but in Hong Kong
NG is bailing out. He's selling his apartment, quitting his job
and moving with his wife and baby daughter to Canada. The boom years
that lured the 32-year-old computer consultant back to his hometown
of Hong Kong are gone. Now he sees no future in the city he calls
In a city where businesses are struggling and bankruptcies
are rising, one trade is thriving: debt collection. Hong Kong's
100-or-so debt-collection agencies have rarely been busier
- and their tactics have never been nastier, as Sharon Yeung
discovered earlier this year.
after moving into a new apartment, she was visited by a heavy,
who demanded to see a man she had never heard of. "Don't
try and hide him. I know he's here'', the visitor roared.
After 15 minutes of verbal abuse, he stalked off with this
parting shot: "It looks like your flat has just been
redone. Be careful".
was caught up in a mess not of her own making. Actual debtors
may endure non-stop abusive phone calls, jammed fax lines
and threats of non-existent criminal penalties. None of this
is illegal - yet. At the most extreme end, debt collectors
have even torched homes.
and lenders are turning to debt collectors in the face of
a sharp increase in bad debts. The manager of the collection
department of a lending company, who asked not to be named,
said he sees 200 accounts a month in arrears at an average
of $4,500. "We'll only see a fraction of that coming
back", he says.
stop debt collectors from trying, though. But at least debtors
can take some comfort from a call by Hong Kong's Law Reform
Commission to licence collectors and criminalise many of their
that's unlikely to have much impact just yet on the city's
debt collectors. As the lending-company manager says, "They
can expect to do a roaring business through the middle of
next year and possible even longer".
He's not alone.
Many of his friends are leaving too - one to Malaysia to start a
business, another to Vietnam to explore some business opportunities.
They all have something in common: They're educated, middle-class
and - like 250,000 other Hong Kong people - hold passports from
someplace else. They came in the mid-1990s for the opportunities
that Hong Kong offered, but as this city of seven million struggles
with an uncertain economic future, they are pulling up stakes and
see a future here," says Ng, who grew up in Hong Kong but moved
as a teenager to Toronto with his family in the mid-1980s. "Sometimes
my friends and I get together and this is all we can talk about.
It's so depressing."
There's a deep
sense of malaise in Hong Kong. The city that for decades embodied
Asia's spirit of can-do capitalism now feels adrift - its economic
future cloudy, its political leaders scorned. A recent survey by
Mastercard International found people in Hong Kong are gloomier
about the future than anywhere else in Asia.
As a result,
many in Hong Kong's middle class are voting with their feet, moving
to places like Canada, Singapore and, increasingly, China. That's
hollowing out the city's educated, white-collar workers and widening
the gap between rich and poor. Some argue that there may be long-term
benefits. Just as it did in the past, Hong Kong is once again reinventing
itself, this time as a city that's economically competitive with
its mainland rivals. How long the process will take, though, is
anyone's guess. In the meantime there's a lot of pain to be got
In some senses,
Hong Kong has been here before: This is a city that was built by
immigrants seeking temporary refuge. Hong Kong has twice before
witnessed large flows of people fleeing political uncertainty: In
1949-50, they flocked here from the mainland in the wake of Mao's
communist revolution; between 1987 and 1997, they left Hong Kong
ahead of the handover from British to Chinese rule.
Now, on a smaller scale, Hong
Kongers are on the move again. But this time it's economics, not
politics, that's the driving force. Although Hong Kong has just
technically come out of recession, a whole host of indicators continue
to paint a gloomy picture. Unemployment is at 7.6%, down from a
record high, but expected to rise again. Welfare payments are also
at record highs. Consumer confidence is close to record lows.
and property prices continue to fall and the city is now in its
46th consecutive month of deflation. An estimated 150,000 Hong Kongers
are facing unrealised losses on their property investments. A recent
poll shows approval ratings for Chief Executive Tung Chee-hwa, who
heads Hong Kong's government, are hitting new lows.
Yet such figures
can't capture the deep pessimism that has gripped the city. A better
indicator is the other statistics that speak to the climate of despair.
