Eldon-Online

The ABC of Finance

Now, you may have landed up in this Blog by accident because you were searching Google for something learned or maybe educational, on finance. Perhaps you wanted a forum to exchange views with finance industry participants. Or you may just be curious about the title. Whatever it is, read on. By the time you have discovered it is not exactly what you were looking for, you will have finished it anyway!

But first to the "A". A happy letter - it starts the alphabet, but is now a letter feared in Europe because it is the starting letter of that other "A" word - Austerity. A concept that some European leaders (not that Greece seems to have found a leader yet, following their elections), seem to regard as a recipe for disaster. A concept that politicians from the left seem to find has a particular appeal for their voters, especially those in the "sunshine belt" of the Mediterranean . But I bet those same politicians don't run their homes the same way they want to run their economies. If they want groceries, heating, clothing - they work out what they can afford, and spend within their limits - or close to them. And if times get tough, they cut back on various things. That is austerity, so I wonder which bit of Austerity they don't understand.

They want growth, but they need money to grow and they don't have it. Where does it come from then - the printing presses? Yes, up to a point but then we all know what happens to countries that just print money - eventually it all catches up with them and they enter a period of depression. Worse, much worse, I would suggest than a period of austerity. Oh yes, and another thing, who suffers the most - who has to pay it all back eventually? The children, and their children and inevitably, even their children. What great parents you all turn out to be.You voted for yourselves a comfortable life without having created the means to pay for it but, just like your household bills, they have to be paid eventually.

Sure, some people get it. While M. Hollande may have been victorious, yet the margin was not as large as it could have been, and he only received a little over half the votes which doesn't suggest a landslide, because almost the other half didn't want him! But look at the poll results for the far left. A huge success for them.That should worry Europe!

And has Europe given up worrying about Greece? I saw today that the leader of their far left says Europe would not dare throw Greece out of the Euro. Really? Alexis Tsipras might regret such a bold statement. But once again, did you notice in Greece the rise in popularity of a neo-Nazi party in the polls. Be wary Europe. It does not look good from where I am sitting.

"B" in the Blog title is for Bankers and Brides. Actually, I was originally only going to talk about brides under "B" - and at a safe distance from my daughter who could suffer sense of humour failure if I write this incorrectly, but it was in relation to austerity! My extremely talented and beautiful daughter (what do you mean I'm biased - well of course I am - but she is!), is about to get married - in a couple of months actually. Made a wise choice - Scottish accountant; they don't come much more careful than that - (but good luck son)! I was merely going to say that for weddings, austerity is not a word on the lips of many! But it's worth it - and I am NOT spending more than I saved for the day!

But then my thoughts on brides got neatly hijacked by Mr Dimon and his J P Morgan Chase colleagues, with yet another example of the excesses that continue to give banks and bankers a bad name, reinforcing the view that the profession is run by a bunch of banksters.

One of the greatest critics of new regulations, claiming they stifle business, Mr. Dimon has quickly been "up front" in saying that they got it badly wrong. USD2bn wrong at the last published count, (which is already a lot) although there were some rumours on the street I hang out on that the amount was actually quite a bit higher. Nice of Mr. Dimon though to be so refreshingly honest, and for senior people in his firm to accept responsibility and leave already. But in an honourable house, the buck stops with the boss who should take full responsibility. But then perhaps like the now standard "Murdoch defense", Mr. Dimon was not aware of what was going on!

And as for "C", well yes, China. For the second time in a month I find myself in the Middle East at the request of people there, to go and talk about China. Talk about a region which has strong historical links with the Middle East and Eastern Europe. Links that were put on the back burner during the last couple of hundred years with the rise (and subsequent decline) of British naval and trading dominance, the subsequent rise generally of the West, and then the growth of nationalism in China which effectively closed off the country for decades. The Middle East has the oil and gas and the money. China has money and a work force for hire. Both want to invest, but the trade links are nothing new. It is just a restoration of an old pattern.

As far back as 745 AD, or whatever the politically correct term is now, a census determined that as many as 5,000 foreigners were living in Xi'an, the so-called "eastern terminus" of the trade route from the Middle East. In terms of the difficulties of travel in those days, it represents a large community.

And today, in the North Western provinces of China, written out in this Blog in a six part series starting in July 2009 by younger son Paul entitled "Travels in China", there is still strong evidence of the Turkic minority in China known as the Uyghers. But the links have gone, so I find it fascinating that business people in the Middle East are once again looking eastwards. Wanting to re-establish ties with an emerging China - and othercountries in the region. Deciding that the future is in the East, and in what my colleagues in the PwC bit of my current working life have dubbed SAAAME. (South America, Africa, Asia and the Middle East).

