Hong Kong Cautiously Optimistic as 1997 Reversion Approaches : International Business / Executive Travel

As the deadline for Hong Kong’s 1997 reversion to China counts down on a clock at Tian An Men Square, visitors are starting to notice subtle changes in the business climate of the British territory. But so far nothing has knocked Hong Kong off the list of the most frenetic and freewheeling centers of capitalism in the world.

“The business climate is still very, very good, and I expect it to remain that way,” said Wolf Hengst, president of Hong Kong-based Regent International Hotels. “Hong Kong is the most important trading partner in all of Asia. The Beijing government is not going to change that.”

Hong Kong’s history of British rule has given it an infrastructure unparalleled in Asia, Hengst said. As a largely English-speaking center, it has the telecommunications, financial, transportation and other resources necessary to conduct trade anywhere. The container terminal at the port of Kwai Chung, for example, is the busiest in the world and has an average turnaround time of just 13 hours, making it one of the most efficient. The Kai Tak Airport has one of the world’s busiest cargo terminals.

But the key reason for optimism about the reversion to China is Hong Kong’s unique relationship to China. It is in a geographic and political position to offer businesses entry into China’s burgeoning marketplace.

“It is the most important steppingstone to the mainland market,” said David James, an international business consultant with Business Strategies International in San Francisco.

The Chinese market, which has been growing at a rate of about 10% a year, is still relatively untapped. About 40% of China’s trade goes through Hong Kong.

Some people are nervous about the changeover, which is scheduled to occur July 1, 1997. But “for every company that moves out, a new one is coming in,” Hengst said.

Barring a political or judicial incident of some kind, business should continue to run smoothly just before and after the change, said James, who is also author of “The Executive Guide to Asia-Pacific Communications” (Kodansha America Inc., 1995).

Still, people in Hong Kong are well aware of the future. Possible judicial system changes are a primary concern.

“Tian An Men Square shocked a lot of people,” said Bruce Ramsey, a former editor with AsiaWeek who worked in Hong Kong for 3 1/2 years. “People are nervous.”

Some middle managers have decided to take jobs outside the colony in recent years, so a new practical problem is finding executives who can speak Chinese and manage Chinese employees. James said it is also becoming increasingly important for managers in Hong Kong to be able to speak Mandarin, the official dialect of mainland China, as opposed to Cantonese, the dialect spoken in the southern provinces of China and Hong Kong. Overall, English remains the international language of business.

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Business people are concerned about how much negotiating power they will have once the Chinese government is in control. “Chinese officials have a lot of discretion,” Ramsey said.

Hengst believes the Chinese government will stick to its agreement to allow Hong Kong to operate as a special administrative region in essentially the manner it has been. “The [Chinese] government knows all eyes will be on Hong Kong for the first couple of years,” he said.

“Already, there is increasing interaction between Beijing and Hong Kong,” Hengst said. Most companies have appointed special representatives to serve as liaisons with the Chinese government. “As a result, there is a greater awareness that whatever actions you take today may have an effect after 1997.”

Although such steps are considered reasonable, there is a psychological toll, he said.

On the other hand, there is a growing sense of pride among Hong Kong Chinese in belonging to China.

“China has changed a lot. There is an enormous amount of pride among Chinese to be Chinese. China is rapidly becoming the other world power,” Hengst said.

Business Culture

The growing sense of belonging to China has also caused some shifts in the way business gets done. Hong Kong has long been one of the most Westernized and least formal areas in Asia for doing business. However, there is a growing emphasis on culture and relationships that James attributes to the influence of the mainland.

“To some extent relationships are being built anew. Relationships are even more important today than they have been in the past,” James said. “It’s very important to make business contacts through an acquaintance you know.”

“In previous years, you could just walk in and expect to do business,” he said. That’s not true today.

Even so, Hong Kong is still not expected to be as formal a business environment as some other Asian business centers. Hong Kong Chinese have a reputation for being shrewd, tough negotiators who prefer to handle discussions face-to-face or on the phone, not through mail or go-betweens.

There are many similarities to American or British business cultures. Some general caveats are to be polite, avoid the use of first names, don’t ask too many personal questions, carry plenty of business cards, be on time and come prepared to make quick decisions. Flexibility is an asset. Business suits are the customary attire at all times, even during the height of summer, which can be steamy. (Offices and cabs are air conditioned.) And neither gifts nor heaving drinking are a formal part of business rituals.

Despite the Western influence, it does pay for business travelers to familiarize themselves with some Chinese customs. Certain colors and numbers, for example, connote good or bad luck.

Of particular note to business people is the fact that Hong Kong Chinese adhere to the principles of feng shui , a philosophy that is part pragmatism, part aesthetics and part superstition that holds that the design of a home or office can affect the occupant’s well-being and fortune, James said. Thus, order and harmony in everything from the placement of furniture to the way business communications are carried out is central to a successful meeting.

Business Appeal

Despite the overall uncertainty, Hong Kong’s considerable assets continue to lure new business prospectors and investors. According to the Hong Kong Tourist Assn., about 30% of Hong Kong’s more than 7 million international visitors a year come for business or to attend meetings. Hong Kong’s appeal is that it is still one of the least regulated, most convenient and most efficient business environments in the world, said Mary Bakht, spokeswoman for the Hong Kong Tourist Assn. in New York. A tax base of only 15% for corporations, unrestricted movement of goods, labor and capital and a non-protectionist environment give foreign and local companies equal footing to launch their business ventures.

There is a saying in Hong Kong that you can set up a business in the morning and be making a profit by the afternoon, Bakht said.

Indeed, Hong Kong has the largest American Chamber of Commerce outside the United States.

General Information

For information about doing business in Hong Kong, the Hong Kong Trade Development Council handles trade inquiries and provides business introductions. For more information, call (212) 838-8668. The Hong Kong Tourist Assn. assists travelers with hotel reservations at (310) 208-4582.

Most travelers advise against renting a car. Hong Kong’s business center is concentrated in a small area with plentiful, inexpensive taxis. (You need not tip drivers.) And the underground rail system, which goes to all primary business destinations, is clean, efficient, inexpensive and easy to use. Signs throughout the region are in English and Chinese.

To get to your hotel from the airport, there are airport buses or cabs, although cabs must pay double the tunnel toll, which makes them more costly than shuttles.

Hotels and food are about 25% more expensive than they are in Los Angeles, James said. All the larger hotels have sophisticated business centers for people who need to get work done.

To go to Hong Kong, travelers need a passport and proof of onward transportation. Visits of up to 30 days don’t require a visa. Britain continues to handle customs details.

Hong Kong is generally considered safe. As in all urban centers, pickpocketing can be a problem. For help, the American Consulate General in Hong Kong is located at 26 Garden Road. The telephone number is (852) 523-9011.

Carol Smith is a free-lance writer based in Pasadena