1996 International Study Mission to Hong Kong – A Report

International Study Mission Report: Hong Kong

In early May 1996, over 90 local business, government and civic leaders from the Greater Seattle region traveled to Hong Kong as part of an annual Intercity Study Mission. The Hong Kong mission was the 15th in a series of Intercity Study Missions and the thid international Study Mission. The missions are organized by the Greater Seattle Chamber of Commerce, the City of Seattle, Port of Seattle, and Metropolitan King County and Snohomish County governments. For international study missions, the Trade Alliance plans the programs. Following is a report which was prepared by one of the delegates on the trip, Monte Enbysk, managing editor of Washington CEO magazine.

Asia’s Friendly Mecca of Capitalism: Why is Hong Kong so successful and what is Hong Kong’s future?
by Monte Enbysk, Managing Editor, Washington CEO Magazine

A half-dozen or more women business leaders from the Greater Seattle Chamber of Commerce are gathered one evening in the 33rd-floor executive lounge at Hong Kong’s J.W. Marriott hotel. They are enjoying each other’s company – and the stunning view of Hong Kong’s bustling skyline of skyscrapers and neon signs. But the women are anxiously waiting to meet a counterpart in Hong Kong, high-powered business executive Maria Fang, who is the sister-in-law of top government official Anson Chan. And Fang is obviously late. She’s either stuck in traffic or not going to show.

Fang finally arrives, 35 minutes late, with a smile and an apology. She tells the Seattle women she is “so sorry,” but she was at her bank “in the middle of making deals, and could not leave.” The evening’s social event would have to wait; business in Hong Kong comes first. A day or so later during a group tour, Fang again keeps these American women waiting for several minutes, standing by while she is on the phone “making deals.” (Turns out she is calling her sister-in-law, Hong Kong’s chief secretary, to strategize about how to lobby U.S. Sen. Slade Gorton to vote for keeping China’s most-favored-nation trading status.)

Making deals. In tiny, crowded Hong Kong, there isn’t anything more sacred or fundamental. From the smallest foodstand or gift shop in Kowloon to the top floor of the Jardine House office tower in the Central District, Hong Kongers are forever engaged in business transactions. Their days are spent seizing opportunities, negotiating prices, coming to terms, shaking hands. Each has something the other wants. Most everyone is aggressive, opportunistic, proud and looking to strike a good but honest deal. “The name of the game here is making deals,” concludes Donalee Rutledge, president and CEO of Seattle-based Market Street Computer Systems (who struck her own deal with Fang on some U.S. real estate).

Hong Kong packs some 6.2 million people on a land mass that is only slightly more than twice the size of the San Juan Islands. But its GDP is $150 billion, compared to Washington state’s $127.6 billion. Hong Kong ranks No. 89 worldwide in population, but has the eighth-largest trading economy. It has successfully transformed itself from a manufacturing to a services-oriented economy, sending manufacturing jobs across the border into southern China, and re-training workers at home. Its unemployment rate is only 3.2 percent.

Nearly 90 delegates from the Greater Seattle Chamber of Commerce visited Hong Kong (and southern China) for a week in early May, and saw how businesses there seemed to thrive under a government policy of minimal regulation and intervention. Many from Seattle were flabbergasted at the emphasis on deal-making and money making. In the back of everyone’s mind were fears of a trade war between the United States and China, and continuing speculation about what may happen after July 1, 1997, when Hong Kong reverts from British to Chinese ownership. Both are burning issues, but most Hong Kongers didn’t seem to be too distracted, or even very wrapped up in politics. They just wanted to make deals.

“I’ve never seen a place on earth that has as much interest in money, income and profits,” says Steve Van Luven, a Republican state representative from Bellevue. “In Hong Kong, everybody talks about it positively.” And yet, crime and corruption appear surprisingly low. You feel safe walking alone at night.

Why Hong Kong?

The Hong Kong study mission May 3-11 was the 15th in a series of Intercity Study Missions organized by the Greater Seattle Chamber of Commerce, city of Seattle, Port of Seattle, the Metropolitan King County and Snohomish County governments and the Trade Development Alliance of Greater Seattle. Previous missions have been to Europe, Japan and U.S. cities such as Atlanta, Cleveland and Pittsburgh.

