethal drug is unpardonably insufficient. “Tobacco control policy,” Mr Proctor says, “too often centres on educating the public, when it should be focused on fixing or eliminating the product.” He points out that we don’t just educate parents to keep toys painted with lead-based paints away from their children’s mouths; we ban the use of lead-based paint. Similarly, when thalidomide was found to cause major birth defects, we did not just educate women to avoid using the drug when pregnant.

Limit nicotine Proctor calls on the U.S. Food and Drug Administration to use its new powers to regulate the contents of cigarette smoke to do two things. First, because cigarettes are designed to create and maintain addiction, the regulator should limit the amount of nicotine that they contain to a level at which they would cease to be addictive. Smokers who want to quit would then find it easier to do so. Second, the U.S. Food and Drug Administration should bear history in mind. The first smokers did not inhale tobacco smoke; that became possible only in the 19th century, when a new way of curing tobacco made the smoke less alkaline. That tragic discovery is already responsible for about 150 million deaths, with many times that toll still to come, unless something drastic is done. The regulator should therefore require that cigarette

smoke be more alkaline, which would make it less easily inhaled, and so make it harder for cigarette smoke to reach the lungs. Much of Mr Proctor’s book is based on a vast archive of tobacco-industry documents, released during litigation. More than 70 million pages of industry documents are now available online. The documents show that, as early as the 1940s, the industry had evidence suggesting that smoking causes cancer. In 1953, however, a meeting of the chief executives of major American tobacco companies took a joint decision to deny that cigarettes are harmful. Moreover, once the scientific evidence that smoking causes cancer became public, the industry tried to create the impression that the science was inconclusive, in much the same way that those who deny that human activities are causing climate change deliberately distort the science today.

Deadlier than guns As Mr Proctor says, cigarettes, not guns or bombs, are the deadliest artefacts in the history of civilization. If we want to save lives and improve health, nothing else that is readily achievable would be as effective as an international ban on the sale of cigarettes. (Eliminating extreme poverty worldwide is about the only strategy that might save more lives, but it would be far more difficult to accomplish.) For those who recognize the state’s right to ban recreational drugs like marijuana and ecstasy, a ban on cigarettes should be easy to accept. Tobacco kills far more people than these drugs. Some argue that as long as a drug harms only those who choose to use it, the state should let individuals make their own decisions, limiting its role to ensuring that users are informed of the risks that they are running. But tobacco is not such a drug, given the dangers posed by second-hand smoke, especially when adults smoke in a home with young children. Even setting aside the harm that smokers inflict on nonsmokers, the free-to-choose argument is unconvincing with a drug as highly addictive as tobacco, and it becomes even more dubious when we consider that most smokers take up the habit as teenagers and later want to quit. Reducing the amount of nicotine in cigarette smoke to a level that was not addictive might meet this objection. The other argument for the status quo is that a ban on tobacco might result in the same kind of fiasco as occurred during Prohibition in the United States. That is, like the effort to ban alcohol, prohibiting the sale of tobacco would funnel billions of dollars into organised crime and fuel corruption in law-enforcement agencies, while doing little to reduce smoking. But that may well be a false comparison. After all, many smokers would actually like to see cigarettes banned because, like Obama, they want to quit. JANUARY 2012

Technology

Big tech trends

Consumerisation and the growing influence of social media are the leading themes in IT for business this year ig data” analytics, security and cloud computing will be three of the main drivers of technological change worldwide this year, according to international IT research firm Ovum, based in London. It also predicts that social networking will have a growing influence on collaboration within enterprises. The independent technology analyst expects the role of chief information officers to continue evolving this year. CIOs will face strong pressure to develop operational and investment models that embrace technology-led innovation.

JANUARY 2012

“The adoption of new smart devices and sophisticated web services in the consumer market is accelerating, extending the gap between user [employee] expectations and the services being delivered by corporate IT,” says Tim Jennings, Ovum’s chief analyst for enterprise IT. “To minimise this disconnect the CIO will need to act as an enabler of innovation for the business, and this creates the opportunity to play a central role in both operational and commercial strategy.” With an increase in the number of employee-owned devices used in

the workplace, data security will remain a top concern for businesses in 2012, Ovum predicts. Companies will need to protect and secure corporate information, while also giving access to corporate data on privately owned devices. “We expect these overarching themes to be pivotal to the success of business strategy next year. Only businesses considering the opportunities that each trend presents, and the challenges that may exist, will ensure that they remain at the forefront of their respective industries,” says Mr Jennings.

OVUM’S MAIN PREDICTIONS FOR 2012 CLOUD COMPUTING: THE YEAR OF PLATFORM-AS-A-SERVICE The approach of organisations to cloud computing will shift away from just low-level infrastructure-as-a-service, in which cloud computing is seen as a way to cut costs by outsourcing the IT equipment used to support operations. Increasingly, companies will opt for higher-level use of cloud computing, either as platform-as-a-service, renting hardware, operating systems, storage and network capacity over the Internet, or software-as-a-service, with applications hosted by a service provider and made available to customers over the Internet. “BIG DATA” AND ANALYTICS: SOCIAL MEDIA AS NEW DATA SOURCES Applying analytics to social media and other sources of unstructured and semi-structured data in huge quantities (so-called “big data”), will create new business opportunities and drive new investment in business intelligence and data warehousing infrastructure. However, only organisations using big data and analytics in a transformational way will reap big benefits, Ovum warns. More organisations are expected to engage directly with their markets through social media and will look to measure the effectiveness of their investments in this channel. IT CONSUMERISATION: A SOURCE OF CONTENTION IN THE WORKPLACE The consumerisation of corporate IT is a growing trend, as employees increasingly use their own gadgets for work and use social media to communicate and collaborate with their networks and customers. This is likely to create contention within the workplace as corporate IT is probably not flexible enough to support this trend. Meanwhile, the personal computer will start giving way to the “personal cloud” as employees consume more mobile and web applications, making “bring your own software” more common. SOCIAL MEDIA: RAPID GROWTH IN SOCIAL ENTERPRISE PLATFORMS The social networking market will mainly keep growing as it has done so far, Ovum predicts. Facebook will continue to drive the evolution of employee communications as companies look to enterprise social networking software. However, the independent technology analyst predicts there will be more focus on company-specific social platforms that also allow for online collaboration. SECURITY: MOBILITY INCREASES THE LIKELIHOOD OF LEAKS Organisations should plan and act as though they have already had their security breached, Ovum says. The use of employee-owned devices also will continue to increase the likelihood of enterprises leaking data. MOBILITY: TABLETS DEPLOYED AS AN ENTERPRISE TOOL Mobile applications in both the commercial and public sectors will mature to become a catalyst for change and innovation. The tablet computer will continue to be deployed by companies for specific roles, particularly with staff that come face to face with customers in service industries.