And if you look at the West today, can you blame them for heading this way?

Earth Hour - Beijing Gets With The Programme

It's Earth Hour on 31 March 2012, and it's just gone 8:30pm. The lights have gone out, so it is a romantic candle lit dinner for one in a Beijing restaurant. (Not a problem; I enjoy my own company!) But Beijing ... a city where the many critics of China will naturally assume they wouldn't pay the slightest attention to the idea of conserving energy. But oh no! Think again. There is hardly a light in sight other than candles and my unfriendly iPad - or none that I can see anyway - although in an attempt to keep the food cooked there is some oven light. And interestingly, the noise level has dropped. The traditionally raucous restaurant has conversations taking place in hushed undertones.

I am pleasantly surprised, and wonder what other cities are doing - both in China and outside. And what this exercise,this global initiative, well-meaning as it may be, is actually achieving. An increased level of awareness about energy conservation? Maybe. A permanent change in behaviour? Probably not. At least not yet!

In the West - yes, maybe there is a greater awareness of the  damage that the lack of environmental control can bring - although I still see little evidence of it being practiced in some places, unless we run events like this on a regular basis as a reminder.

It is a little like people going on a diet and once they have lost the weight they wanted to, then saying to themselves that they have achieved their objectives, and going back to their previous eating habits. The lights switched off tonight - most especially in homes and in empty office buildings, will undoubtedly be on again tomorrow night.

China has pollution problems, as does Hong Kong (semantics - I KNOW it is a part of China), but I am also increasingly convinced that they are becoming more and more aware of the problems. Taking the whole issue seriously, and believing that "education" is part of the solution to the problem.

Certainly tonight, in my part of Beijing anyway, the hour has been fully embraced, and I mean fully - although now the lighting has returned to normal I guess I might have avoided those foods splashes on my shirt if I could have seen what I was doing - but then again, maybe not!

I hope the laundry process, especially the stain remover, is environmentally friendly!!

And The REAL Winner Is .....?

On the one hand - Hong Kong, but on the other?? I really must stop sounding like an economist ...

Talk about fluctuations. The early favourite losing almost all momentum from the outset, and even though the gap narrowed towards the end, the clear winner based on strength, skill and tenacity was .... definitely Fiji!

Oh! You thought I was talking about that other event - the annointing of Hong Kong's next Chief Executive? (Well, you can't really call it an election can you, when hardly anybody votes). More about that in a minute.

But over the weekend, Hong Kong was at its best. As a tolerant host of the Cathay Pacific/HSBC Rugby Sevens, welcoming hordes of overseas visitors, some of whose behaviour and habits would seem outlandish but which was all pretty good natured. I have not seen the attendance figures, but I would be surprised if they were not a record. And - yes I am biased - but so good to see the "auld alliance" back together of Cathay Pacific and HSBC - and even better to see helping to present some of the prizes, HSBC's former Chairman Sir Willie Purves whose early involvement in the Sevens set Hong Kong off on the track of creating what surely must be adjudged one of the best Sevens tournaments in the world. No, THE best Sevens!! Hong Kong does it very well, and although our police force were at full stretch on Sunday with the various events going on - they were unobtrusive. Good for them! Good for us!

And for the other event? What was apparently pre-ordained, was not to be.

But after all the shenanigans at least we were spared the ignominy of having re-runs and second votes. And if the outcome was not what you wanted - sorry, that's life. But you know what - having got it over can we just now get on with it? 

That of course is unlikely to happen. Already we have the analysts, the re-analysts, the commentators who commentate on the comments made by the analysts all trying to give their definitive opinions on what happened, what went wrong, what went right, who is to blame. Is it really any surprise that the first four letters of the word analyst are so wonderfully descriptive?

I thought Henry Tang's description of why he didn't get the position were the most sensible of the whole campaign - "I didn't get enough votes". Well said Henry. I think it is a shame that whoever was advising you did such a bad job, and it is also a pity if the powers that be decided to hang you out to dry, in the interests of - well - themselves really.

The facts seem simple:

a)    CY Leung has received the mandate to be CE of Hong Kong for the next five years.

b)    For whoever is paying attention to us - China in particular, the rest of the world, our trading partners, our competitors (think Singapore, think Shanghai) - we need to demonstrate that Hong Kong is somewhere to be taken seriously, and that we have a lot to offer.

c)    We have had an acrimonious and debilitating run up to the events of this last weekend, making us look rather juvenile. We have some ground to recover.

If we want to drive Hong Kong further into "backwater" status, then let's just carry on as we are, but if we have any pride left in our city - and the Rugby events of the last weekend have left a very positive impression in the minds of many well-placed visitors - then now, right now, is the time to move on.