There were obvious reasons for choosing Hong Kong in 1996. It is Washington state’s sixth-largest trading partner, with $2.2 billion in two-way trade in 1994. Its major import from Washington is Boeing airplanes (for Hong Kong-based Cathay Pacific Airlines), and major export is clothing (sweaters, pants, shirts) to retailers here. Hong Kong was selected by Fortune magazine in late 1994 as the world’s best city for international business, two years after Seattle was chosen as the United States’ best city for international business. And the British colony is now just a year away from being handed back to China. How that change in governance is executed and accepted should mean a great deal to Washington state and other U.S. businesses. For example, Seafirst parent BankAmerica Corp. and Seattle-based law firms Perkins Coie and Preston Gates & Ellis are among many U.S. companies with offices in Hong Kong.

The following is a summary of what was learned from the week-long stay, characterized by balmy weather and intermittent showers. The Seattle group was accused several times of bringing the rain.

National flower: construction crane

After a daily series of tours and briefings from key Hong Kong government and business leaders, one of the most striking things the Seattle group noticed were the deals government and business made with each other – on infrastructure, trade and tourism, housing and other needs. Strategic, long-term thinking between government and business goes into decisions on these needs, with limited citizen input. Government ministers and business leaders have carved out beneficial relationships. When asked about public input, Ted Pryor, the provincial government town planner, remarks, “At times there is too much. It can be useful, but it takes up a lot of time.” So most infrastructure needs are determined well in advance, then routinely acted upon. They include everything from a new airport and subway system to entire new cities, to provide enough housing for a rapidly growing population (another 1 million new residents are expected by 2005).

“The construction crane is still our national flower,” says Greg Terry, group general counsel at Jardine Matheson, a Hong Kong-based multinational conglomerate. “They are throwing up entire cities the way we throw up parking lots,” muses delegate J.D. Alexander, editor and publisher of the Seattle Post-Intelligencer. The tradeoffs for Hong Kong appear to be low wages for laborers and an obvious laxity in environmental standards. The harbors appeared filthy, and the British colony’s sewage continues to be dumped, largely untreated, into the ocean. So you don’t drink the tap water.

Still, things seem to be happening the way most Hong Kongers want them to be – at least here and now, prior to July 1, 1997. A flat tax of 15 percent on salaries and 16.5 percent on profits seems to generously fill the Hong Kong government’s coffers. You will hear some grumbling about the rates being too high, but not much around Americans. Any tax talk then turns to jokes about the IRS and America’s expensive and complicated system. The rich get nicked much less than the middle class or poor under a flat tax, of course. Steve Forbes would like it here. So would other Americans. English is almost universally spoken, as is Cantonese. Street signs, billboards and most everything else is written in both English and Chinese.

What amazed many Puget Sound delegates is how, without bond issues or special levies, Hong Kong government and business leaders work in tandem to pull off – and pay for – whatever they feel the colony needs.

Some examples of Hong Kong’s infrastructure “deals”:

-A $20.4 billion (U.S.) airport and related infrastructure system was planned and will be completed in 10 years, about the same amount of time Puget Sounders debate a third runway at Seattle-Tacoma International.

-An elaborate mass transit system that includes a subway, railways, buses, taxis and ferries has all but eliminated the need for most people to own automobiles.

-Hong Kongers build houses, mostly in the form of high-rise apartment flats, before they build businesses, retail shops or anything else. And more than 50 percent of all housing is subsidized by the government – but don’t think it’s going broke doing so. The Hong Kong Housing Authority actually has a staggering amount of cash in the bank.

-Trade and tourism facilities are regarded as integral elements of Hong Kong’s infrastructure, and it shows. The territory’s total trade last year was $372 billion (No. 8 worldwide). Hong Kong’s container port is the world’s busiest, serving as a main gate to China and the rest of Asia. Tourism/travel has become a $10 billion industry, and will continue to balloon as Hong Kong positions itself as Asia’s business and financial center and a shopper’s paradise.