JANUARY 2012

Human Resources

A crisis of creativity Creativity in the workplace in Macau is ... well, there is very little creativity in the workplace in Macau. Blame a glut of job openings and a rigid education system BY LUCIANA LEITÃO JANUARY 2012

reativity is increasingly being put at the heart of company performance by international management gurus. Allied to innovation, it is now recognised as central to organisational well-being. A lack of new ideas leads to stagnation and leaves a company unable to perform or handle change. In Macau, however, creativity is the subject of little academic research, and human resources experts say much has to be done to promote it in the workplace. Alex Lu, branch manager of job

website MacauHR, says the degree of creativity in the workplace is still “not competitive enough” in Macau in comparison to Hong Kong or Singapore, although he adds: “It has been improving over the past five years, after many international companies and hotel-casinos set up business in Macau.” Mr Lu has wide professional experience in Hong Kong and the mainland. He notices differences in how creativity in the workplace is viewed in each place. “In Hong Kong, people generally have more creativity and more interna-

95 tions of other good companies,” Mr Lu says. He attributes this to political considerations that inhibit thinking outside of the box. Mr Lu points to the education system as one of the constraints on creative thinking in Macau. He calls for teachers to give students more projects and to encourage them to be creative instead of always resorting to book learning. “Then, when they start working, they can automatically provide new ideas to the employer,” he says.

Attitude problem

tional exposure. It may be because of the economic and business environment,” he says. Bosses in Hong Kong promote creativity and expect employees to come up with new ideas to boost business, Mr Lu states. “There is never a bad idea. Any idea is very valuable for the employer, especially when they are considering who to promote.” In the mainland, it is different. “Workers are clever: they are very creative but apply creativity in copying other people’s things. Many brands, when starting, always copy designs and func-

Mr Lu also stresses that local companies do not demand creativity in the workplace that much. “Employers usually expect more senior staff to possess such a quality,” he says. If companies are really looking for creative types, they are likely to look for them abroad. The Asian Development Bank notes: “Creativity flourishes in organisations that support open ideas: these organizations create environments that inspire personnel and maintain innovative workplaces.” Macau’s low unemployment rate, coupled with thousands of job openings, adds to the city’s low levels of creativity, Mr Lu says. Workers do not feel the need to prove they can add value. “If they are unhappy in a company, it’s easy to have good options and move,” he says. Queenie Zhu, managing director of MyJobs Macau, a human resources company, has a brighter view. “It’s difficult to label local workers as non-competitive when compared to overseas workers,” she says. Ms Zhu believes that in an economy where hospitality in particular and the service sector in general is dominant, creativity is already an important part of work. “To serve a customer better, we have to think of ways to satisfy him or her,” she says. Ms Zhu links creativity to a good attitude. She says the difficulty in finding employees with a good attitude is one of the main complaints of employers in Macau. Bosses say workers are not eager to show how much they are worth since they can easily change jobs.

Chapter and verse “Creativity will come, if you are sincere about solving the problem,” Ms Zhu says. She says high schools need to do more to encourage creativity in students,

by scrapping old teaching methods based solely on rote learning. In a written reply to Macau Business, the Education and Youth Affairs Bureau denied local teaching methods are out of date. The bureau says it is promoting creative thinking in schools through curriculum reform, teacher training and vocational programmes. Rui Martins, vice-rector for research at the University of Macau, rejects the idea that institutions of higher education fail to promote creativity enough. “When I arrived at the university, 20 years ago, students were used to memorising the book. I introduced different bibliographic references to prevent them from memorising. They will not memorise four or five books,” he says. “Since we have a diversified teaching body, from different parts of the world, what is usually taught is, in our case, pretty diversified,” Mr Martins says. Also, several student exchange programmes bring students to Macau from as far away as Europe and Africa, and send local students abroad. Diversity, he says, stimulates creative thinking. The director of the Gaming Teaching and Research Centre at the Macau Polytechnic Institute, Hester Cheang Mio Han, also believes institutions of tertiary education promote creativity. She says the Polytechnic Institute not only includes a variety of subjects in its programmes but also asks students to complete an original thesis or project before graduating. “Students are required to develop their critical thinking,” she says.

