Expertise required to face recession

PUBLISHED : Monday, 19 October, 1998, 12:00am
UPDATED : Monday, 19 October, 1998, 12:00am

With bankruptcies at a record high companies will need professional help to survive the economic downturn, a leading trouble-shooter says.

'After 20 years of sustained growth, most management in Hong Kong have never faced a recession,' said High-Point Rendel managing consultant Keith Probert.

'Unless they start buying in expertise, many firms will be faced with unpleasant circumstances.

'Firms think cutting prices and slashing jobs is enough for them to face the next six to 12 months, but more companies go under when coming out of a recession.' High-Point Rendel specialises in management consultancy, capital and project management and engineering. It advises the World Bank, Asian Development Bank and international conglomerates, including US power company Enron Corp.

On Friday it posted a 150 per cent increase in operating profit to GBP2 million (about HK$26.4 million) on turnover of GBP32.82 million for the 14-month period to the end of July.

Figures from the Official Receiver show an average of 61 receiving or bankruptcy and 57 winding-up orders are made a month.

To the end of August, 488 receiving or bankruptcy orders were made, with 458 winding-up orders. If the trend continues these will be the highest since 1989, the earliest records available.

Deputy chairman and chief executive Ian Reeves said firms must adopt innovative management techniques to survive.

One example is out-sourcing, already popular in other parts of the world. Services previously done internally, including accounting, payroll and cleaning, are done by outside companies.

Mr Reeves said out-sourcing could offer a cheaper option than axing jobs.

Proper project management and cost-control measures were also needed, he said.

Companies should be aware of the actual costs of doing business, he said, but many were not.

This lack of control was the main reason why 'all the hospitals built by the Government prior to the United Christian Hospital were late and over budget. The UCH was the first hospital finished on time and on budget.' High-Point Rendel project managed the complex.