-Public education receives 21 percent of the government’s budget. A key feature of Hong Kong’s educational system is the more than 40 government-supported international schools serving 23,000 primary and secondary students. These schools prepare students for college or work overseas and in Hong Kong, which is truly an international city.

When an airport is needed, it’s built

The modern new airport at Chek Lap Kok was conceived in the late 1980s and set to begin operating in April 1998. The $7.7 billion new airport, located to the west on Lantau Island, is the focal point of a seemingly well-integrated 10-part program that will reshape Hong Kong. The rest of the program: A whole new airport-area community that will immediately be home to 40,000 people; a high-speed rail system to whisk travelers 21 miles from the airport to central Hong Kong in 23 minutes; two suspension bridges (one of them 4,518 feet in length), a third road-tunnel under Hong Kong’s harbor, and two new reclamations of land. Regarding the latter: Yes, Hong Kong is land-poor – when it needs more land, it uses mounds of fill dirt to extend certain shorelines.

A dispute between the British and Chinese governments over its projected debt after 1997, resolved in the 1990s, may have knocked it off schedule, but only by a year. Some 10,000 laborers are currently working shifts around the clock. The airport will handle 35 million with one runway and 87 million with two. The British and Chinese recently agreed to build a second runway to open in late 1998. Kai Tak, the current airport, served 27.4 million passengers last year. It is centrally located along the harbor, surrounded by skyscrapers, but has no room to grow. Kai Tak will be converted into an amusement center. Sea-Tac, by comparison, handled 22.8 million passengers last year.

Hong Kong’s government is paying for the bulk of $20.4 billion airport program, without raising taxes and putting itself into a huge deficit. Hong Kong officials say the project costs will be recovered after four years of operation, due to the new revenues expected to be generated. One has to question the optimism here. What if there is a downturn in the world economy? It apparently wouldn’t hurt passenger traffic from Asia as much as it would traffic from North America, which is on the decline anyway and being counted on increasingly less in the years to come.

Hong Kong’s mass transit system is better than driving

Single-occupancy vehicles are simply not welcome – the roads are congested and the air pollution bad enough as it is. The British colony’s substantial taxes on automobile ownership provide a disincentive anyway, as does a relative lack of parking in most commercial districts.

Hong Kong’s subway system, Mass Transit Railway, is made up of three subway lines that total 27 miles in length and have 38 stations. Opened in stages between 1979 and 1989, it is now one of the world’s busiest systems, carrying more than 3 million passengers a day. A familiar sound on any particular ride is that of a cellular phone ringing – Hong Kongers use them like walkie-talkies. The government-owned MTR appears to operate very efficiently, and is entirely self-supporting. You wouldn’t see the same ridership and cost-efficiencies in the more spreadout Puget Sound area, where a light-rail system has been fought for years and again will be voted on this November.

Tax and other revenues to the Hong Kong government finance 60 percent of the costs of new roads, subways, railways and other land transportation systems, according to Secretary for Transport Haider Barma. That amounts to $2.5 billion in the past five years and another $3.8 billion worth over the next five years. The rest is privately financed. Tolls, subway fares and other user fees are set with at least two objectives in mind – encourage use of mass transit, but offer private investors a fair rate of return, Barma says. “The government provides the framework, but private industry supplies the services and must be allowed to make a fair return.” Even so, $1.10 (U.S.) for a subway ride from central Hong Kong Island across the harbor to Kowloon and 26 cents for a similar ferry ride seemed reasonable. Taxi rides also are relatively cheap. Tolls at the various harbor entrances are not as cheap – which is why you should use mass transit.

Making deals internationally

Trade is Hong Kong’s lifeblood – that’s something you will hear often. “We see ourselves as the New York of Asia,” says Victor Fung, chairman of the Hong Kong Trade Development Council, the territory’s international marketing arm. Hong Kong is centrally positioned between China, Singapore, Indonesia and other fast-growing economies in Asia, and has been wise to take advantage. The Hong Kong Trade Development Council, a quasi-government agency established in 1966, is equipped with an annual budget of more than $100 million and a staff of 500-plus. Washington state, by comparison, promotes itself worldwide on $4 million.