Unexpected expected Ms Cheang accuses employers of failing to stimulate employees. “Maybe the whole working environment is not offering enough challenges to young people to push their creativity,” she says. “Whether they are allowed to exercise their creativity, depends on the company. Sometimes they are creative and the work does not require them to be creative.” Employers in the hospitality sector, at least, insist that they treasure and encourage creativity in their employees. Trevor Martin, the senior vicepresident for human resources of Galaxy Entertainment Group Ltd., believes creativity is a crucial requirement in the industry. “We want people to generally feel warmly welcomed. We want them to feel that their needs were anticipated, JANUARY 2012

Human Resources

and that their needs were addressed in a good way.” Mr Martin is happy with his staff’s performance in this respect. He says his company has also been investing heavily in training, and that this promotes creativity because it teaches employees how to deal with unexpected situations. Mr Martin gives a diplomatic answer when asked whether Macau workers are less creative than their counterparts elsewhere. “Some people feel more naturally comfortable in a service environment, some people more comfortable working in teams. Everybody needs to adjust. That’s why we provide the training,” he says. Wendy Yu, the vice-president of human resources of MGM Macau, says creativity is important for developing a competitive edge in a cosmopolitan city. Asked if workers here are creative enough, she says: “People can be creative when they need to be, and all people have their creative side.” Ms Yu stresses the role of the employer in stimulating creativity. She says open internal communication is important. The vice-president for human resources of Wynn Macau, Zuleika Mok, would not be drawn on whether workers here lack creativity. She prefers to point out that in view of the need to accelerate the development of talent, in 2008 her company established an academy to nurture employees with leadership potential. Employers do not grumble about a lack of creative workers – at least, not officially. In a written reply to Macau Business, the Labour Affairs Bureau says most of the complaints it gets from employers are about manpower shortages.

THINK SMALL C

reativity in the workplace is often regarded as something that only big corporations need to think about. Experts say this view is wrong, and that small and medium enterprises actually have the most to gain from having creative and innovative employees. One example in Macau is SmallWorld. The company was established in 2007, pioneering the marketing of thrilling experiences such as driving a Formula One car or diving with Great White sharks. The idea was unsuccessful, so the company was sold and began concentrating on corporate event planning. However, creativity remained part of its ethos. “We are always trying to create new packages,” says general manager Adriana Cabral. “In an event planning company, you have to convince the customer through the price and creativity. That is what distinguishes you from the competition.” The company’s biggest obstacle is bureaucracy, she says, especially for outdoor events. “We have to ask permission with at least two months in advance. We’ve already given up ideas because they involved a lot of bureaucracy,” Ms Cabral says. She adds that it is difficult to get suppliers to understand new concepts. They are quite efficient as long as orders are very specific, but an invitation to suppliers to come up with suggestions can easily lead to misunderstandings, Ms Cabral says.

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JANUARY 2012

Human Resources

Playing for keeps While attractive wages are essential for companies to find employees, good leadership and non-financial incentives are essential if they want to keep them BY SARA SILVA MOREIRA

JANUARY 2012

99 uman resources are the biggest headache for businesses in Macau today. With Sands Cotai Central scheduled to open later this year, employers are again worrying about a new dearth of labour. The question remains: is pay their only way to lure and retain talent? Experts tell Macau Business pay is important during the recruitment stage but that non-financial incentives matter a lot more in the long run. The recent “What’s Working” global survey by United States human resources consultancy Mercer polled nearly 30,000 employees in 17 markets between the fourth quarter of 2010 and last year’s second quarter. The findings show employee loyalty is declining worldwide. At the same time, non-financial incentives are increasingly important to ensure employees stay motivated and committed. That said, the findings highlight Asia-Pacific as the region where workers value money the most – with Hong Kong being the only place in the world where employees say basic pay is what most motivates them and keeps them engaged in their work. The Mercer survey does not cover Macau but the latest data indicates attitudes are similar to those in Hong Kong. The results of a Statistics and Census Service survey show that more than half of employees that changed jobs in 2008 did so for better pay. The results show that changing jobs increased their median monthly pay packet from MOP6,000 (US$750) to MOP8,000. The Statistics and Census Service has not repeated the survey since then but anecdotal evidence suggests the combination of a growing job market and a small pool of available labour has enabled people to shop around for better employment.

Yearning for a leader According to a case study published in 2008 by Zenon Udani, an academic specialising in human resources management at the University of Macau, and MBA student Au Ieong Un Nam, a major determinant of loyalty is the quality of leadership. Employees are largely influenced by the boss and his or her attitude toward them. They are more likely to be motivated and stay with the same company if they have an engaged, concerned and competent leader. “The best motivator remains in the hands of the direct supervisor, who sees the staff every day, understands his or her

challenges and shows empathy and offers support whenever necessary,” says Baudouin Neirynck, an assistant professor at the Institute for Tourism Studies and a specialist in hotel operations. Employees across the border seem to think the same way. The Mercer study found that in the mainland the quality of leadership in an organisation was the most important influence on employee motivation and engagement at work, although basic pay was not far behind. Providing feedback on performance, giving recognition and praise when deserved, and taking the time to train employees and develop their skills are all part of what a leader must do to establish a good relationship with a subordinate, says Jiji Tu, the managing director of human resources company MSS Recruitment and job portal hello-jobs.com. A leader must also have good communication skills and know the names of his or her employees, their likes and dislikes, their families and so on, she adds. An employee that feels respected and nurtured is less likely to leave, even for a job with better pay, says Mr Udani. “Employees quit a boss, not necessarily a company.”

Three ages Akin to quality of leadership is the quality of colleagues. Working in a good environment and making friendships in the workplace increase attachment to a company, experts say. These non-financial incentives can come into play even in the recruitment process, when a job candidate is given an idea of the corporate culture. But they can work properly only once an employee has accepted a position and is a member of a team. Until that happens, the first things a job is judged on are the remuneration and the company’s reputation in the marketplace, say Ms Tu and Mr Neirynck. “Most employers in Macau are aware of the value of non-monetary factors that bind people to their jobs but they are not exerting as much conscious effort to tap them as means to enhance employee commitment,” says Mr Udani. Ms Tu says that to attract, retain and motivate employees, companies need to be aware of their expectations. Expectations, she says, typically depend on an employee’s age. Those in their 20s to 30s, or recent graduates, value learning opportunities and financial incentives. Those in their 30s to 40s value career advancement JANUARY 2012

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Human Resources

opportunities and financial incentives. Those in their 50s or older prefer a secure and stable position.

