A new model for a new century – Entrepreneurship, a new paradigm shift for growth

Written by Cliff on Thursday 6 February 2014 at 3:29 pm

Kaitak Runway concept
Despite its ignoble birth, Hong Kong was alchemized into the “Pearl of the Orient” by the combined forces of its geographical location and historical circumstances. July 1st 1997 was a notable date in the annals of Hong Kong. Not only did it mark the birthday of HKSAR of the PRC, but it also witnessed the zenith of its economic prosperity. The collapse of the Thai Baht in the autumn of 1997 triggered throughout Southeast Asia a severe financial crisis, which punctured the balloon of Hong Kong’s financial and property markets, resulting in share and property prices plummeting by more than 50%. But even then, fortune continued to smile on Hong Kong. When China pledged full support for the Hong Kong Dollar, and stubbornly resisted international pressure to devalue the Yuan, Hong Kong rode through the crisis unscathed, as far as its monetary system was concerned. Nevertheless, it is a lamentable fact that our economy suffered a severe downturn, and the “Pearl of the Orient” lost its lustre. Almost two decades after the Asian financial crisis, Hong Kong is still struggling with massive fiscal deficits, crippling inflation, and to a lesser extent the chronic pain of “negative equities” of our sandwich class, whereas all our neighbouring countries have either recovered from the crisis or well on the way to do so. And of course, China continues to prosper.

Most of us would agree that our failure to respond positively to the economic decline could be due to the absence of a sense of direction. We heard a lot of noises, but nothing really happened. This sense of drifting and feeling of helplessness could not be more demoralizing. Feeble attempts by the HKSAR Government to liven things up — like the $100 million Harbour Fest — usually ended up with more questions being asked than problems solved. Instead of conserving energy and employing collective efforts to do something positive for Hong Kong, we expended our time and activities in street demonstrations, finger-pointing and mutual recriminations. The Central Government went all out to extend help and assistance by promulgating a series of measures calculated to stimulate Hong Kong’s economy, like CEPA and its supplements, as well as encouraging Mainlanders to visit as tourists, etc., from which Hong Kong derived much benefit. These led the HKSAR Government to announce that a fledgling GDP growth year after year. I do not wish to sound ungrateful, but I consider such announcements as warning signals that Hong Kong is fast becoming one of the many ordinary cities in China, supported by the guided hand of the Central Government! The “Pearl” has lost more than its lustre; it is losing its individuality! Where is our uniqueness, our identify, and our pride?

To answer this question, we can go back into history. The reason behind Hong Kong’s success story as the “brightest star in the Chinese firmament” in the past was because we could do things in Hong Kong which our compatriots in China could not do due to political reasons. With the “open market” in China, where material and financial resources are far superior to Hong Kong, what we can now do, China can do much better. To deliver Hong Kong out of its current malaise and economic quagmire, and to regain our self-respect, we must be bold, daring, adventurous, and most importantly, nurture a broad vision with an inventive mind capable of lateral thinking. We must concentrate our energies and expertise to develop and exploit a NEW, ULTRAMODERN, NOVEL, AVANT-GARDE and REVOLUTIONARY
venture which no one else in this part of the world can do any better than Hong Kong. In plain words, we must find in Hong Kong “natural settings and indigenous advantages” which others do not have, and by which Hong Kong can do what others cannot do!

In this respect, notable analysts have pointed out that Hong Kong is blessed to have just the exact specifications and the right prerequisites of “natural settings and indigenous advantages” in the site of the old Kai Tak Airport in Kowloon Bay to enable us to do what others cannot do. Nowhere else in the world can anyone find an abandoned airport runway jetty jutting 8,000 feet right out into the sea — basically providing a ready-made sea-frontage of approximately 20,000 feet (8,000 x width of runway), and permitting the simultaneous berthing of more than ten ocean-going cruise vessels each of 1,000 feet long. Never has the world beheld such a huge cruise terminal right in the centre of a major international city. With this physical asset in situ, Hong Kong could become the “Miami of the East” (but better and bigger). Hong Kong has already built one of the largest, the most modern, and the most user-friendly airports in the world — Chek Lap Kok. By the same token, there can be no reason why we should not think big and build much more than just a mere “Cruise Terminal” in the old airport site. This idea, in the words of the late doctor Peter Lee, J.P., is “mind boggling”. Of course, the Cruise Terminal may well ignite the reform and transformation of vintage thinking that plagues the local government. But we will need far more than what may be a white elephant to sustain the momentum of improvement needed to resolve Hong Kong’s lingering problems, which include income disparity, poor living conditions, unaffordable housing and air pollution.