That includes trying to ensure that C Y Leung is willing to fulfill many of his statements, recognising that the "Occupy Hong Kong" movement under the HSBC Building in Central has made its point (apparently - because I never did see the point of it) and it is time to pack up and move "because you are achieving nothing other than making our city look untidy", and learning from the experiences we have just gone through in how to mismanage public relations.

There is much to be done, and as usual - it is up to us! The "blame" games shouldn't even start. What's done is done - get over it. Wouldn't it be nice if for once we could all try and pull in the one direction and to do what is right for Hong Kong? Then we will know the identity of the REAL winner.

 

Look, Listen ... and Learn.

Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so. (Douglas Adams - author of "The Hitchhikers Guide to the Galaxy")

How true is that?

Every day we are regaled with stories of people who never seem to learn from the mistakes of others. Accident "black spots" are designated as such because people never heed the warnings even if they hear about them regularly, and they are well signposted. Political crises occur because the lessons learnt from messes made by previous administrations are not remembered, because ultimately it becomes politically expedient to tread the populist route rather than making the tough calls. Financial crises appear periodically despite the politicians and regulators saying "this is never going to happen again!" after the latest one. To which the rejoinder is always "Oh yes it will!". And it does! We do not learn.  

Of course the learning process does not have to relate solely to mistakes, as given in the above examples.

The ability to listen and learn "positively" is alive and well. I recall occasions not that many years ago when senior figures from Singapore would arrive in Hong Kong and invite small, select groups of Hong Kong businessmen for lunch. They would compliment the invited guests on their successes and then, with them suitably preened, would dredge out of them the "secrets" of their success. Back in Singapore they would sift through the information, pick out the good bits they could use themselves or suitably adapt, and discard the rest. Sadly, because "we knew it all already", there was never a return match.

Singapore today, as many will tell you, is a transformed city. It has picked up ideas that have suited its development and does not worry too much about the "not invented here" syndrome that hinders growth in other cities. If it works, use it! It isn't important where it came from initially.

And they are doing it again. The Economic Development Board in Singapore is flexible in its attitude to attracting talent to the city. It is prepared to cut deals. It will contribute to the salaries of suitable experts from outside Singapore if it means better talent will arrive in the City, develop business, enhance the prestige of the country, transfer their knowledge and contribute to the continued prosperity of Singapore.

Okay - Singapore may not suit everybody, but it is telling a compelling story, and people are listening. Including people from Hong Kong!

And if Hong Kong needs yet another prod that we may not be looking or listening enough - beware the next issue of the Global Financial Centres Index. After the last report that indicated there was little difference now between London, New York and Hong Kong - this latest issue will indicate that Hong Kong is slipping. London has improved slightly and New York is moribund in the index, but Hong Kong has fallen. In fairness, Singapore and Shanghai have fallen too, and we will need to wait until later this month to understand why, and then perhaps we can learn from others? Improve our standings?

Clearly our drop in ratings is not (hopefully) directly connected to the CE race chaos, but it is yet another indication - as if we really need any more signposts -  that Hong Kong should be concerned about its reputation as an IFC, and the mess with Messrs Tsang, Tang & Leung isn't doing the city any good.

There is plenty of good advice available in Hong Kong. Innovative ideas that were once the lifeblood of this city cannot have just disappeared, but perhaps no one is listening.

Meanwhile ... Back In The Real World

As Hong Kong waits with breathless anticipation for further raunchy revelations or alleged underground illegalities to emerge, aimed at besmirching the candidates in the race for election as the city's next Chief Executive, the world around us meanwhile has been witnessing some rather more serious issues that should be commanding greater attention from our somewhat parochial media. 

Elections, for want of a better or more accurate description, have taken place in both Russia and Iran during the last few days. The North Koreans meantime have, once again, successfully pulled the wool over the eyes of a number of countries by offering to talk about the cessation of their own nuclear ambitions in return, as usual, for food to feed their starving masses. And the odious Assad continues to kill his Syrian countrymen, women and children without conscience or any regard for humanity. Like father like son, I guess.

In the case of Russia, the election result which gave back Mr Putin the Presidency he had temporarily had to give up, came as no surprise. Well, maybe not entirely true. While the result was never in doubt in the minds of the foreign community, it surprised the people inside Russia who had been protesting en masse against his "leadership". Perceived to have had a tear in his eye when acknowledging the cheers of his supporters (he said it was the cold wind that caused the damp eyes), maybe he was crying about the fact that he had to pay people to stand and wave their flags in his support.

