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Jessica Wong posted an articleInteresting facts and finer points of doing business, and living, in Hong Kong. see moreBy Josh Steimle, Forbes
Since moving to Hong Kong one year ago, I’ve fielded many questions from friends, associates, and strangers regarding this world city of 7 million. What follows are some interesting facts and finer points of doing business, and living, in this magnificent city. I have included a few items which you might not think of immediately as directly related to doing business here, but if doing business in Hong Kong also means living here, these are factors you’ll want to be aware of.
Hong Kong is Not China
Technically, Hong Kong is a “Special Administrative Region” (SAR) of China, operating under the slogan “One country, two systems.” But for all intents and purposes the Chinese government is invisible, and likely to remain so. There is plenty of socialism to go around in the forms of public health care and public schools, as you would find in many other countries around the world, but Hong Kong is first and foremost concerned with maintaining a calm, status quo, and that means making sure the wheels of business continued to run smoothly.
Everyone Speaks English
Ok, not absolutely everyone, but if you’re coming here for business it might as well be, because everyone you need to do business with will likely speak English as well as you do. And what phrases of Cantonese you might find useful on a day to day basis you can pick up with a few weeks of listening to Pimsleur audio programs and some focused practice. Those who are inclined to dive a bit deeper can hire a Cantonese tutor. Either way, don’t expect the locals to be very helpful. If you try to speak Cantonese, they’ll almost always respond in English. And if you tell them you want to learn Cantonese, they’ll tell you that you’re wasting your time and should be studying Mandarin.
Finding Housing is Messy
Although companies like Spacious and Okay are revolutionizing the process of buying or renting a home in Hong Kong, for the most part finding a place can be confusing due to fundamental flaws in the Hong Kong real estate industry. The two things you’ll want to know is that first, each realtor covers a very small, limited area. If you hire a realtor to guide you through one neighborhood, you would assume she covers the neighborhood right next to it, but she probably doesn’t. You’ll have to get a separate realtor to show you around each area. Second, there is no Multiple Listing Service (MLS) system, as exists in the U.S., that puts every residence within easy reach of every realtor. Realtors only show you the properties people list with their agency. So if there are two agencies next to each other, covering the same area, you can’t assume that both agencies will show you the same properties. They may have entirely different portfolios to show you. And by the way, it’s not uncommon for people to look at 40 to 50 properties before they find the one they rent.
Everything is Small
Don’t plan on bringing much with you, because your housing likely won’t have the space for it. We moved here with only our luggage, then bought furniture at IKEA, of which there are three very popular locations in Hong Kong. For a modest additional fee that is well worth it, they’ll deliver and assemble your furniture. Stairs in Hong Kong are also smaller (don’t trip!) than in the U.S., offices are smaller, and just about everything else makes efficient use of space. It can be inconvenient on occasion, but for the most part it’s a simple adjustment.
Housing is Not Necessarily Expensive
If you want to live in the middle of the city, then you can expect to pay an outrageous amount of rent. But if you’re willing to have a 30 to 45 minute commute, you can live quite comfortably. Our family lives on a separate island from the main city of Hong Kong and we pay less in rent than we did in Salt Lake City, Utah. Granted, it’s smaller quarters and lacks some of the amenities we once enjoyed, like a full size oven, but it’s perfectly workable and affordable.
Schooling is Expensive
If you want to send your children to the “finest” international schools in Hong Kong, you can expect to pay as much as $22,000 USD per year, per child. That’s if you’re lucky enough to get your child into a school at all. The education system enjoys spectacular demand and dwindling supply which has forced prices into the stratosphere. But there are other options, such as the International Montessori School, local schools (if you want your children to learn Cantonese), or in our case, we’ve chosen to homeschool which, by the way, is not illegal in Hong Kong, despite reports to the contrary.
Office Space is Very Expensive
The expense of having an office in the business district of Hong Kong is such that many businesses are foregoing having a “real” office, instead opting to house their employees in co-work spaces or virtual offices. Or you can just work from Starbucks. Everyone else is doing it.
Don’t Cheat on Your Wife
In Hong Kong a woman may kill her husband if she discovers he has been unfaithful. It’s completely legal–as long as she kills him with her bare hands.
It Gets Cold In Hong Kong
Having lived in truly cold places like Rexburg, Idaho, and knowing that Hong Kong sits at about the same latitude as Hawaii and the Bahamas, the warmest clothing I brought with me was a windbreaker. I learned my lesson. I have never been colder in my life than I’ve been in Hong Kong where buildings have no insulation and no central heating. Although temperatures rarely dip below 40 degrees fahrenheit, if it’s 40 degrees outside, it’s also 40 degrees inside, and that makes for a chilly day at the office if you have nothing on but a suit coat.
There is No Amazon Prime
If you love Amazon and its two-day free delivery service through Amazon Prime membership, you’re out of luck. Ecommerce is in its infancy in Hong Kong, and making a purchase often means picking it up and hauling it home with a level of effort anyone in the U.S. would find almost unimaginable. Buying a computer printer was a five hour process for me, and a good workout. The good news is you can still order from Amazon. It takes a bit longer than it would stateside, and the shipping costs aren’t cheap, but they aren’t outrageous either. In some cases the shipping costs merely make the product equal in cost to what you would pay in Hong Kong anyway.
Hong Kong is the Freest Economy in the World, Sort of
The Heritage Foundation has ranked Hong Kong as the freest economy in the world for 20 years. But that doesn’t mean it’s a libertarian paradise. A handful of wealthy families effectively run the city, with their holdings primarily in real estate and commerce. As long as you don’t compete against their business interests, you enjoy great freedom. If you want to come here and start a new grocery store chain, forget about it. Hence, there is no Walmart in Hong Kong, although there is a few minutes away across the border in mainland China.