China is Hong Kong’s largest trading partner and investor, and vice versa. So the Hong Kong TDC has concentrated its efforts in recent years on marketing the territory to China and the rest of Asia. But it continues to promote Hong Kong and its companies and products in North America, South America and Europe, where it has more than 40 offices. The agency sponsors more than 300 trade-promotion events worldwide each year, as well as hosting many of Asia’s largest trade fairs – for electronics, toys and games, and fashion apparel – at the Hong Kong Convention and Exhibition Centre.

Hong Kong’s container port is the world’s busiest. Its annual growth equals the total output of Seattle’s port – a line Port of Seattle commissioners on the trip got tired of hearing. Again, Hong Kong is strategically located as a gateway to China and the Pearl River delta. It benefits considerably from “pass-through” trade both to and from China.

Come spend your money

Visitors are treated like royalty in Hong Kong, and the reason is simple: the territory wants you and your money. Hospitality workers realize aggressively good service, with a smile, makes it easier for you to reach for your wallet. (It becomes more trouble than it’s worth to say no to dessert or another beer.) But there is bang for your Hong Kong dollar, which equals about 13 cents in U.S. currency. There are 34,000 hotel rooms now, with 25,000 new ones expected in the next 10 years. There are more tourist shops and restaurants per square mile in Kowloon than perhaps anywhere else in the world, plus the Stanley Market (Hong Kong’s version of Pike Place Market) and, if you can get in, the Royal Hong Kong Jockey Club (Hong Kong’s prestigious horse-racing track and club, soon to drop “Royal” from its name).

Indeed, tourism is one of Hong Kong’s most vital industries, providing about 8 percent of its GDP. The industry has grown from 907,300 visitors in 1971 to 10.2 million last year, with 70 percent coming from Asia. Tourism is the second-largest producer of foreign-exchange dollars in Hong Kong, generating $9.6 billion (U.S.) a year, behind only the textiles/garment industry at $10.35 billion. That compares to Washington state’s $7.1 billion in travel spending in 1994.

Again, Hong Kong is well-positioned – half of the world’s population is within five hours’ flying time, notes Amy Chan, executive director of the Hong Kong Tourist Association. Twenty years ago, 70 percent of the territory’s visitors came from the West, mostly North America. Today the reverse is true. “Asian people have more disposable income now, and a greater desire to travel,” Chan says. “Hong Kong is now a magnet for many of them.”

The government spearheads this industry by supplying 90 percent of the Hong Kong Tourist Association’s $60 million annual budget (Washington state’s annual budget for fiscal 1997 is $3.1 million). It also participates with the association in a proactive effort to grow Hong Kong’s tourist industry to 16 million visitors by 2004, and to offset advances made by Singapore, Kuala Lumpur, Jakarta and other burgeoning Asian cities and resorts. Last December, the association finished work on a 10-year strategic plan that outlines 78 different recommendations for boosting Hong Kong’s tourism industry beyond the year 2006. Among the strategies is joining with China next year for a “Visit China in 1997 – and Don’t Forget Hong Kong” campaign.

Private housing costs plenty

Housing forms the core of each of the nine new cities planned or under construction in the last 23 years. Several 30-story residential complexes are built first, followed by commercial buildings, schools, hospitals, churches and retail establishments. Hong Kong Island, the Kowloon peninsula and the New Territories, connected to mainland China – the three regions that comprise Hong Kong’s 413 square miles – have almost exhausted their buildable land.

But new ways are constantly being found to build new homes and commercial buildings. Again, shorelines are expanded if necessary, mostly notably for the Chek Lap Kok airport and an addition to the Hong Kong Convention and Exhibition Centre on Hong Kong Island. For houses, rolling hills are cut into or leveled. How many more residential towers can be built in Hong Kong is unclear, but 40 percent or more of the territory is undeveloped. That includes land that cannot be developed, because of terrain or soil conditions. In the past, however, it appears some undevelopable land has been developed anyway. With its 90-degree sloped driveways and its roads and buildings situated next to rugged cliffs, Hong Kong is either an engineer’s dream or an engineer’s nightmare.