 But although this was supposed to have been a fair and democratic process, there are certainly not many (actually, not any) people I have spoken to who believe it to have been the case. Allegations of fraud are rife, amid concerns that this marks a reversion to the bad old days of dictatorship. We can but hope not.

On the face of it, better news from Iran - but is it? 

In the 2 March elections for the legislature, a high turnout of voters saw a great amount of support for those allied to Supreme Leader Ali Khamenei against President Mahmoud Ahmadinejad. Almost ensuring that Ahmadinejad will not be re-elected President next year. And while the Supreme Leader is not exactly a fan of the West, he is potentially less volatile than the current President.

But how will the President react to this result - given his history? Probably quite badly, but maybe not immediately. There has been much talk in defence circles recently about the heightened level of concern surrounding Iran's nuclear capability and its attitude towards Israel. There is also concern being expressed by the same circles about Israel's potential action - rather than its reaction. The major question being "who strikes first". Not, you will notice, an "if" - but almost a foregone conclusion that a pre-emptive strike is more probable than possible. That surely is worrying.

And still in the Middle East - what about Syria? A matter for the Arab League to sort out -  Western forces really should not intervene, but this is getting to be too much. Whilst I can understand the comment made by a former British Ambassador to Syria who said that even if Assad goes the same way as Gaddafi and Mubarak - hopefully the former in my view - there is no guarantee as to what we might get by way of replacement. A regime not so cold blooded as Assad surely, but then again and regrettably, when the first wave of euphoria at the toppling of Assad is over there will be many scores to settle. Acting under orders or not, you won't get much sympathy from a mob baying for retribution. 

Yes, North Korea has pulled it off once again. How many times is this?  "If you give us some food we will be happy to talk about not proceeding with our nuclear capability"  At least feeding some of the people is the right thing to do from a humanitarian perspective, but come on people - been there, done that, or prove me wrong - Please!! And by the way - nothing on the discussion table about stopping nuclear supplies to Iran?

But, you say, why should any of this bother Hong Kong? We have no political strife, only political satire. We are economically okay. What does a Russian election, a bit of North Korean kabuki which we have all seen before, and the actions of some mad people in the Middle East have to do with us?

Well, potentially quite a lot actually.

If Russia reverts to its old ways, repression, communism, "four legs good, two legs better", markets around the world will get nervous, and China is a little close in proximity to Russia.

North Korea will remain quiet for a little while, as it has done in the past while it consumes its food (not sure who gets it, but looking at the size of the new leader I can make a guess). But then it will start to get a little belligerent again, as it has done in the past. Let's think about this. The "boy", to remain in power, needs the support of some octogenarian generals who will see, at last, an opportunity to do something they have wanted to do for a long time. Something dramatic. They won't care, but China is a little too close for comfort.

If Ahmadinejad wants to make a point to the Supreme Leader that he still has power and, like a cornered snake, decides to attack first then any semblance of stability in the Middle East goes out of the window. This will of course impact the developed world, in the midst of its fragile recovery, and it will impact China. 

And if China is impacted, so too will Hong Kong be, because most of our eggs have been invested in the land mass to the north of us!

It is not a comfortable situation in which we find ourselves, while we hide our sniggers behind our hands at the discomfort being felt by at least one of the candidates for Chief Executive. But if the global situation is not enough to concern us - or at least make us aware that there is a real world out there - also give some thought to the reaction of Beijing to our Hong Kong blues! Could they by now be fed up with their potential poster child? Will they now say enough is enough? They had their chance, but now Shanghai is going to be positioned as the financial centre for China while we really do become what others have predicted - just another city in China.

Our fate, I would argue, is clearly in our own hands.

To Be Or Not To Be ... Hong Kong Elections!

To be, or not to be: that is the question: 

Whether 'tis nobler in the mind to suffer 

The slings and arrows of outrageous fortune, 

Or to take arms against a sea of troubles, 

And by opposing end them? 

Wm Shakespeare (Hamlet) 

 Shakespeare had a much greater talent than most of us for expressing ideas succinctly – and asking questions the same way. But while the meaning in this speech by Hamlet was whether it is better to live or die, it is not my intention to go quite that far! 

By freely expressing your thoughts on politics or religion, no matter how well intentioned, you stand to lose more friends than you might expect, which is one reason I rarely get involved publicly, preferring to remain blissfully ignorant on the side lines of the machinations being undertaken - over which I have absolutely no control; not a good situation if you're a bit of a control freak! 

But first, let me take a step back.

Although it might have been the best deal on the table at the time, the return of Hong Kong to China in 1997 left Hong Kong with a somewhat unwieldy or even "unworkable" political structure.

