Eldon-Online

HSBC; The Last Word!

It really is time to put the lid on it!

After a couple of weeks of a media feeding frenzy based on whispered half truths, appalling leaks from people who I assume should have known better, speculation and speculative "analysis" - it is time to calm down and think of the future for the Bank.

The "leaks" were inexcusable. I don't care what folk say about "public interest" - because that can be their only "so called" defence for telling anyone - but when things are in a state of flux it is surely better to get them resolved than indulge in a "nomination by media" exercise. Or in Mike Geoghegan's case - "vilification by media". How times have changed. We saw the beginnings of a more loose-lipped Board - or those very close to it - when the news broke prematurely about Geoghegan's move to Hong Kong. Without any conversations at all about that particular matter in advance, the information was volunteered to me in intricate (and accurate) detail by someone well removed from the Board. It was a sort of "I expect you know already ..." type of conversation. I didn't.

But look, it might have been ugly but a win's a win and we have to move on.

Mike Geoghegan I met as a young man in the Middle East - I actually think it was on a rugby pitch the first time, but our paths have crossed many times since then - none so closely though as when we worked in the Bank's Mongkok office in the early 80s. He was then showing the right signs of leadership and ability, and I am sorry about the manner of his departure. It could have been handled so much better - and I hope that any companies out there who have been reading the negative commentary about Mike put it all into perspective. Mike is tough, rough and gets things done. He has considerable charm - although I do admit there are occasions when you have to find it, and he does not suffer fools gladly. There will be many, certainly inside the Bank, who will see Mike's tenure as positively transformational. Those less able may welcome his departure (although that underestimates Stuart Gulliver).  

He will handle all of this with dignity, no matter how much he may hurt inside, and I wish him well. 

[Oh, and STOP all this silly speculation about his "pay-off". Much of what he might receive in the future will depend on how the Bank performs and it is not cast in stone. And that is something I can testify to from somewhat bitter experience. But that is another story - and it's private!]

And so to the future. Messrs Flint and Gulliver will make a great combination for the future of the Bank.

 I know there are those who would have preferred to see the change at the top come from the outside, in the shape of an Independent non-executive Chairman. But this is a regulatory and market "preference" - and it's also "comply or explain". The Bank chooses to explain - and the Bank's results do not seem to have suffered as a result of following a tried and tested tradition. What would an Independent Non-Executive bring that someone with the skills of Douglas Flint could not bring? If anyone thinks Douglas is a "patsy" who will not have the interests of all constituents of the Bank at heart - then they don't know the Bank or its people at all.

Stuart Gulliver is a person to watch - always has been. He is highly intelligent and very articulate. I see he is being "criticised" already for being an "Investment Banker" - well he does run the investment bank in HSBC, but again - if you don't understand Stuart, get to know him before you start writing rubbish about him. I have no doubt in my mind that he will step right up to the plate and continue to perform as well in his new role, just as he has in the past.

Having already been regaled with stories of dinners at plush restaurants in London prior to Mike's decision to move on (a week before he was supposed to have threatened to step down if he didn't get the top job), I hope we are not going now to be subjected to two weeks of analysis of the new team and what they can do wrong. They have more than sufficient ability, and are supported by a highly competent team of executives around the world. Let them prove themselves, and go find other victims to write about.

I see that already the focus has now changed slightly to the future role of Mr. Thornton with HSBC and the fact that he might himself step down. That, it seems, would be a pity from the perspective of some but if his skills were China related (forget the fact that he was an Investment Banker and an American - two issues that seem to have unsettled some), then I think there are plenty of others out there with good China credentials too.

So - let's now all get on with our jobs!

What Ever Happened to Will Power?

If I had been given a sticky bun for every conversation I have had over the last couple of years about weight and lack of exercise, I would be a very fat boy indeed. I don't know whether it is an age thing, but the will power that even amazed me at times, seems to have disappeared. The ability to get up early morning after early morning and toodle off to the gym - or out on the road for a walk (I draw the line at running!), seems to have left.

I made some rash promises towards the end of last year about losing weight. The only thing I achieved was not to put any more on! Well, it's a start, but it's not enough.

So, annual medical examination completed for another year and an endorsement that I might make it through to the next one, left me feeling mildly elated - except for the warnings yet again on weight and exercise. Too much of one it seems, and not enough of the other.

And then someone sent me this stark warning:

 
Well, when put like that even I get the message!!

Hence given that this is the week of the Mid-Autumn Festival, Autumnal Equinox, or whatever - I have decided that I cannot put it off any longer. It is time to start a new trend in Resolutions. Out with the "New Year Resolution" stuff and in with the "Autumn Ambition".

With "No time like the present..", and "Today is the first day of the rest of your life ..." dreadful stuff ringing in the ears, I lumbered off this morning to tackle Bowen Road, forgetting just how long it was going to take me to get there in the first place ... but I made it. And that, really, was where the trouble began ...