Suicide rates have never been higher while personal bankruptcies
almost tripled to 12,407 in the first seven months of the year -
also a record high. Crime is up, too: Robberies in the seven months
to July were up 16.5% from a year ago. Divorce and domestic violence
are also both on the rise, say social scientists.
are giving up and leaving," says academic Michael DeGolyer
of the Hong Kong Transition Project, a long-term project that's
monitoring the territory. "They are buying property outside
the territory, they are killing themselves. The only way you can
characterize it is that Hong Kong people are in despair at their
a native-born Hong Konger, lost her job in May and is moving back
to her adopted home in Canada. Like David Ng (neither Ng nor Chai,
who both still have close family ties to Hong Kong, wished to give
their real names for this article), the 50-ish executive secretary
first emigrated to Toronto in the mid-1980s but was lured back to
Hong Kong a few years later by the giddy boomtown atmosphere of
the time. "In the 1980s it was an exodus. Everybody was leaving
Hong Kong then," says Chai. "It's funny, all of a sudden
in the early '90s the flood came back but now it's starting to flow
the other way again."
Like other emigrants, Chai is leaving for several reasons. Job prospects
are one factor, family is another - both her sons live in North
America. Quality of life is also a concern - Hong Kong's worsening
air pollution has taken a toll on her health. "My major reason
for leaving is that my children are not here. Another thing is the
pollution, and my health is not good," says Chai. "I still
like the accessibility of everything in Hong Kong but more and more
I'm really looking forward to the quality of life in Toronto."
To be sure,
the emigration now taking place does not begin to rival the numbers
that left Hong Kong in the late 1980s and early 1990s. Nor is the
city depopulating: Foreign companies continue to set up their regional
headquarters here and I50 mainland Chinese settle in the city each
and every day.
But one thing
is clear: Those who are moving belong overwhelmingly to the city's
skilled middle-class. More than three-quarters of Hong Kongers working
in China, for example, are either managers or professionals and
88% have a secondary education or higher.
Hong Kong's Census and Statistics Department, 190,800 Hong Kongers
now live and work in China, mostly just across the border in Guangdong
province - a 20% increase from three years earlier. Another 41,300
have taken up residence in Guangdong and commute into the city.
Hong Kongers now also collectively own or rent some 218,000 residences
in China - double the number five years ago.
But those figures
may be too low. The statistics are over a year old and only measure
Hong Kongers who still keep a residence in the city. Aware that
the number may be far higher and growing fast, the city plans a
separate census in Guangdong later this year. More recently, the
Beijing Youth Daily estimated that up to 500,000 Hong Kongers now
live and work in China.
Part of the
reason for the exodus is that many of the city's middle-class, white-collar
jobs are leaving, just as manufacturing jobs did in the 1980s and
1990s. As a result, Hong Kong is becoming increasingly divided between
rich and poor. "In Asia, Hong Kong is among the worst in terms
of income distribution," says Fernando Cheung, a lecturer at
Hong Kong Polytechnic University's Department of applied social
sciences. "It's comparable to the averages in places like Latin
America or Africa. Certainly a Third World income distribution."
One likely aspect of the future is that Hong Kong will have to restore
some of its lost competitiveness, particularly with the mainland.
"Quite clearly, cross-border flows of people have very much
increased in intensity," says Hong Kong government economist
K.Y. Tang. "It is not what is usually defined as emigration,
but rather can be understood as closer economic integration."
called, in Hong Kong it's likely to mean continued price falls.
That won't stop until the cost of living in the city begins to approximate
costs in neighbouring Guangdong province - where prices are rising.
That may take
a while. Currently, property prices in the border city of Shenzhen
for a mid-range flat are around $I50 per square foot - that's at
least half the going rate for Hong Kong. Salaries too are half or
less of what they are in Hong Kong, though in certain clerical and
accounting jobs anecdotal evidence suggests that the wage gap is
narrowing fast. The middle-class, white-collar workers who are migrating
north in search of jobs are also part of that adjustment process.
know what is going to happen, but basically you will see the cost
of living continue to decline for most people in Hong Kong until
we are more or less equivalent to the people in China," says
Cheung at Hong Kong Polytechnic. "And at that point, the long
decline will probably stop."