In simplistic terms, the recipe was:

a) Take a Civil Service (and a very good one at that), and call it Government. It was unelected, unable to be voted out of "power", yet it was to be held accountable for whatever decisions it took.

b) Elect 30 representatives by a process of universal suffrage out of geographical constituencies, and 30 representatives from a series of “functional constituencies", generally representing business interests.

c) Create a Legislative Council (Legco), put all 60 representatives inside and call it - for want of a better word - opposition, who are actually accountable for very little.

Although there is provision in Hong Kong's Basic Law for full universal suffrage, this is unlikely to happen for some time yet and therefore political parties in Legco (represented largely by the 30 geographical constituencies) will be waiting a while before they might be in position to form a Government. So they tend to say whatever they think will get them re-elected even perhaps if they think the "Government" is probably correct. But agreeing with the Government does not appeal to most of the 45% (2008 figures; last Legco election) of eligible voters who bother to exercise that right. Apathy reigns with the remainder.

The election of Hong Kong's Chief Executive follows another system. It is an "election" decided by an Electoral Committee that represents around 0.01% of Hong Kong's population

Traditionally it appears to be done on a nod and a wink from Beijing, with their candidate then endorsed by the Committee after, of course, long and serious debate on the merits - or otherwise - of the candidates before them. In the past, the process has been reasonably clear-cut, and so it looked this time round until recently.

The favoured candidate, according to the people who should know, was Henry Tang, until recently the Chief Secretary of Hong Kong - he stepped down to concentrate on running for Chief Executive role. In the background was the seemingly less likely C Y Leung. Former Convener of Hong Kong's Executive Council, and widely reported to be unpopular.

But then the wheels started to come off Mr. Tang's train. First there was his admission last year of infidelity, but his wife stood squarely behind him and all was forgiven apparently. After all, he would not be the first among a list of leaders who have strayed - and undoubtedly will not be the last.

But perhaps strangely, a little before that admission was made came a flurry of views in the Chinese press that were suddenly supportive of Mr. Leung. No particular reason seemed to be forthcoming - but it was as if the media had suddenly woken to the qualities of the candidate in second-place. Being of cynical mind, I don't suppose this would have been anything to do with people in high places becoming aware of the announcement about to be made, and deciding to "float" the idea of a credible new candidate?

And so it has continued. In the best traditions of politicking, little gossipy things were hitting the media on and about both camps - and then came the bombshell. Or should that be bomb shelter!

The "discovery" of an illegal structure having been built under a home owned by Mrs. Tang. Not, of course, the first time that illegal structures have featured in Hong Kong, some belonging to senior people in both private and public sectors, but once found usually dealt with quickly and removed. It is harder though, to remove a 2,300 sq ft (214 sq m) illegal construction built under a property.

The suggestion that it could have been an oversight was hastily dismissed, and then the previously supportive Mrs. Tang was made to tearfully confess that it was all her idea.

If the people who make the decisions about who should, or should not, be elected were worried about the earlier admissions - they must be positively stressed out by this one. But what happens next is beyond the knowledge of a non-Chinese foreigner. We shall have to wait and see, although the question Henry Tang must be asking himself is "To be ... or not to be"?

If the polls are anything to go by, the public view is that Mr. Tang should not stand for election. I can only suggest another quotation, while he thinks about it:

To lead people, walk beside them ... As for the best leaders, the people do not notice their existence. The next best, the people honor and praise. The next, the people fear; and the next, the people hate. 

Lao-tzu - Chinese philosopher - 6th Century BC 

 

A Lesson For Us All

A normal day in Hong Kong. Noise pollution with dust and debris from the site across the street as yet another building in Central is demolished, prior to the construction of a new shiny bank head office, making concentration difficult. Particulate pollution in the air where the quality of the oxygen we breathe is regularly tainted - at times to alarming degrees,but mostly imported pollution of course, according to the Government. Amazing how it lingers at the road side - nothing to do with the cars then. That's good! Streets where traffic flow is impeded thanks to the actions of some overly self-important citizens - or their shopping bag laden spouses - who demand that their driver waits for them outside the Prince's Building, double or triple-parked until they emerge, having scant regard or care about the inconvenience they cause others. People in a hurry, grim-faced as they weave a passage through the crowds of people.

Despite all the negatives, Hong Kong works. It's a "material" city, but as long as your own sense of values does not get distorted, and you can live with the selfishness and the pollution, you can negotiate a path of your own making. You have that freedom.And we are lucky enough to live in a city that has almost full employment at present, with less than 3.5% unemployed. With a pretty good infrastructure, low taxes, good medical facilities and a high standard of education. 

So, if on balance it's not too bad, what brought about this retrospective? It was a recent visit to a school in South Africa! To a part of the country where pollution levels are non existent, where all you see around you is greenery with mountains in the distance. Not many cars - at least privately owned ones. Where the pace of life is very different. And the people are very poor.