The first part of the walk was rather ordinary, except for the overpowering smell of dog urine that filled the nostrils - but it it did make one walk a bit faster! (The dog walkers - not, I suspect usually the owners of the dogs - had done a decent job of cleaning up the really nasty stuff - but doggy pee is pretty potent too!)

And so to Bowen Road. I was being overtaken by everyone, all shapes and sizes, all ages, all nationalities. Just as well the dog that passed me didn't think I was walking slowly enough to be mistaken for a tree or lamp post - although he did slow down and look! Everyone was running, and then success ... I passed a rather elderly couple walking, appropriately dressed like me in exercise clothes. "So it's going quite well", I thought to myself - until I realised they were walking in the opposite direction to me. Ah well; next I passed a gentleman and we exchanged pleasantries, but I expect he was intending to remain seated on his bench in the shade a while longer.

To my credit, I wasn't actually overtaken by anyone who was walking (does everyone run on Bowen Road? There were no "Runners Only" signs that I could see - or "Minimum Speed"). And then I started to meet people coming from the opposite direction who were also walking. Now what was all that about, I thought. Was I supposed to start walking from the Stubbs Road end - while the runners did it in reverse? But what would be the point of doing that - after all I was taking a great deal of comfort from the fact that I was walking towards the Adventist Heart hospital - not walking away from it!

So it was, 6.3kms later, and triumphant it was time to return home. I waited a few minutes for one of Hong Kong's finest red taxis to pick up a rejuvenated, adrenalin pumped soul, determined to repeat the exercise again very soon. And then a few more minutes - and then some more, wondering why I was unable to attract a passing glance from even the scruffiest looking "For Hire" driver. Of course, triumphant I may have been but I realised I probably looked as if I had been dragged through a hedge backwards in the rain, and probably smelled as if I had done the whole journey by sewer, so I understood the reluctance.

Maybe it will rain tomorrow (it certainly is raining now) and I won't be able to repeat the experience, but maybe, just maybe I have caught up with the elusive Will Power. I rather hope so, but only time will tell!

Hong Kong - Laissez Faire or Lazy Fare?

Is it only me, or are there others out there who think the laissez faire of Hong Kong fame, and past economic success, has now transcended into lazy fare? Are we losing the plot somehow, with decreasing service standards and a lack of broad thinking? 

Take the mobile operator “3”. (In fact I wish somebody would!) A day doesn’t seem to go by without me hearing yet another horror story about the customer service provided by “3”. But then you start to think, surely the stories are all ‘spiced up” just to make them more dramatic?

Personally I use “3” for my iPhone and, okay, I do not find the service to be brilliant, and I do find the roaming charges to be exorbitant (so I don’t use them for that any more). However, if I have to deal with them, I recognise that I am not dealing with people for whom the English language is their mother tongue. I try and ensure my questions are easily understood and, at the end of the day, I often get the job done. If not, I head back to the office and enrol the help of some Cantonese-speaking staff! I am fortunate to have them. 

But I have now had a “too close to home” experience with “3” over the last six weeks which has led me to conclude that the horror stories are not exaggerated. The company actually does produce the worst service in Hong Kong and, cleverly, they have created a situation where there is no one to complain to – or if they offer to call you back, they don’t. And they’re a telephone company for goodness sake!! Or they say they called you, and when you show them all the numbers that have called your phone in the last month and theirs doesn’t show up; there is not even an apology.

Here we have a company that seems to be interested in getting, but not in keeping, the business – so we won’t be keeping them as service(?) providers any longer. Not that they’ll care!!

But moving on, what about the prospect of attracting business to Hong Kong? A subject that has graced many a discussion in various Chambers of Commerce, InvestHK and at Government level, but how seriously proactive are we about it these days?

Commentary in the last few weeks has indicated, by way of an example, that two or three of the larger non-Government funded British banks (well Barclays is British, whereas in my view Standard Chartered and HSBC are only British in name, rather than business) were threatening to headquarter some or all of their businesses outside the UK if the British Government carried through plans that would seriously restrict their business. The next thing you hear is that Australia is a possible location. Why? Look, Australia is a good place to live, work and operate – I’m a fan but come on, why has Hong Kong not put up its hand and said publicly to these institutions – “if you want to move, we would like to talk to you seriously about coming here”. Why not? If you don’t show you are interested, then you can’t expect people to second-guess your views. I am sure that representations are being made by other Governments to entice them in the event of a move. And we don’t need to provide concessions – we are already competitive (with the possible exception of property).  But be bold Hong Kong. Say we would like them to come here (well, we would, wouldn’t we?). Especially HSBC – which would be a proper homecoming.