Your own parking slot In their 2008 case study, Mr Udani and Mr Au Ieong analysed a non-gaming multinational company established in Macau and found that most employees described workers there as committed and loyal to their employer. Although some hoped for better remuneration, more training and improvements in the workplace, they treasured working for a firm with a record

of having made few layoffs and of having rarely been late with the pay – which also instilled team spirit. The study found most employees thought job stability and a good working environment were important considerations in their preference to remain in the company. In Macau’s highly competitive tourism and hospitality industries, remuneration and benefits are likely to remain costly in the short run, as employers strive to attract the most talented candidates from a limited pool of labour, says

Mr Neirynck. Jobs in these industries are usually intense and done in shifts (often long and late-night shifts) and in a competitive atmosphere, making non-financial incentives even more important for day-to-day motivation, he says. Hotel and casino companies have been improving their non-financial incentives, offering a wide range of career planning and progression initiatives, team-building activities and good working conditions. Wynn Macau Ltd. is an example. The casino operator offers incentives such as employee recognition and award programmes, sports and social activities to build team spirit and strike a work-life balance, and a dining area, parking and an in-house clinic for employees. The company also offers learning and development opportunities. “When employees know that they are part of a company that fosters talent, they naturally want to remain and grow with the company,” says Zuleika Mok, Wynn Macau’s vice-president for human resources.

Love equals money Aware that training increases employee satisfaction and motivation, the casino industry has been steadily building up its capabilities. In a study published in 2009 of the relationship between job satisfaction and performance in Macau casinohotels, Ricardo Siu, associate professor of business economics at the University of Macau, and Zheng Gu of the University of Nevada, Las Vegas, found that most casino employees were short of training and wished for more of it. Mr Siu says the situation has greatly improved since, not only because of the training offered by gaming operators but also because of their support for and assistance with education. Casino operators are also giving employees opportunities to try out different jobs so they can find the one that suits them best, he says. Experts say that greater employee loyalty and commitment benefit a company’s bottom line. They usually boost productivity while reducing staffing costs, so increasing profitability. There are also intangible benefits. Satisfied employees tend to recommend their company to others, improving its reputation in the labour market and eventually helping it to attract the best people. Sometimes it is not just about the money. JANUARY 2012

101 KEITH MORRISON AUTHOR AND EDUCATIONIST - kmorrison.iium@gmail.com

Trouble in paradise IT’S A WONDERFUL TOURISM CONCEPT TO PROMOTE MACAU AS THE PERFECT PLACE FOR A HEAVENLY BREAK BUT IF WE TOLD TOURISTS THE WHOLE TRUTH ABOUT THE CITY, WOULD IT BE ECONOMIC SUICIDE? any of us, for whatever reason, can be “economical with the truth” by withholding material facts. In a court of law, witnesses swear to tell “the truth, the whole truth and nothing but the truth”. In the more mundane world of tourism, is telling the whole truth such a good thing? Should Macau make its millions of tourists more aware of its negative features, rather than presenting only its best side, so they can gain a better idea of what to expect when they visit or try to understand Macau? The city enjoys brand-good shopping malls, gift shops, gaming to satisfy any preference, heritage sights and centres, entertainment, upmarket hotels, international cuisine, jewellery and fashion shops to suit all tastes, grand prix races, and the bright and soft lights that add romance to the brochures. Macau has an enviably wide range of museums, from fire engines and military equipment to wine and racing cars. It has a plethora of churches and a clutch of old-style Portuguese-era buildings. The city is not without its drawbacks. There are serious air quality problems caused by pollution, downtown flooding almost every year, environmental degradation, roads dug up, shoulder-to-shoulder crowds everywhere, high-rise buildings that dwarf the slums all around them, narrow sunless streets, desperate poverty, human trafficking, petty crime, pickpocketing, loan sharking, in-your-face prostitution, gambling addiction and grave social problems. To cap it all, the monthly tourist population outnumbers residents by a factor of three, so a tourist is actually rather unlikely to see Macau as much as just other tourists.

Full-colour fantasy The breezy, open spaces in tourism brochures, the calm sea or the crest of a wave, belie the reality of massive overcrowding, a concrete jungle, inescapable noise and luminosity everywhere. If you do not visit during a few days in June, you are unlikely to see the bright blue sky and white fluffy clouds plastered on the publicity posters. Tourists could be forgiven for thinking that Macau has endless empty beaches. In reality, there are only a couple, and they are often nightmarishly packed and noisy. The sea is brown and scientific reports indicate that the Pearl River estuary is a marine “dead zone”. The brochures will not tell tourists about the high-decibel restaurants, the appalling taxi drivers – if they can find a taxi at all – or the stinking streets, the screaming hordes at the ferry terminal, the thronging thousands at St Paul’s ruins, or the casinos at every turn. They fail to let them know about the clogged traffic system or the choking, burning exhaust fumes in the city streets. Most tourists will find that out for themselves, when it hits them in the face. But wait. Tourists are keen to relax, to have a flutter at the

Should one put on a bright face that conceals Macau’s dark underside? casinos. They want to take a break “away from it all” and leave their troubles behind. Why would we tell or show them about Macau’s shadowy side, the side of the city that nobody likes? Why spoil their holiday? The city’s downside is for social researchers, politicians and journalists to ponder.