According to the government census, the median monthly domestic household income for 2012 was $20,700. About 1.3 million people, or 19.6% of the population, were below the poverty line and only 3.9% of domestic households earned over $100,000 per month. The latest statistics show that Hong Kong’s Gini coefficient, a measure of wealth distribution where 0 describes perfect equality and 1 describes perfect inequality, has reached 0.533, the widest income gap among all developed economies. With private housing prices surging over $3,000,000 for a 600 square feet cubicle, it is no wonder many couples do not want to have children, feel insecure and have no desire to commit to any risky, innovative ventures that could have any prospect of improving their livelihoods. The venerable model of buying a home in preparation for marriage has become a historic relic and a topic for discussion over dinner that is swiftly diverted to topics of social unrest, ‘occupy Hong Kong’ and other unconstructive distractions. The systemic inability to keep up with the older generation has led to profound dissatisfaction among the younger participants of the workforce, of whom over 33% have undergone tertiary education. Young people are finding that the once-coveted relationship between education and income is far looser than just 20 years ago. Furthermore, each taxpayer now has to supplement a growing demographic of elderly people and increased welfare benefits. The ageing population in Hong Kong is testimony to its impeccable healthcare system, but akin to Japan, this growth is a cause for concern.

It is not necessary for me to make out a case for a “Cruise Terminal” in Hong Kong or to list out each and every social problem that we are facing now since so many people already voice out their opinions each week while parading through Central. But the statistics require a solution; and fast. This solution might find its roots in Taiwan, an island with an ageing population, low birthrate and high inflation. Profit margins for Taiwan’s high-tech industry, which make up 75% of its economy, have continued to decrease over the years as competition increases, prices slide and wages in its manufacturing base, China, go up. Wage rises have not matched company profits and low-skilled workers have been left behind during decades of growth. Even many in the middle class cannot afford to buy a home or have children, contributing factors that have led to the island state having the lowest fertility rate in the world.

For the past decade, however, an enthusiastic response has struck a chord with the island’s inhabitants. One in six Taiwanese of working age today are involved in a side business of sorts to supplement their income. These entrepreneurs often work with an established brand to provide products or services within a circle of influence, be it a circle of friends, a book club or an interest group. This “side economy” is empowering a large proportion of the female workforce and over US$2.8 billion of the local economy. It is no wonder that local trade ministries are promoting this form of work in each and every locality in Taiwan. In a nod towards the needs of a people keenly aware of health and wellness trends, wellness products form an astounding 59% of overall revenues. The side business culture has also taken off in nearby South Korea, where it is generating over US$12.9 billion each year and has captivated the minds of chaebol senior management and base-level employees alike. This spirit has yet to take flight in Hong Kong.

The past three decades have seen increasing emphasis on tertiary and professional education to service the hopes that increased education leads to better livelihoods. The number of university graduates has increased dramatically since 1960 and the number of universities has increased from 1 to 8 in our little city of 7 million souls. Entrepreneurship, something in which almost everyone was involved in during the 1930s is only starting to become popular again in our humble city simply because people need to afford better living conditions for themselves in a time when employment can no longer meet expected standards of living. The starting wage today has remained stagnant over 15 years while inflation continues at 4% year on year. Dragging their feet, universities are providing more and more resources to entrepreneurship, which used to be a mere six credit course in most institutions. Entire curriculums, office complexes and staff are now dedicated to entrepreneurship education in universities to accommodate forecast demand. However, only a handful of well-known multinational companies are willing to serve the needs of budding entrepreneurs or employees wishing to do a little more to support their families in their spare time. This is no small wonder since established businesses have no interest in serving prospective competitors. Entrepreneurship with a ‘social’ aspect is becoming a buzzword in universities as students begin to learn about how private free enterprise can have a profound social and environmental impact around them. One can imagine how an established and ethical provider of entrepreneurship tools can reap the benefits of the upcoming tide.

We all have a innate biological motivation to help ourselves. But with our increasing awareness of Hong Kong’s problems and social needs, our entrepreneurship cannot only be self serving, it must also help people help themselves. After all, teaching people how to fish is a longer lasting solution than giving people fish. And teaching people how to fish sustainably whilst teaching them how to teach others fish may be the greatest revolution that Hong Kong’s entrepreneurs will yet have to experience for themselves. I do not believe that we need to be so outstanding that we become insurmountable objects of esteem but I do believe that we can become so outstanding that we become a model for the world to emulate and copy as much as they like.

A new model, for a new century.

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