It is a school that caters to a number of villages, thirteen in all, in the North East of the country. But where in contrast to Hong Kong, unemployment runs at a staggering 60% - and the level of illiteracy is at a similar level. A school where a little over 40 teachers cope with nearly 1400 children, where one teacher told me she had 56 pupils in her class, and that she had them all day. Perhaps not an uncommon statistic in many developing countries. But it's shocking.

Some 18 months prior to the visit, as a result of continuing to be impressed by the work done by charities such as Room to Read, about which I have written before, our family had made a donation towards facilities for this school. Although we had been kept informed about the progress of the school, we found ourselves unexpectedly in the region and on the off-chance asked whether a visit might be possible. Clearly we did not want to cause any disruption to the school's regular activities, nor did we want any special treatment, and the charities themselves are not really geared up to arranging such visits. The school's Principal was to say the least, accommodating, welcoming, charismatic and ...yes, absolutely inspirational. I cannot think of a better description for her.

Here, in the middle of nowhere, was a "facility" designed to improve through education the plight of thousands. How else can you describe the phenomenon whereby 1400 students turn up for school regularly, neatly dressed, and who are eager to learn. Students, some of who travel for more than a couple of hours - in each direction - between home and school, and not in comfortable air conditioned chauffeur driven cars! And if the genuinely happy smiles of the children, the evident rapport between the teachers and then the teachers with the children, the openness with which everyone in the school interacted, and indeed if the results achieved by the pupils themselves are anything to go by, this is a school blessed by dedication and by love. And it provides a lesson for us all.

Were we moved? Of course we were. I think everyone who genuinely feels that they might have contributed to "making a difference" - no matter how large or small that contribution - should be happy to have done so. Oh! And why did I say "genuinely"? Because it is sometimes too easy, especially as a corporation for example, when asked to donate or contribute to a cause, to do so because it is a "suitable cause" that fulfills your corporate social responsibility, without thinking too deeply about the positive impact that the $10,000 or $1m you can so easily afford, will have on so many lives. That is not to imply that the corporations don't "care", of course they do, but they need to think carefully about the impact on the donees, not just their CSR Committee.

This is where, and how, hope begins. This is what Room to Read, and others, do. And if I may paraphrase the Room to Read motto, opportunities for education exist in the developing countries of Asia, Africa or Latin America, and with educated children you create a better understanding of the world, with which will come positive progress.

Syria - No Excuse For China!

 

I know that through my Blog I have sometimes been described as an apologist for China. If it is the impression I give, so be it, even if I do not agree with the "label". But I do admit to having been conscious for a long time that many in the West fear China without understanding it. They want nothing more than to see China fall flat on its face, so they can continue to do as they have always done without having to face the inevitable economic competition that China brings. They do not want to acknowledge the progress made by China, certainly economically, and at a somewhat slower pace – socially.

My Blogs have therefore, where appropriate – and generally avoiding the “politics” of it all on which I am less qualified to comment – been an attempt to maintain a balance and keep matters in some sort of perspective. This does not make me blind to the faults of China, of which there are many, and accept that anything China does is okay.  Syria is a case in point.

The United Nations may not be the most effective body in the world, but in matters of global security it is the best we have got. If there were serious alternatives I guess they would have found them by now. It is a forum for the nations of the world to express their views on issues of the day, and there can be no more pressing issue than that of the murderous Assad regime in Syria. Frankly, as I have said before, this is an issue that the Arab nations themselves should deal with, and indeed the Arab League has been active for once, following its remarkable absence in the case of Libya where it basically hid behind the Western forces and used them as their shield to defeat Gaddafi.

Surely, the wanton murder – for there is no other word to describe it – of civilians under a brutal and despotic regime should be a cause for concern of any nation of right minded people. How can it be that China (and Russia of course), in full consciousness, does not share in the condemnation of such acts? The view expressed by the Russians (and presumably shared by China) – that approval of the UN resolution might lead to a Western-driven attempt to overthrow another Arab regime - is frankly ludicrous. The Arabs themselves want to overthrow the regime. The majority of the people in Syria, it would seem, want to overthrow their Dictator. But are currently powerless to do so. 

So with China’s veto of the resolution, the killings continue indiscriminately. 

I honestly cannot believe that the vast majority of the Chinese I know, if not all – were they able to express their views in something as simple as a referendum for example – think they should allow this situation to continue unchecked. 