Single-family houses are sparse in number, and are largely mansions scattered in and around the hills of Hong Kong Island’s south side. These are home to Hong Kong’s wealthy upper class. Most in the middle class live in 1,000-square-foot flats where purchase prices average $1 million (U.S.) or more per year, according to tour guide Mary Chui. People living in 500-square-foot flats pay $300,000 or more to buy. If this sounds high, think of what Hong Kong businesses pay to lease office space – an average of $118.33 (U.S.) per square foot, the world’s most expensive rates, according to Colliers International. Class A office space in downtown Seattle averaged $18 per square foot in the first quarter.

In some areas of Hong Kong, the only way you can tell residential buildings apart from commercial buildings are the bamboo clotheslines extending out the windows of upper floors. The frequently hot, muggy weather allows Hong Kongers to hang their laundry to dry, and save on the cost of appliances.

Public housing puts money in the bank

Hong Kong has no welfare system, so unemployed people have to scrape. Again, the 3.2 percent unemployment rate is low. The government does guarantee housing and health care for everyone. Some 53 percent of the population lived in public housing last year – 46 percent in rental units and 11 percent in owner-occupied units that are subsidized by the government. It is a number the government is trying hard to reduce, without much success. “We are the world’s largest landlord,” says Rosanna Wong, chairwoman of the Hong Kong Housing Authority. By comparison, the city of Seattle has less than 5 percent of its population in public housing.

There are scattered homeless people – apparently by choice – who can be spotted living under viaducts and bridges, as well as squatters in makeshift tents and cardboard homes at the edge of parks and other tree-covered areas. And several hundred people live shabbily aboard boats in Victoria Harbour, although the Seattle group was told by tour guides not to feel sorry for them because they live there by choice and have easy lives pulling fish from the murky harbor waters.

One of the most astonishing things about Hong Kong is how the Hong Kong Housing Authority can reap a huge profit managing the public housing. It does so by getting land from the government for free, then financing the construction of not only the public housing, but also the schools, hospitals and commercial buildings surrounding it. This sets up several revenue streams besides home sales and rents that pay back the Housing Authority – and then some, according to Wong. Half the proceeds go back to the government, which then finds a way to supply more land, and half to the Housing Authority. Last year, when nearly 53,000 housing units were constructed, Wong says she divided $7.6 billion (U.S.), sending half to the government and giving the Housing Authority a $3.8 billion cash balance.

Wong laughed when asked by the Seattle group who her lender is. “We don’t need to borrow at all,” she said. Also, the crime rate is lower in the public housing complexes than in the private housing sector, due to “sound management” and the employment of security guards.

Government supports international education

Hong Kong’s government commits 21 percent of its annual budget to public-school education, and last year had 1.2 million students attending 2,200 different schools. Chinese is the medium of instruction in most primary schools and English in secondary schools, but proficiency in both languages is generally required. A student’s first nine years of school are free and compulsory; after that, he or she may continue with upper secondary course work leading to college, or tertiary education, which is the equivalent of vocational school.

In addition, the government subsidizes a popular international-school system of some 40 schools and 22,000 students. The demand for international education comes from expatriates from the United States, Britain and elsewhere, but also from many local Hong Kong families. The government assists these schools with land grants, capital funds and/or annual subsidies.

The Seattle group visited one of the more exclusive international schools, the Hong Kong International School, where tuition rates were said to be about $10,000 per year per student. Here, some 2,400 students in primary school through high school have access to a variety of cultures – at least 42 different nationalities are represented – as well as a strong Christian orientation, highly regarded instructors, an impressive computer library and modern school facilities, a la Lakeside School. Some 90 percent of its graduates go on to U.S. universities, many to Ivy League schools, says acting headmaster Earl Westrick.