(These are excerpts of an article that appeared in the latest issue
of the Far Eastern Economic Review.)
need for new business paradigms
By Chandra Jayaratne
(The following are excerpts of a presentation made recently
by the former chairman of the Ceylon Chamber of Commerce to The
Sunday Times Business Club on the theme of peace and the private
Sector Vision 2020 identified Sri Lanka as a nation where its multi-ethnic
and multi-religious people will live in harmony, with peace, internal
security, political stability and good relations with India, enjoying
sustainable economic growth and a per capita income of not less
than $ 4000, with those below the poverty line being less than 10
percent of the people.
The building blocks of this "House of Sri Lanka" are now
beginning to be laid in a carefully planned manner and it is the
fervent hope of a majority that political, religious, business,
trade union and other leaders of society will extend their support
to make this dream come true.
In the context
of potential peace and development and the expectation of the private
sector being the relied upon driver of the growth engine, the current
business models and business paradigms are unlikely to deliver the
desired returns for the local private sector, within a globalised
open market oriented business environment.
need of this hour is for the local private sector to actively seek
sustainable growth and competitiveness, via new paradigms and new
business models and this article attempts to catalyse a few thoughts,
merely as examples of the opportunities available in some sectors
of the economy.
In the trading
sector, without waiting for wholesale/retail traders and direct
clients being canvassed or calling the manufacturers and importers,
can a new paradigm of toll free calling systems be introduced as
a facilitator for enhanced trading?
In the technology related services sector can a new paradigm of
flexi hours and home-based services support and leverage capability
best, including the key resource group of professional women in
child bearing age and those engaged in domestic chores?
In the industrial
and commercial sectors, can we evaluate the option for a new partnership
of employer-employee relations being built with consent outside
the framework of labour laws and holiday laws, based on compensation
packages genuinely leveraging effective gain sharing?
Can this regime,
even the trade union check off be related to gain shares of employees,
thereby gaining acceptance of the trade unions to the principle
of gain sharing?
In the banking
sector, can commercial and development banks be led primarily (with
risk emphasis say of 75 percent) on estimated cash flows and assessment
of markets and management capability and not on the basis of security
of backing asset covers?
In the tourism
sector, can we attract the high end focused segment of wealthy,
elderly and professional classes of tourists, under the theme developed
by the Ceylon Chamber of Commerce titled "Care Services",
offering care of the mind, body and lifestyles?
Can we support
this business model with similar operations in key western nations
and high-end infrastructure facilitated apartment complexes in Sri
Lanka? Similarly can we draw in high-end segments of knowledge and
information seeking tourists?
In the construction sector can we compete with international contractors
engaged in triple R and infrastructure related projects in Sri Lanka,
by engaging Chinese/Vietnamese labour and deploy latest technology
and develop capabilities to effectively compete overseas contractors?
To make Sri
Lanka a maritime services hub can new alliances and business clusters
invest and manage resources in network partnerships and provide
a way forward for competitiveness?
Can we develop
an additional dockyard at Hambantota or Trincomalee to cater to
naval craft of Western nations?
Can our private
sector extend business alliances even amongst their competitors,
especially in the area of shared services thus significantly reducing
Can we leverage
the resources of the sea for fisheries, aquatic plants and mineral
exploitation, whilst enhancing the image of Sri Lanka as the pleasure
crafts and cruise ship destination designated tourism flagship country
in the region?
Cannot the private
sector make genuine commercial enterprises of value addition to
farmers and fishermen and the rural economy though market complexes
with packaging, sorting, value addition and logistics facilitation
Cannot the plantation
sectors meet emerging competition from China/Vietnam and also meet
the expectations of labour, whilst at the same time improve the
cost competitiveness, by converting plantations to smallholder crop
based, facilitated and farmer managed business models, with quality
support and conversion facilitations only being within the organised
In network alliances with Indian partners, can Sri Lankan business
provide significant backend processing and office support leveraging
the capability of youth?
May I remind
the private sector entering this new paradigm led operating arena
of some vision related commitment focus of what the former US President,
Lyndon Johnson told the public in the context of a nation coming
out of the Vietnam war.
"What matters in a new vision is:
* not how big but how good,
* not how much of wealth is created but how you created it,
* not how fast you go but where you get to in the end."