One final thought. In the late 1970’s China started to emerge into the world rather like a newborn baby. It was huge in size, but unsophisticated in thought.  A rather gangly ungainly “teenager” was how I described it. Fast-forward 35 years, and there is no doubt the country has made huge positive strides in so many areas. But China is now looking outside its boundaries for future supplies of food, raw materials - and oil, of course. Its reserves and wealth have made it a major part of the global economy, with aspirations perhaps to run world bodies like the IMF for example. But if it is not prepared to be a part of the world, a humanitarian world, then the shutters will inevitably start to fall.

Russia is already falling backwards. I sincerely hope that China does not follow suit.

The Pot and the Kettle.

Communist China is destined for the ash heap of history because they are not a country of virtues.

Republican Presidential hopeful Rick Perry.

For those unfamiliar with the expression "The pot calling the kettle black", it is an idiom used to accuse a person of being guilty of the very thing of which they accuse another.

I have been accused of anti-American sentiment in these columns before which, happily, American friends willingly deny on my behalf, but I have never (yet) been accused of being totally stupid. (And I am equally critical of other nations too, when warranted).

But I just wonder what Mr Perry had in mind by referring to China lacking virtue, and which country was he using as a benchmark - the USA? Does he really believe that the "American example" is the one that everyone else should follow? Does he seriously believe that the country that brought us the origins of the latest global financial crisis (not being well handled by European political leaders, in my view) is one whose greed is to be admired? There are surely, if one but reads or listens to the news, cases of rights abuses, fraud, shootings, and many other defects in the USA - in some cases many more than elsewhere.

Or is this "merely" electioneering rhetoric, not to be taken seriously? Let's face it "Destined for the ash heap of history" is pretty strong, but I don't think the Chinese leadership are going to be quaking in their shoes at Mr Perry's pronouncement.

I suspect, instead, that China is more inclined to the Kissinger view of US influence in China, when he said words to the effect  "China managed to get through 5,000 years of history without significant advice from the United States. That is why they do not take as self evident that their domestic affairs should be prescribed by the United States." I have seen this written in a variety of ways, all attributed to Mr. Kissinger, but all say the same thing.

Don't get me wrong. I am not defending China from the comment made about virtue. Is China a country of virtues? Of course it's not, but I believe that it is making progress, which is slow at times, and it is determined to do more. But with a population four times the size of the USA it is going to inevitably be a long process. The USA has been trying to "get it right" since 1776; China, only really from it's re-entry into the modern world in the late 1970s. It is far from ideal - particularly from a Western perspective - and anyway frankly, is there a country anywhere that could truly describe itself as virtuous? Which one is the role model? Mr Mugabe's Zimbabwe doesn't seem to be criticised much these days - but then I suppose it is too insignificant to be considered a threat to America.

And why the China bashing anyway, are you really that scared of China's return to influence? Its return, if you like, to the prominent position it once held globally and long before a young America came onto the scene.

Actually, I wouldn't worry too much about it. China, along with much of the rest of Asia is much more likely to link up with South America, Australasia, Africa and the Middle East over the next century or two and will leave the USA and Europe to go and figure out the future for themselves.

It does worry me though that in this world of ours we are becoming increasingly nationalistic and protectionist. Although I do understand that when we have the sort of levels of debt and unemployment we are facing today, particularly in the West, that this is perhaps a natural reaction. But when you add inflammatory comments to the equation from politicians who, frankly, should know better - in the long run it will come back and bite us.

Oh, and by the way, isn't this the same Mr. Perry who just been accused of hypocrisy for an investment in America's largest pornography distributor? The pot calling the kettle black - perhaps?

It's going to be a long winter!!

And in the Blue Corner ... Singapore vs Hong Kong?

The end of this week sees a heavyweight boxing reunification title match between David Haye, the British holder of one title and Wladimir Klitschko the Ukrainian holder of two titles. An event that has been long anticipated, and will see plenty of action, I have no doubt. 

So, why the reference to boxing? In a somewhat lower-key event that has nevertheless been building up into something more aggressive recently, I have been keeping an eye on the rivalry that undoubtedly exists between Hong Kong and Singapore. A sort of virtual boxing contest where perhaps the smaller contender has been showing signs of punching above its weight.

I thought about it in particular when I noticed a revival of interest in a Blog I wrote just over two years ago on the debate about Hong Kong vs Shanghai. I had no idea why this should again be on the mind of readers, unless it was part of the regular round of paranoia on the subject - usually for the less confident people of Hong Kong. The blog concluded then that Hong Kong, if it stayed focused, flexible and positive would remain of significant global importance, but needed to keep Shanghai in its sights. 

On reflection, I then realised that I had become much more focused on the positioning of Singapore in recent months, after the election, because here is an economy and a political structure in transition - and it's making waves. I thought a quick look at the situation - as usual from my own perspective - was warranted.