Westrick was asked what he could tell the Seattle School District, which is being encouraged by many of its patrons to open an international high school here. “It’s easy to be international when you are forced to be,” he responded, implying that overseas families demand international education. It would seem Seattle has enough of an international population to support such a high school, but there are budgetary constraints and other issues involved. Westrick said the Hong Kong International School hosts foreign-exchange students each year, and does some recruiting internationally via the Internet, where it has a home page.

Chris Clayton, at HKIS for only his senior year, before he enrolls at Cornell University to study architecture, calls the school the best he’s ever attended. His father is a businessman in Hong Kong, and the family’s travels have taken him to Costa Rica and Taiwan as well parts of the U.S. He says he appreciates the close attention and quality of instruction each student gets. He also noted his experience at adjusting to new schools and new settings, and has been able to make new friends quickly. But he says HKIS is not perfect by any means – there is student drug and alcohol abuse, some racial tension and lots of cliques. (Indeed, the school was prominently mentioned as a problem area for student drug use in a newspaper feature story that came out the day the group was heading back to Seattle.)

A glimpse at the future of China?

A highlight for some delegates may not have been the five days of observing Hong Kong, but the one-day sojourn to Shenzhen, a ballooning city located just across the China-Hong Kong border in one of China’s five “special economic zones.” Only 16 years ago, Shenzhen was a fishing village of 20,000 people. Today it has a population of 3 million, with a Hong Kong-like skyline in its downtown, plus factories, museums, sidewalk businesses, plush hotels and a ton of Hong Kong money. Some $10 billion in outside investment has helped Shenzhen, as one tour-goer described it, go from being a Walla Walla to a San Francisco in about 10 years.

The Chinese government created the special economic zones to spur foreign investment in China and to provide badly needed jobs for some of its 1.2 billion people. For days, we’d heard how Hong Kong had moved many of its manufacturing plants to Shenzhen to take advantage of the cheaper labor. We visited one of the many factories in the city, a Compaq computer-hardware plant where mostly young women worked the assembly line. (We did not observe any factories turning out pirated software or CDs, though this region is said to be filled with them.) We also visited a museum where a sequence of photographs of Shenzhen illustrated how fast it has grown.

Finally, we toured the Yen Tien Port that serves Shenzhen and appears to complement Hong Kong’s container port, although both say they want to be the main port of South China. When new container berths are completed in 18 months, Yen Tien will be equipped to handle 8 million TEUs (twenty-foot equivalents; a port measurement device), while Hong Kong already handles 12.6 million, and Seattle 1.5 million.

If Hong Kong has its way, China as a whole will someday mimic Shenzhen and embrace capitalism, so that its economy can blossom and its people can enjoy economic and political freedoms. Such a notion is too simplistic. China has overpopulation, a lack of jobs and other inherent problems that will take decades to resolve. Perhaps, Hong Kong can be a positive influence, however.

Politics and Hong Kong’s Future

The question on most people’s minds is what kind of influence will China be on Hong Kong before and after July 1, 1997? The answer is, no one really knows. China has promised to leave Hong Kong alone and its capitalistic economy in place for at least 50 years, under a so-called “one country, two systems” structure. But can it keep such a promise? Does it dare tamper with Hong Kong’s success, and the personal freedoms its people enjoy? Does it open more of its own doors to Hong Kong’s burgeoning number of tycoons – who are openly wooing Chinese authorities? One can only speculate.

Many government and business leaders the Seattle group heard emphatically professed optimism, and “don’t worry about us.” One said, “1997 will be a ceremonial event.” Another said, “1997 will be a non-event.” Nellie Fong, chairwoman of The Better Hong Kong Foundation’s executive committee, asserted, “Statements that June, 30, 1997, will mark the end of democracy in Hong Kong are simply untrue … You are welcome to come and study our election process (after that date). I trust it will be clear to you that those elected will not be Beijing-appointed puppets.”