Safety and Life Expectancy
Hong Kong is both the safest city in the world, and the city with the longest life expectancy. I’m convinced it has something to do with people eating smaller portions of food (as mentioned before, everything here is small) and walking a lot. I lost 10 lbs the first two months we lived here, without trying. Make sure you bring comfortable shoes.
Hong Kong is a great city to live in, and to do business in. Have you done business here before? What would you share that people might not know?
Joshua Steimle is the CEO of MWI, a digital marketing agency with offices in the U.S. and Hong Kong.
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Jessica Wong posted an articleEven less-than-rapid Chinese growth generates plenty of opportunities for Canadian corporations. see more
By Helen Wong, Globe and Mail
Helen Wong is chief executive officer for Greater China at the Hongkong and Shanghai Banking Corp. Ltd. and member of the board of directors for HSBC Bank Canada.
After decades of supercharged growth, China’s economy is now growing at a more moderate pace. But given its sheer size, even less-than-rapid growth generates plenty of opportunities for Canadian corporations that cater to the changing needs of the world’s second-largest economy.
China’s economic transformation over the past 35 years has been rapid, far-reaching and multifaceted.
In 1978, the year before Beijing began to reform and open up the Chinese economy, the country was home to 22 per cent of the world’s population, but was responsible for just 5 per cent of the world’s economic output. By 2014, its share of the global population had slipped to 19 per cent, but its share of global gross domestic product had soared to 13 per cent.
Over the same period, millions in China left their farms for jobs in the cities. While agriculture’s share of the economy has fallen from around 30 per cent to less than 7 per cent, that of services has doubled to nearly 50 per cent
Many of China’s 1.36 billion citizens have become wealthier as a result. As recently as 2000, just 4 per cent of China’s urban households were considered middle-class. By 2012, that share had soared to 68 per cent.
Although Chinese private consumption as a percentage of GDP is much lower than that of most other major economies, it has been rising rapidly. Last year, U.S. online sales on Black Friday and Cyber Monday, at a combined $4.2-billion, were dwarfed by those in China on Nov. 11, better known as “Singles Day.” Chinese shoppers spent $9.3-billion that day, three times more than just two years earlier.
These changes have brought tremendous opportunities for foreign businesses, which, in the decades after China opened up to global trade and investment, seized on the country’s low-cost manufacturing prowess to source and manufacture goods for markets around the world.
From 2008 to 2013, the value of Canada’s exports to China increased at an average annual rate of 14.4 per cent, while the value of Canada’s imports from China rose an average of 4.3 per cent each year. China is now Canada’s second-largest source of imports as well as its second-largest export market. However, China-Canada bilateral trade accounts for only a small part of both countries’ total foreign trade, so there is room for growth.
Canadian commodity exporters, in particular, benefited from China’s ravenous appetite for metals and other raw materials and energy. China’s cooling growth has dulled that demand of late, but this does not mean that business opportunities have dried up.
The “new normal” in China means more realistic, sustainable expansion, where the emphasis is on the quality of growth, rather than its sheer speed. The goal is to reduce the old reliance on exports and low-value-added manufacturing, and increase the role of domestic consumption, private-sector activity and services, which now make up a bigger part of the economy than manufacturing.
While old-style manufacturing will not disappear, the government is making big efforts to move China’s manufacturing capabilities to the next level. Policies such as “Made in China 2025,” announced in May, promote advanced industries such as information technology, robotics, aerospace, railways and electric vehicles.
This presents opportunities for Canadian business.
Take urbanization. Despite the massive migration to China’s cities, the urbanization rate lags that of other countries at similar levels of development. The government’s target is to have 60 per cent of China’s population living in cities by 2020.
That means a continued, big need for investment in urban infrastructure – from subways, water-treatment systems and waste-management facilities to building technologies and airports.
Bombardier, for example, is close to sealing an order from a Chinese lessor for its biggest-ever jet. The company is forecasting the need for 2,450 commercial aircraft in China – deemed a “major opportunity” – in the 60-to-150-seat segment over the next 20 years, with deliveries to Greater China representing 19 per cent of the world’s total demand.
On the consumption front, the stars remain aligned for robust growth for many years to come.
The days of double-digit economic growth may be over, but salaries are still rising. While consumer appetite for some goods or brands may have dropped off, a lot of cash is simply shifting to other product categories or will be deployed a little later.
As Chinese consumers become wealthier, they will continue to buy iPhones, send their kids to universities in the West, travel to Toronto or Vancouver. China has emerged as Canada’s second-largest source of overseas visitors this year.
The recent stock market volatility has not put a stop to consumer spending. Retail sales data for August showed an increase of 10.8 per cent from a year earlier – more than analysts had expected.
Meanwhile, Beijing’s goal of boosting private-sector activity, increasing the service sector and raising living standards will bring new business opportunities in sectors such as financial services and health care.
Health-care spending alone is estimated to grow to $1-trillion in 2020 from $357-billion in 2011, according to McKinsey – and the government has signalled that foreign investment will have a role to play.
China is not an easy market, and the days when companies could record easy, double-digit annual growth are over. Foreign companies doing business in China have to be nimble, to be able to adapt to the constantly changing spending preferences of Chinese consumers and to be prepared to deal with periodic stock-market volatility. For those who do so, China will continue to be a must-be location and key export market.