Before I get started, I should say I am familiar with the old arguments about Singapore being more focused, smaller, and able to be more flexible than Hong Kong, and that Hong Kong has its hands tied and should not compete in the same manner with Singapore. I am sorry to say that on the latter part I disagree. We do not have to have our hands tied, and continuously worry about the blanket opposition that seems to typify debates in a negative Legco.

I should also say, having said it before, that despite the frustrations everyone feels occasionally, Hong Kong is my home. I enjoy being here. I want us to do well domestically and to continue working on areas of social reform, but without giving everything away for nothing in return. But our prosperity also relies on our performance internationally and as a global business centre. Thus I am not going to throw in the towel just because we are looking more and more as if we have lost our way, but we have to wake up. In another more recent blog, in September last year, I spoke of Hong Kong's attitude towards the present and the future as giving me some cause for concern. That continues to be the case, but I digress.

Today I am hearing Singapore's name being mentioned a little too often for Hong Kong's own good.

In the years before I retired, I was invited on a number of occasions to lunches in Hong Kong hosted by some very senior officials from Singapore. Lunches that were attended by a small number of Hong Kong businessmen who were variously flattered for their business acumen (in fairness, justifiably in many cases), and then asked to share the secrets of their success - which they did willingly. It seems that after the information had been harvested, those officials would return to Singapore and sift through the commentary provided to see if there was anything that might be of value to Singapore. Ideas they could use, or adapt to suit their own purposes. Whether it was a successful exercise or not is hard to say today - but the real point was, they were prepared to seek out ideas and didn't mind where they came from.

I remarked at the time that I could not see any Hong Kong official seeing the need to do the same sort of thing in Singapore, as we seemed to believe we had all the answers anyway.

Fast forward to today, and what are we hearing?

I am talking about what I hear from people I speak to with practical experience. I am all too familiar with the statistics that pop out from Government to indicate how well Hong Kong is doing in attracting new offices and headquarters. No, I am hearing from people trying to employ quality internationally minded linguistically competent staff, trying to find school places in Hong Kong, and trying to find a general quality of life that is attractive. From people who are looking at choices available - Singapore, Hong Kong or China direct. People who are looking at legal structures in which they would feel comfortable operating, looking at the rules and regulations in effect or their likely trend, and searching for incentives - real incentives.

In all of this searching, Hong Kong has of course one major attribute that Singapore just cannot replicate - and that is proximity to China. And a special relationship that, although perhaps strained at times, has certainly been favourable to Hong Kong. But for the rest?

Despite a few good days recently in Hong Kong where the skies have returned temporarily to the blues of some decades back, one cannot help but feel this is temporary. And if it is not - what has changed? I saw an argument that our recent good weather is a reflection of the fact that factories in China are not so active as previously and that therefore all our earlier pollution problems were due entirely to factories in China (operated mainly, by the way, by Hong Kong businesses). I don't think so, somehow.

Wind - of one sort or another - has always had an impact on our pollution levels!!

I was told the other day that an incoming executive from an established Hong Kong entity looking for a school place for his children in an ESF school had one of them at 120 on the waiting list! He chose Singapore instead. We are not going to gain, or even obtain credibility or talent if that continues to be the case. I understand that Harrow School's total registration in Hong Kong for new students was filled in less than an hour after opening. I have no independent verification if this is true, but it wouldn't surprise me.

And most compelling of all is perhaps Singapore's willingness to do "deals". In this, where Hong Kong may hold the moral high ground and be applauded by trying to ensure that everyone is treated as fairly as possible, it is nevertheless unlikely to win us new businesses.

In any business environment, you occasionally have to make special offers to attract new business. Does this disadvantage existing players in the market? - Yes, but then if you are attracting the right sort of business, the overall benefits could be higher - if you are efficient and competitive. And it is here that Singapore is currently winning out - tax concessions are significant when compared to Hong Kong. And the other benefits being offered would certainly match Hong Kong on the face of it. And if the reality is different - then we are not articulating our competitiveness sufficiently well.

If this is a heavyweight contest, then we are certainly facing an onslaught of jabs right now. If we don't protect ourselves by becoming the aggressor, then the body blows will start to take their toll, and we will be vulnerable to the killer punch.

Boxing matches usually have a result and although there may be a re-match, the loser is often at a disadvantage. If we are in the early rounds, we had better re-think our strategy as we move deeper into the fight, because we may be falling behind on points.

We need some inspired and inspiring leadership to start changing the characteristics of the fight, yet June 2012 for a change of trainer sounds a long way off.

But as they used to say, before it became politically incorrect to do so, may the best man (person) win!