Even native Scotsman Alasdair Morrison, managing director of the Jardine Group, a massive Hong Kong-based conglomerate and the territory’s largest employer, contended that China’s MFN status was far more of a concern than Hong Kong’s change of ownership. But he revealed the Jardine Group recently became domiciled in Bermuda, just in case there were problems in Hong Kong. And what he didn’t say, but local newspapers widely reported, is that the Jardine Group also recently de-listed itself from the Hong Kong Stock Exchange, causing a minor furor. (Morrison did say he was spending time these days to “mend fences” with China, for such moves.)

Deep in the heart of Kowloon, small business owners said they worry mainly about whether they can keep their jobs and businesses. “Only the rich people are worried; for normal people, we just need to work,” says Tony Lau, who owns a gift shop. “Maybe I learn how to do another business. Maybe I move to another country, maybe Australia,” says Frederick James Lai, who with his wife owns a toy shop. One of the tour guides for the Seattle group, Mary Chui, comments of most Hong Kongers, “They worry. Believe me, they worry. Except the rich people. They’ve got visas already, so if anything goes wrong, they will leave.”

Some of the most astute comments came from C.Y. Leung, a business leader and member of the Preparatory Committee that is working with China on the transition. He says, “Hopefully, Hong Kong people will not be put in a tight corner by the media and others from foreign countries. It is hard enough without listening to so-and-so 2,000 miles away telling us what is going on here.” In other words, CNN and other international media should not pretend to know the situation better than those on the inside, who are trying to make the transition work. Still, given the uncertainty, Washington state businesses may want to carefully investigate things before investing heavily in Hong Kong.

What have we gained from all this?

Here are some conclusions that could be drawn from the Hong Kong experience:

1. Public-private partnerships work here. You get the impression Hong Kong could build just about anything it needed, if business leaders supported it (and shorelines could be extended). The central government seems to view its role largely as facilitating the needs of the business community. It might help in getting elected. But there is strategic thinking by government and business that shapes major decisions, something we could learn from in Washington. On the other hand, citizens here have more a say, a key difference. So the new airport, the new cities, the tunnels, railways and subway – all would take much longer to build in our state. That is why it is ironic that Hong Kong doesn’t have a better sewage system, so it could avoid sending largely untreated sewage into the ocean. There were no answers here – it apparently is a matter of priorities.

2. Government seems to serve the people, and make money too. Even without a welfare system, Hong Kong seems to care for its citizens. The unemployment rate is extremely low, housing, schooling and health care are provided to everyone, and the Hong Kong government doesn’t have any debt. Meanwhile, the Hong Kong Housing Authority seems to make billions subsidizing public housing! It is all very impressive, on the surface.

3. Trade and tourism given proper emphasis. Hong Kong’s investment in both trade and tourism keeps outside dollars continually flowing into the territory, like a hot springs of money. There is an outflow to China, Vancouver, B.C., Singapore and elsewhere, but many times more money coming in. Hong Kong has built its economy around international trade, taking advantage of its proximity to China and Southeast Asia. It has positioned itself well to capture Asian and foreign tourist dollars, too. Washington state also is well-positioned as a gateway to the Pacific Rim and Canada, and is considered the most trade-dependent state in the country. But its trade and tourism budgets are meager compared to Hong Kong’s, which may have the right idea.

4. Entrepreneurial spirit, can-do attitude and friendly demeanor are infectious. People of Hong Kong are very businesslike but pleasant. You found it hard to say no sometimes, and that is to their credit. You didn’t seem to catch any hotel employee, restaurant worker or shopkeeper having a bad day. It seems clear they like your money more than you, but their hospitality is still to be appreciated.

5. Making money isn’t everything – quality of life and the environment are important too. Many of us could never live in Hong Kong, at least for very long. We need a house with a yard, not an upper-floor flat. Some of us would get claustrophobic. In Washington state, some of our land-use battles slow progress, but are necessary to reduce negative impacts on surrounding people. Our state also places greater care on the quality of air and water. It is questionable how much effort Hong Kongers are putting into preserving their environment for future generations.