Important questions All cities have a dark side, right? If you publicise what is wrong with Macau, it would be economic suicide, reputation selfdestruction and political inanity all in one. Why should a city condemn itself? What exactly is in the public interest here? Actually, who is the “public” in the “public interest”? Indeed, if you accentuate the seamy, salacious side of Macau, will that not attract the very people you do not want to visit; the sex tourists and others keen to turn a quick trick from exploitation and pandering to more base human drives? And what if – as actually happens – something goes wrong? For example, if tourists are ripped off, left without guides, transport or accommodation, or forced to buy goods from shady shops? Does not Macau suffer when such stories leak out? Is Macau culpable for not having warned tourists in advance? Macau is a wonderful example of the Chinese concern for “face”, with different faces being turned to different groups. Should one put on a bright face that conceals Macau’s dark underside? Should one simply stay silent and allow tourists to enjoy their escapism into Macau’s tacky materialism? Small wonder, perhaps, that Chinese culture is rich in masks. Is it really acceptable to say nothing about the downside of Macau? Is such silence ethical or does it breach the responsibility for telling the truth, the whole truth and nothing but the truth? JANUARY 2012

If you know of an event that you believe should be listed with Macau Business, please drop us an e-mail: calendar@macaubusiness.com. In the subject bar, type in “List me as an event”.

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TBA : To be advised |

: A Macau Business partner event

January Date: Event: Venue: Organiser: Address: Tel: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:

23rd

International Gaming Awards Sheraton Park Lane, London Clever Duck Media Suite 105 Park Plaza, Point South, Hayes Way, Cannock, WS12 2DB, UK (44) 0 1543 57 86 89 www.gaming-awards.com colin@gaming-awards.com

24th - 26th

ICE Totally Gaming

Earls Court Exhibition Centre Clarion Events Warwick Road, London, SW5 9TA, UK (44) 20 7370 8200 (44) 20 7370 8344 www.icetotallygaming.com charlotte.cowdrey@clarionevents.com

February Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:

14th - 17th

5th Anti-Corruption Asia Congress

Renaissance Harbour View Hotel Beacon Events 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong Kong (852) 2531 6107 (852) 2586 1999 www.beaconevents.com cs@BeaconEvents.com 21st - 23rd

Gaming Executive Summit LatAm

Panama City, Panama Terrapinn 96 Spring Street, 4th Floor, New York, NY 10012 (1) 212 379 6322 (1) 212 379 6319 www.terrapinn.com enquiry.us@terrapinn.com

Date: Event:

29 th - 31st

2012 Macao International Environmental Co-operation Exhibition and Forum (MIECF)

Venue: The Venetian Macao-Resort-Hotel Organiser: Macao Trade and Investment Promotion Institute (IPIM) Address: World Trade Centre Building, 1st & 4th Floors,918, Avenida da Amizade, Macao Tel: (853) 2871 0300 Fax: (853) 2859 0309 Website: www.ipim.gov.mo E-mail: ipim@ipim.gov.mo April Date: Event:

19 th - 20 th

Mobile Payments & NFC World Summit 2012

Venue: Eaton Smart Hong Kong Organiser: Symphony Global Pte Ltd Address: 10 Anson Road, #26-04 International Plaza, Singapore 079903 Tel: (65) 6474 1471 Fax: (65) 6725 8438 Website: www.symphonyglobal.com E-mail: enquiry@symphonyglobal.com May Date: Event: Venue:

1st - 3rd

UAE Ministry of Foreign Trade Annual Investment Meeting

Dubai International Convention & Exhibition Centre (UAE) Organiser: Annual Investment Meeting Organizing Committee Address: P.O.Box 10161 Dubai, UAE Tel: (971) 4 39 23232 Fax: (971) 4 39 23332 Website: www.aimcongress.com E-mail: info@aimcongress.com

March Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:

6th - 8th

iGaming Asia Congress | Macau

Grand Hyatt, City of Dreams, Macau Beacon Events 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong Kong (852) 2531 6107 (852) 2586 1999 www.beaconevents.com cs@BeaconEvents.com 16th - 19 th

ENADA Spring

Rimini Expo Centre Rimini Fiera Via Emilia, 155, 47921 Rimini - Italy (39) 0541 744 214 (39) 0541 744 454 en.enadaprimavera.it g.zoni@riminifiera.it JANUARY 2012

Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Website: E-mail:

10 th - 12th

GTI Asia Taipei Expo

Taipei World Trade Center, Taiwan Haw Ji Co., Ltd 2F, No. 17, PaoChing St., SongShan Dist., Taipei City 10585, Taiwan (886) 2 27607407 (886) 2 27 42 0522 www.gtiexpo.com.tw gametime@taiwanslot.com.tw 22nd - 24th

G2E Asia

The Venetian Macao-Resort-Hotel Reed Expo 39/F Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong (852) 2824 0330 www.g2easia.com info@g2easia.com

Business

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Capitalism for a cause More than three years after the term “social enterprise” first entered the government’s vocabulary, the concept is far from widespread BY LUCIANA LEITÃO

acau has just added one more social enterprise to its inventory. Two months ago the Fuhong Society of Macau opened a laundry that is intended to be staffed by mentally handicapped people. The number of social enterprises in the city is unclear but anecdotal evidence suggests there are very few. Macau Business sought details from the Social Welfare Bureau but had not received a response by the time this edition went to press. Nurturing social enterprises was part of chief executive Edmund Ho Hau Wah’s plan to counter the effects of the 2008 international financial crisis. But they have yet to take off in a big way.