And if we get more investment, more diversity, we need more culture and we need more support for the arts. Another area that we do not seem broadly focussed on. Sure, we are building West Kowloon but this is not quite the same as supporting some of the smaller cultural activities in Hong Kong that could make us major players in the arts world – and bring more tourists to our hotels, more spenders.  An example? Hong Kong’s annual but privately funded Arts Fair. An event that is gaining worldwide credibility; 46,000 attendees this year over 5 days, many from overseas. One hundred and fifty Art Galleries from overseas.  In fact I was talking to a Middle Easterner just today who is very involved in this arena, and who has plenty of promotional ideas to put forward, but the extent of Government assistance to help promote the event, courtesy of InvestHK? A couple of advertisements on the side of a tram!

Point of disclosure, I am not entirely unbiased when it comes to the Art Fair – but this is just one event that would benefit from some Government support, that would then repay itself by bringing more people into the city.

I fear we have stopped thinking laterally, or considering the bigger picture. It seems to be just too hard, whilst property is just too easy.

With the exception of our hotels where I think service standards are generally pretty high, elsewhere we are not doing so well. Our tour guides (often Hong Kong’s first face to the visitor) don’t seem to be doing themselves any favours by berating tourists for not spending enough (which probably impacts their commissions). Similarly, our services on the ground like those being experienced by customers of “3”and, I am sure – others, but I quote from recent experience – do not fill one with confidence. And what appears to be a rather laid back attitude towards attracting new businesses and people for Hong Kong that is being adopted by bits of the administration, suggests we are losing that edge for which we were once so famous.

Korea - In Transition

Reading recent news reports about Korea you could be forgiven for thinking that the country was about to implode. Politically and financially. Failed attempts to get major positions filled due to allegations of corruption. Resignations of cabinet ministers due to allegations of nepotism. Not the sort of things that fill foreign investors with confidence. And if that is the case, just imagine what ANZ is currently thinking, as it moves towards a hoped-for acquisition in Korea, when the media seems to be of the opinion that they don't want KEB to fall into foreign hands again - even if common sense suggests that at least this time they would get a proper bank involved for the long term, rather than someone who just wanted to run once they had made a profit.

And it's not as if Korea doesn't want foreign direct investment - it does. Neither do various entities of Government nor various cities give up in their ambitions for growth and the establishment of areas for education and financial centres. Indeed in the case of the former ambition, Jeju Island has already secured signatures at least from a couple of high class foreign schools - one Canadian and one British. 

But look, the economy is doing okay. They have certainly recovered well from the financial crisis and would seem to be on track for some decent growth. So what is it about Korea that is such a conundrum? That keeps investors on the back foot, scratching their heads.

I make no apology for the fact that I have been a long-term supporter of the potential that is Korea. A frustrated supporter, admittedly, but I still believe in Korea's ability - if it wishes to do so - to take its place properly amongst the major nations of the world. The hosting of the G20 summit this year is no mean feat for the smallest economy in the "20" - but when all the razzmatazz has died down - what then for Korea?

Actually, perhaps perversely, I don't necessarily see the political events I outlined above as being all bad. Neither do I view as entirely shocking, the news that a whole bunch of convicted business heads are about to be released from jail and pardoned. Perhaps the surprising thing is the manner in which it is being done, which once again suggests that the Korean PR machinery - such as it is - needs an overhaul.

But think about this:

South Korea became a Democracy in 1950, after its liberation from Japan by the USA and Russia - and then plunged into war with the North. It had a number of Governments - most of them military - but it has only really enjoyed a stable(?) civilian democratic government since 1992. As a young democracy, with a very rapidly growing economy, and an electoral system that only allows each President one five year term, Korea has had much to absorb in a short space of time. It is still officially at war with the North, and under threat of a rogue nuclear attack from that quarter. Even if you believe, as I do, that such an event is unlikely to happen there is no accounting for the actions of madmen.

It is also smarting from 40 years of Japanese occupation, and the Koreans are a proud and nationalistic race. Not a criticism - a fact.

In many countries in the world, those which are now described as civilised and developed, there existed at some stage of that development blatant nepotism. (And dare I say it remains - better hidden perhaps). In addition, accusations of corrupt practice was often laid at the door of people already in power - or of those aspiring to it - otherwise, they said, how would they have got there in the first place. It was all seen as "normal".

Thus I see events in Korea today as representative of a country in transition. Reaching the same conclusions those other countries discovered a while ago. Realising that certain behaviours are not acceptable in the global village but, as so often, finding out the hard way - for themselves.

And the wholesale release of "big business" leaders? Well, I am sure they should probably not ALL go free, but look at the Korean penal code. It has been under review certainly since the time I became a member of the Presidential Council on National Competitiveness, because many penalties in Korean legislation for economic offences - for example - are currently criminal offences, rather than civil as they would be elsewhere. In this regard I suspect - although I admit I have not looked at every case - that many of the releases would reflect the new codes of de-criminalising events. It is just the way it is announced that makes it look so bad.

So don't give up on Korea. They have not lost the plot - they are just taking time to understand it.