Hong Kong has a unique foundation for growth
Hong Kong’s core strengths face serious competition. However, as the Lloyd’s List Business Briefing has heard, it has advantages nowhere else can match
Hong Kong must shift its emphasis to what makes the Chinese Special Administrative Region different, the Lloyd’s List Business Briefing heard in Maritime Week. It’s time to seek the unique.
In a wide-ranging discussion about Hong Kong’s potential avenues for growth in a dynamic maritime sector, the presence of China was described as both overwhelming and transforming. Vincent Lai, CEO of Landbridge Holdings, explained in a keynote presentation how China’s expansion since the economy was opened up 40 years ago – and especially since the country joined the World Trade Organization in December 2001 – has only been partly understood by the rest of the world. Thus far, growth has concentrated on GDP but there has been a significant move away from export-led expansion to an emphasis on domestic needs. In addition, there is now a push for quality over quantity. Hong Kong, with its strong international outlook, is strategically located to guide this realignment.
“Delegations must go to Washington: we must state why Hong Kong is unique”
Peter Levesque, Modern Terminals
The real impetus will come with the development of two major initiatives: Belt and Road – which now links 120 countries, half the world’s GDP, and three-quarters of its population – and the Greater Bay Area (GBA). Hong Kong will play a key role in the GBA corridor. Agnes Choi, from the Hong Kong Maritime and Port Board, said the Greater Bay Area has a GDP of $1.5 trillion (comparable to the economies of Australia or South Korea). Together, Ms Choi explained, the BRI and GBA projects “are a welcome counteracting force against the tide of de-globalisation.”
“One country, two systems,” said Modern Terminals’ Managing Director Peter Levesque in his keynote presentation, is “a unique opportunity to combine the China economic engine with the features and benefits this SAR has to offer… No one else has this foundation from which to work.” But Mr Levesque is aware that realigning Hong Kong with the new China would bring monumental challenges for Hong Kong port that have to be tackled head-on. China’s deep-water ports add a new dimension to regional competition for container business. That competition has heightened as container ships reach 22,000teu capacity, which challenges even the most efficiently-run operation, and as consolidation renders alliance-berthing plans no longer fit for purpose.
“The consensus is that we need a new operating model,” he urged. “We need to re-invent.” Mr Levesque is confident that the answer lies in embracing new technology from automation to blockchain. There was a unique culture in the Renaissance period in Europe “that encouraged innovation from across disciplines to combine to create new ideas; Hong Kong is on the cusp of its own Renaissance,” he believed.
“We don’t differentiate [between Hong Kong and China]: China is an extension of our Hong Kong office”
Nigel Moore, Wallem
Even so, there is no time to lose. “There’s no shortage of BRI projects but the answer is not to sit in Hong Kong and wait for them to come to us. Where can we add value?” he asked. In her policy address released in October, Hong Kong CEO Carrie Lam called for a new maritime push. Mr Levesque concurred.
The temptation has been to accentuate the challenges for Hong Kong, nevertheless this Business Briefing brought out its strengths. These include Hong Kong’s many decades of international contact, the Rule of Law, the ease of doing business, and the pool of educated and experienced professionals across the maritime and logistics sectors.
Nigel Moore, Sales and Marketing Director at Wallem, a shipmanager that has been in Hong Kong for almost a century, raised the vital but often-overlooked point that although some of the support skills have been migrated to centres around the Asia Pacific region, the leadership will continue to have its base in the SAR. “Hong Kong must not assume the same shape and format will continue,” he said. “Technology is often overlooked. We don’t differentiate [between Hong Kong and China]: China is an extension of our Hong Kong office.”
Deepak Saxena, Executive Director of Kerry Logistics, did not agree that Hong Kong might have lost its attraction for the Millennial generation. Rather he pointed to the fact that his company was receiving 600 applications for every 70-80 vacancies. He sees the logistics business as solving problems and believes that’s what brings in a regular flow of university graduates seeking to be part of an industry that’s focused on value-creation. “We do not think of ourselves as a B2B operator; that’s our uniqueness.”
For Peter Glover, of Norton Rose Fulbright, problem-solving is an integral part of legal work. This pushes into opportunities for a whole-of-life career. The breadth and depth of Hong Kong’s professional services must be seen as a strength to be transformed positively by disruptive technology, through closer links with the wider logistics supply chain, driven by China’s economic transformation and twin initiatives of global scale.
In any discussion of Hong Kong’s uniqueness, the presence of China will always play an influential role. Hong Kong’s maritime community lives and breathes China in a way no other community can do. Several questions at this Briefing suggested that greater emphasis should be made on Hong Kong’s unusual opportunity to speak ‘China’ to the international business community.
Peter Levesque explained: “[The US] Congress used to know about Hong Kong; we need to re-educate Congress. Delegations must go to Washington: everybody pays attention when they do. We must state why Hong Kong is unique.” It’s not good enough just to send a message, he insisted. “You need to go.”
The Chairman of Maritime UK, Norton Rose Fulbright’s global head of transport Harry Theochari, closed the Briefing succinctly. “HK has no choice other than to succeed – and succeed now. We are learning about China and China is learning about the world. Maritime UK has delegations from Shanghai telling everyone we must be there.”
Hong Kong’s uniqueness is facing serious competition from across the Asia Pacific region. This Maritime Week Briefing revealed solid strengths, areas for realignment, and a willingness to change. It also revealed there’s no real substitute for old-fashioned person-to-person marketing.