“A social enterprise is an organisation whose social mission fulfils a social need and operates with entrepreneurial strategies to be self-sustaining,” is how the Hong Kong General Chamber of Social Enterprises defines the term. This means a social enterprise cannot be supported by government grants. Any profit is usually either reinvested in the company or used for the benefit of the community. Mr Ho announced his plan in November 2008. He expected social enterprises to give jobs to those laid off because of the international financial crisis. At least one enterprise was established as a direct consequence of Mr

Ho’s announcement. A group of 30 people in the building industry set up Macau Social Enterprise Co. Ltd. in August 2009 to provide employment referrals and vocational training for construction workers. As time passed and fear of a spike in unemployment proved unfounded, the urge to promote the establishment of social enterprises to fight unemployment faded. Instead, social enterprises became a way to create jobs for handicapped people.

Clean break To this end, the Social Welfare Bureau began a special programme in 2010, offering associations a lump sum of up to JANUARY 2012

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MOP2 million (US$250,000) to help with the establishment of social enterprises intending to employ handicapped people. The programme was far from successful. It received three applications, of which only one was approved – from the Fuhong Society of Macau. The Fuhong Society is a charity serving mentally handicapped people. The government gave its laundry a MOP1.8 million subsidy to start up but it must now stand on its own two feet. Director Jennifer Chau says the association sees the laundry as a way to give mentally handicapped people greater independence and to integrate them in society. They are trained at the Fuhong’s Pou Choi centre. “After training, they can transfer to our social enterprise to continue their laundry work,” Ms Chau says. “If they are very stable, we will help them find a job.” The employees are not required to do a full day’s work. “They need a job that is not eight hours because they are in a rehabilitation process,” she explains. The laundry has three mentally handicapped employees and two other employees at present. More can be recruited when business picks up. Keeping the laundry’s finances healthy is one of Ms Chau’s main concerns. “We need to have enough orders as soon as possible to balance [costs and revenue],” she says. The society estimates that the laundry can break even within three years. It may employ up to 11 mentally handicapped people by 2016. Ms Chau says Macau still largely ignores social enterprises. If the laundry is successful, the Fuhong Society will consider setting up a second social enterprise.

Tradition of charity In an article published in 2009, the professor of public administration at the Polytechnic Institute of Macau, Lou Shenghua, argued that Macau would be a good nursery for social enterprises. Mr Lou wrote that the city had a long tradition of associations providing social services. Such associations include among others the General Union of Neighbourhood Associations of Macau, commonly known by its Cantonese name, Kai Fong, and the Macau Federation of Trade Unions. He added Macau’s economy was dominated by the services sector, the perfect environment for social enterprises. JANUARY 2012

But Mr Lou said obstacles to the establishment of social enterprises were a shortage of manpower, a lack of clear rules and a need for preferential treatment. In 2002, the Macau Special Olympics created Sociedade de Ngai Chun Se Ltda, a social enterprise that employs mentally handicapped people to clean offices and wash cars. It continues to operate today, with no support from the government whatsoever. The company was a pioneer of social enterprises in Macau. Special Olympics director Hetzer Siu Yu Hong says the purpose was to give employment to handicapped people. “We were training people with intellectual disabilities to get skills and find a job, but there were no job opportunities,” he recalls. At the same time, a change in the rules meant government bureaus could outsource cleaning services only to the private sector. Both fac-

tors eventually triggered the establishment of the company.

Red tape Sociedade de Ngai Chun Se broke even after four years. It now has a workforce of almost 50, more than half of the workforce is mentally handicapped. “Our goal is not to achieve profit. When we do have profit, we share it with the staff,” says Mr Siu. He adds the company also serves to rehabilitate mentally handicapped people, many of whom cannot work eight-hour shifts and so find it hard to get ordinary jobs. “Social enterprise is a more flexible way to give handicapped people a chance,” Mr Siu says. “And we pay them more.” Mr Siu says the Macau Special Olympics considered creating a second social enterprise a couple of years ago and applied to the Social Welfare Bureau for a grant. But the red tape was so

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excessive that they gave up. Casa de Petisco Sam Meng Chi is a sandwich shop run by the Macau Association for the Mentally Handicapped that has been training mentally handicapped people for the food and beverage industry for the past nine years. Social worker Grace Lau, who is in charge of the project, says it is not a social enterprise. “The government sponsors 50 percent of our needs and we get the other 50 percent operating the store,” she says. The workers receive an allowance of MOP600 per month and a MOP500 bonus, depending on their performance, attitude, cooperation and attendance. “During these nine years, we have trained 46 people. Twenty-nine of them we helped get a job outside,” Ms Lau says. Asked why the project has not evolved into a social enterprise, Ms Lau is candid: “We don’t have enough rev-

enue to cover the expenses and we can’t figure out a way to do it.” She says mentally handicapped workers need special assistance, which makes the project’s costs higher than the cost of running a typical business.

Exemplary neighbour Cecilia Ho Wing Yin, a lecturer for the social work programme at the Polytechnic Institute of Macau, believes the paucity of social enterprises in Macau is due to the novelty of the idea, which leads to misconceptions; and to the amount of money the public and private sectors give associations to provide social services, which is a disincentive to the establishment of social enterprises that could provide similar services yet would have to survive in a more competitive environment. Ms Ho says the government should do more to promote social enterprises, since they are particularly helpful to

disadvantaged people. She suggests that the government set up a committee to research and support the development of such enterprises. It should provide start-up funds to encourage individuals, charities and businesses to start their own social enterprises. In Hong Kong, the establishment in 2006 of a start-up fund has helped create 1,800 jobs by financing more than 100 projects. However, some estimates indicate that only one in three of the social enterprises created currently thrives. A survey in 2010 by the Hong Kong General Chamber of Social Enterprises found that government-funded social enterprises are the least profitable. Carlos Siu Lam, an associate professor at the Polytechnic Institute of Macau, says it is difficult for social enterprises to generate enough revenue to survive. “Such organisations are ‘doing charity by doing trade’, rather than ‘doing charity while doing trade’,” he says. JANUARY 2012