Tour delegate Ron Sims, veteran member of the Metropolitan King County Council, appropriately pointed out the difference in values and culture between people of Hong Kong and Washington state, as well as the larger voice each citizen has in the United States. Steve Van Luven, the state representative, added, “Don’t expect to take this government back to the U.S., and make it work. It won’t. What we can do is learn about their system, pick up on the good things they do and take back some new ideas for us.”

But as Snohomish County Executive Bob Drewel observed, “We simply can’t go home and be complacent.”

Monte Enbysk is a veteran Seattle-area journalist and managing editor of Washington CEO magazine.

OBSERVATIONS FROM INTERCITY STUDY MISSION DELEGATES:

Bruce Brooks, deputy mayor of Seattle: “It’s been a tremendous opportunity for all of us here. We fully appreciate that not everything we saw here is immediately transferable. But what I came away with is the success of their public-private partnerships, and the strength of human character. There is much optimism here amid all this uncertainty.”

John Blake, Key Bank vice chairman: “What struck me the most was the optimism of the people I personally talked to, as well as (that of) the speakers. I’m not sure the optimism is genuine – or they are trying to make us feeling things aren’t going to be different…. Also, we need to spend more on infrastructure in Seattle.”

Meredith Blake, wife of John Blake: “All the skyscrapers, so many tall buildings. I thought it was a movie set….. Things are so different here. They do so many things well, but I’m not sure they would work in the U.S.”

Doug Beighle, senior vice president, The Boeing Co.: “The thing that strikes me is the extent to which they are planning and spending millions on infrastructure. Airport, mass-transit system, you name it. They are building it. We just talk about it. We know what we have to do, but we just talk about it.”

Phyllis Campbell, president and CEO, U.S. Bank of Washington, and chairwoman, Greater Seattle Chamber of Commerce: “I was impressed by the way government and business really work together. They set a vision in motion, and the entrepreneurial spirit kicks in. Everybody works together. … I don’t think Hong Kong people get nervous (about the future). They see it as an opportunity. They are figuring out, “How do we make money with this opportunity?’ The bottom line of Hong Kong is making money. That’s not our culture.”

Maura O’Neill, president, O’Neill & Co.: “I think most people in Hong Kong are welcoming the Chinese. So much of Hong Kong is Chinese. Sort of a downfall of the (British) colonists now. (But) they are certainly cautiously optimistic about whether their economic engine will be fueled or destroyed…. My second impression is the tremendous power of the Asian market. The Asian consumer market – it’s been slow in coming, but it is clearly here.”

Vaho Rebassoo, director of network services, The Boeing Co.: The biggest thought I have is that I think the Russians and Japanese would be scared as hell if they look at what is going on here. I would think they would be enormously threatened by this … I was really impressed by the quality of leadership here in Hong Kong, how they were planning the future. It will be interesting to see.”

Brian Derdowski, member, Metropolitan King County Council: “One of the biggest benefits of the trip was getting together with fellow Seattleites and talking about issues and where we are going. Personal relationships are a trust-building thing. In Hong Kong and the Asian culture, personal relationships are all important. Once you have the relationship, you can go in and arm wrestle.”

Roberta Greer, senior vice president, Tillicum Village & Tours: “My most lasting (impression) is that tourism is taken seriously as part of their economic infrastructure. They provide a 10-year plan and capital improvements. It isn’t a matter that we don’t do it well. It’s just that it is an invisible industry (in Washington state), without a single spokesperson. So it is difficult to get the message across with so many different parts.”

J.D. Alexander, editor and publisher, Seattle Post-Intelligencer: “The numbers suggest a lot of people have fled, have gone to Vancouver (B.C.) and so on, and that a lot of the money is gone. I didn’t detect any major loss … People are obviously confident…. I was impressed with the pride of these people and the outward confidence that everything will be OK. China would be stupid to screw up the money machine called Hong Kong.”

Stan Savage, vice chairman, Seafirst Bank: “What you see in Hong Kong is an incredible environment for business. Very proactive and entrepreneurial, and the public sector is a part of that…. (The flat tax) is one of the most positive things. That would be a dream (here)… I’m constantly amazed at the vibrancy of that city. It’s an entrepreneur’s heaven.”

 

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