VT EMBA International Residency: Day 4 - HKTDC & Hong Kong University Visits

February 23, 2010

Hong Kong Trade Development Council (HKTDC)

On our second day of business meetings we went back to Central Hong Kong to meet with the Hong Kong Trade Development Council. Ms. Cherry Lee, Manager of Overseas Promotions gave a presentation on the management of opportunities and challenges of business in China and Hong Kong with the focus on how Hong Kong plays a role in maximizing opportunities.

Ms. Cherry Lee and Rich Teel

Cherry explained to us the role of the HKTDC and why they can help international businesses enter into China through Hong Kong. HKTDC was established in 1966 and they try to match business partners and connect customers who ware focused on trade in Asia. HKTDC's primary focus is bringing business to Hong Kong and then connecting to Asia. They do this through two business models:

Model A: Produce in China for global markets

Model B: Produce in China for China markets

Cherry explained how there is much opportunity in China and how the country holds the world's 3rd largest economy. The GDP growth has been 10.2% over 10 years. Additionally China is no long seen as a production based market and is experiencing growth in the consumer market. Growth in the consumer market is shown by the domestic consumption rise of 15.5% growth in 2009. This is also seen in the growth of consumer spending and a rise in mobile phones (747 million users) and internet users (300 million users), and an increasing demand for business services and technologies. Cherry also explained the challenges of doing business in China and how HKTDC can help weave through some of those challenges such as, finding good business partners, realizing profits, coping w/ bureaucracy, mitigating business risk, and retaining quality staff.

Cherry was enthusiastic about the future for Hong Kong and the assistance that HKTDC can offer to businesses wishing to enter into Asian markets. Cherry provided several advantages that Hong Kong has to offer with the assistance of the HKTDC:

Resilient Economy

Strong, independent legal system built around the "one country, two system" model
Open & transparent government
Anti-corruption culture
Service-oriented economy

International Financial Center

Convertible currency linked to the US Dollar
Free flow capital
Strong, well-regulated banking system
Low and simple taxes (15% personal tax, 16.5% Corporate tax)
International arbitration

Ideal Location

4 hour plane ride to all of Asia's key markets
5 hour plane ride to half of the world's population
Infrastructure integration with Pearl River Delta
#1 International Air Cargo
Closer Economic Partnership Arrangement (CEPA)
Tariff-free access to mainland China

Dynamic People

Diverse international workforce
Entrepreneurial spirit
People educated overseas
Hub of creativity

Aberdeen Fishing Village

We had some time before lunch so Winnie took us to the Aberdeen Fishing Village where we were able to take a quick boat tour. On the boat tour we saw the old fishing village which still contains some junks and house boats among yachts and the background of modern sky rise condos. Also in Aberdeen is the Jumbo floating restaurant that is accessible via ferry. We did not eat there, but Winnie said it was a popular place.

Enjoying the boat ride

Jumbo floating Chinese restaurant

Aberdeen house boat

A few of us catching some sun

Lunch at Golden Bauhinia

Before heading to our next meeting we went to the Golden Bauhinia Square and took a few pictures in front of the golden blooming bauhinia. The golden sculpture is a reminder of the return of Hong Kong to the People's Republic of China. While taking pictures in front of the golden bauhinia we were approached by a few local entrepreneurs who wanted to take a picture and sell the print to us. Most of us ended up with a printed photo that afternoon! We also couldn't help but notice a group of mainland Chinese girls who were posing for a photo op...they adorable! Finally we sat down for another great Dim Sum lunch at Golden Bauhinia restaurant. The dim sum lunch was similar to the previous days lunch and just as enjoyable.

Mainland Chinese children pose for a photo

Golden Bauhinia Square

Dim Sum lunch

Hong Kong University - Professor Enright

The afternoon meeting was supposed to be with the U.S. Embassy Commercial Services, however there was a schedule conflict and we ended up meeting with Professor Enright from Hong Kong University. The meeting with Professor Enright was fantastic and we enjoyed hearing his lecture on the future growth of China. He has been in Hong Kong since 1996 and came from the Harvard Business School. Professor Enright explained how he moved to Hong Kong because it was much more feasible for him to keep up with the world's business because it moves rapidly in Asia, as opposed to the U.S. where he can keep up with events by checking in a few times a month. He emphasized that this point is applicable to businesses that want to do business with Hong Kong or China - they must have a presence in Hong Kong/China to be successful. In addition to teaching he consults as an advisor on economic development.

Professor Enrights presentation focused on China's future and how countries will need to prepare for a future with China. Much like the HKTDC, Professor Enright told us how China's economy is the fastest growing in the world and has a growing consumer goods market which is expected to be the largest by 2015. He was careful to explain that the Chinese leadership may hinder international growth as the Chinese is more ideological and less interested in international cooperation. Along those lines, he explained how the Chinese are outcome driven and are resilient. They are less concerned with principles and will not entertain international pressures and will most likely continue to focus on domestic consumption growth. Because of China's focus on outcomes, Professor Enright suggested that companies wishing to enter into China do so with the understanding that they need to prepare for multiple scenarios and adjust strategies/contingencies as they evolve. The point that the Chinese are resilient and outcome driven was emphasized many times and any international company must understand how to be agile enough to cater to the Chinese political activities.

The second half of Professor Enright's presentation was about the growth within the Pearl River Delta (Hong Kong, Macau, PRD) and was in line with the morning brief from HKTDC. There is much opportunity in the Pearl River Delta with the expansion of urban populations.

Overall the meeting with Professor Enright was extremely valuable and I think everyone walked away a bit smarter about the Chinese market.

Farewell Dinner at Victoria Peak

For our last night in Hong Kong we had a farewell dinner at Cafe Deco at Victoria Peak. We took a tram up a steep mountain to get to the top of Victoria Peak. Once we were there, the views of the Hong Kong night life were amazing. The pictures I took do not do it justice! At Cafe Deco we enjoyed American cuisine and a little wine. Murray and Gity gave very nice speeches reflecting on the trip so far and the last 18 months of the EMBA program.