106 JUSTIN YIFU LIN CHIEF ECONOMIST AND SENIOR VICE PRESIDENT FOR DEVELOPMENT ECONOMICS, WORLD BANK

Demystifying the Chinese economy IT IS LIKELY THAT CHINA CAN MAINTAIN 8 PERCENT GROWTH IN THE COMING TWO DECADES hina had an advanced and prosperous civilization for millennia until the 18th century, but then degenerated into a very poor country for 150 years. Now it has resurged to become the world’s most dynamic economy since launching its transition to a market economy in 1979. What drove these fateful changes? In my recent book “Demystifying the Chinese Economy”, I argue that, for any country at any time, the foundation for sustained growth is technological innovation. Prior to the Industrial Revolution, craftsmen and farmers were the main source of innovation. With the largest population in the world, China was a leader in technological innovation and economic development throughout most of its history because it had a large pool of craftsmen and farmers. The Industrial Revolution accelerated the pace of Western progress by replacing experience-based technological innovation with controlled experiments conducted by scientists and engineers in laboratories. This paradigm shift marked the coming of modern economic growth, and contributed to the global economy’s “Great Divergence.” China failed to undergo a similar shift, owing primarily to its civil-service examination system, which emphasized the memorisation of Confucian classics and provided little incentive for elites to learn mathematics and science. The Great Divergence had a silver lining: developing countries could use technology transfers from advanced countries to achieve a faster rate of economic growth than the countries that were at the industrial vanguard. But China failed to exploit this benefit of backwardness until the transition from a command economy began in earnest.

Dual-track approach In the wake of the communist takeover in 1949, Mao Zedong and other political leaders hoped to reverse China’s backwardness quickly, adopting a big push to build advanced capital-intensive industries. This strategy enabled China to test nuclear bombs in the 1960s and launch satellites in the 1970s. But China was still a poor, agrarian economy; it held no comparative advantage in capital-intensive industries. Firms in those industries were not viable in an open, competitive market. Their survival required government protection, subsidies and administrative directives. These measures helped China establish modern, advanced industries, but resources were misallocated and incentives distorted. Economic performance was poor. Haste made waste. When China’s market transition started in 1979, Deng Xiaoping adopted a pragmatic, dual-track approach, rather than the “Washington Consensus” formula of rapid privatization and trade liberalization. On the one hand, the government continued to provide transitory protection to firms in priority sectors; on the other, it liberalized the entry of private enterprises and foreign direct investment into the labourintensive sectors that were consistent with China’s comparative advantage but were repressed in the past. This approach enabled China to achieve stability and JANUARY 2012

dynamic growth simultaneously. Indeed, the benefits of backwardness have been breath-taking: 9.9 percent average annual gross domestic product growth and 16.3 percent annual trade growth over the past 32 years – a stellar achievement that holds valuable lessons for other developing countries. Now China is the world’s largest exporter and its second largest economy, and more than 600 million people were pulled out of poverty.

Dynamic growth Yet China’s success has not come without cost. Income disparities have widened, owing in part to the continuation of distortionary policies in various sectors, including the domination of China’s four large state-owned banks, the nearzero royalty on mining, and monopolies in major industries, including telecommunications, power and financial services. Because such distortions (a legacy of the dual-track transition) result in income disparities, they ultimately repress domestic consumption and contribute to China’s trade imbalance. Those imbalances will remain until China completes its market transition. I am confident that, notwithstanding the headwinds blowing from the eurozone crisis and the slump in demand worldwide, China can continue its dynamic growth. In 2008, China’s per capita income stood at 21 percent of the U.S. level (measured in purchasing power parity), and was similar to Japan’s per capita income in 1951, South Korea’s in 1977, and Taiwan’s in 1975. Annual GDP growth averaged 9.2 percent in Japan from 1951 to 1971, 7.6 percent in South Korea from 1977 to 1997, and 8.3 percent in Taiwan from 1975 to 1995. Given the similarities between these economies’ experience and China’s post-1979 development strategy, it is likely that China can maintain 8 percent growth in the coming two decades. Some may think that the performance of a country as unique as China, with more than 1.3 billion people, cannot be replicated. I disagree. Every developing country can have similar opportunities to sustain rapid growth for several decades and reduce poverty dramatically if it exploits the benefits of backwardness, imports technology from advanced countries, and upgrades its industries. Simply put, there is no substitute for understanding comparative advantage.

Moments

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SIMPLY THE BEST

A selection of award winning advertising campaigns recognised by Effie China 2011, were showcased last month at an exhibition at One Central. The event, organized by the China Advertising Association and Effie China, sponsored by the Cultural Affairs Bureau and produced by Conde Group, also included an effective advertising seminar at Grand Lapa Hotel. The Effie awards are presented yearly and honour the most effective marketing communication ideas. Today there are over 40 national and regional Effie programmes worldwide. Projects from Watsonâ&#x20AC;&#x2122;s, Coca Cola and Taobao were among the Effie China 2011 award winners exhibited in Macau.

The exhibition

Chui Sai Cheong

Owen Jie, president of Effie China

Raymond So, chairman of the advisory committee of Effie China Awards, and Frederico Conde

Li Zhi Zhong and Tomaz Mok, chairman of Effie China Expert Committee

Chan Peng Fai JANUARY 2012

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Moments

ALLEZ FRANCE!

The France Macau Business Association held its annual gala dinner at MGM Macau last month. The night was a remarkable success with more than 300 attendees from Macau, Hong Kong and the mainland. The gala dinner, already in its third edition, aims to gather all the association’s members, plus guests and other potential interested parties for a French-flavoured soirée. In addition to a cocktail reception, five-course French dinner and several performances, this year’s event also included a silent auction to raise money for charity. Over MOP70,000 (US$8,750) was raised for the International Ladies’ Club of Macau and the Macau Special Olympics. JJ Verdun, Serene Chia and John W. Crawford

Franklin Willemyns, Arnaud Barthélémy, Rita Santos, Pansy Ho and José Pereira Coutinho

Irene Sam, Helene Wong, Natasha Fernandez and Mamie Chan

Dance performance

Performers welcome Terry Siu

Paulo A. Azevedo and João Francisco Pinto

A packed house JANUARY 2012

Silvana Willemyns and Brigitte Chaumin

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The CSR – Macau Residue System Company, Ltd. table Tommy Lau Veng Seng, Irene Lau and Franklin Willemyns

Vincent Marechal

Jorge Vieira, Raymond Kuong, Oscar Chu, Fiona Sou, Iun Iok Meng, António Baguinho and Denis Leong

Raffle selling to Mr Paul Tse and wife, and Charles Chaumin

The Sofitel table

The Cartier table

The Seapower table JANUARY 2012

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MACAU RINGS IN NEW YEAR

Macau welcomed 2012 with a string of countdown parties all over town. Hundreds of revellers saw in the New Year against a backdrop of fireworks by the Sai Van Lake Square, at a government-sponsored countdown concert, with a similar event taking place by the Taipa Houses-Museum. Casinos, hotels and nightclubs also toasted the new year with a hand-full of bashes, with party-goers dancing to live music and drinking champagne as they cheered out the final seconds of 2011.

MGM Macau

Grand Lisboa

Taipa Houses-Museum

Galaxy Macau

Sai Van Lake Square JANUARY 2012

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SILENCE NEVER LIES Statisticians are frequently under fire. Often are they accused of tweaking data to give a different version of reality to suit a particular agenda. It is far from new, as shown by the famous phrase attributed to Benjamin Disraeli, the 19th century British prime minister: “There are three kinds of lies: lies, damned lies, and statistics”. In Macau, our beloved Statistics and Census Service is keen to prove its work is beyond criticism. What better way to do that than by simply not publishing any potentially controversial statistics? Do you want to know more about wealth distribution in Macau, usually measured by the Gini coefficient? The most recent available figures are for 2007-2008. Do you want detailed figures about another hot topic, labour mobility? Again, data is available only up to 2008. Or do you need precise figures about the city’s economic engine, gaming, such as the average size of a bet? Sorry, not available. Keep up the good work, people at the Statistics and Census Service. The best way to stay away from criticism is to keep your mouth shut and do nothing. Work that way and no one can point an accusing finger.

SMART CIVIL SERVANTS We all know knowledge is power. Living in a society where technology is ubiquitous, it is important for everybody to have a high level of computer literacy, starting with the city’s civil servants. Thanks to the Public Administration and Civil Service Bureau, that is no longer a problem. Last month the body promoted an iPhone workshop to help public-sector workers learn how to get the most of their smartphones. Next time you are stuck in a waiting room of a government bureau and see a civil servant behind the counter spending several minutes checking her iPhone, please be patient. Maybe she is doing her revision.

WHAT IF? Frozen Spy is amazed by the wishful thinking shown by some of our legislators. The latest example came from veteran Kwan Tsui Hang. Ms Kwan has demanded that officials make public the full reports of all studies commissioned by the government – something that seldom happens. The goal, she says, is to increase transparency and allow the people to assess the quality and relevance of the research. Looking at the Official Gazette, Ms Kwan discovered that the government has recently commissioned at least 10 separate studies and surveys, with prices ranging from a few million patacas to almost MOP60 million (US$7.5 million). While Ms Kwan’s idea is interesting, it would mean consultancy firms would have to deliver proper results and reports, and that the government would have to explain the need for so many studies and, more importantly, the criteria it uses in choosing the consultancy firms. Finally, Ms Kwan’s idea would oblige somebody in the government to read those reports and perhaps take them into consideration during the decision-making process. That would be just too troublesome.

DISTORTED SIGNAL More than a year after the government introduced a bill in the Legislative Assembly revising Macau’s copyright law, lawmakers have yet to give it the final nod. In any other place in the world, this would be an awkward situation. In Macau, it is just one bill among many dragging their feet. What is special in this case is what divides the legislature and the government. The government wants to punish only those who make a buck out of sharing copyright-protected files over the Internet, while the lawmakers argue that even people who share files online for nothing should be punished, albeit with lighter sentences. The government is taking a populist stance on this matter. It wants to avert a public outcry, since we all know how widespread the practice of unauthorised sharing of music, movie and other files is. If the government continues along this path, sooner or later we will have Robin Hood-style justice, where stealing is not wrong – especially from the mighty United States’ movie studios – just as long as you do not profit from it. Frozen Spy thinks this is the wrong signal to send, especially in a city that wants to diversify into cultural industries, which earn their bread and butter from copyright-protected material.

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Bally Technologies

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BNU

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CEM

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Galaxy Entertainment Group

Pages 03, 41 and BC

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Goldfish

Pages 14 and 93

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Jumbo

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Macau Post Office

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Macau Daily Times

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Mandarin Oriental

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MGM Macau

IFC and Page 45

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MGTO

Page IBC

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Morton’s The Steakhouse

Page 27

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Our Dental Clinic

Page 96

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PokerStars Macau

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Sands China

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www.sandschinaltd.com

Shuffle Master

Page 07

www.shufflemaster.com

SJM

Page 49

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Wynn Macau

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Zung Fu Motors – Mercedes

Page 01

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To advertise call 28331258 or email us at pub@macaubusiness.com Go to www.macaubusiness.com/advertising for media kit JANUARY 2012