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  • Jul 25, 2014
  • Updated: 2:41pm
Mr. Shangkong
PUBLISHED : Monday, 04 February, 2013, 12:00am
UPDATED : Monday, 04 February, 2013, 9:25am

Hong Kong's small businesses and the 'fu er dai' phenomenon

High rents are normally blamed when Hong Kong's family-run shops and restaurants close, but what of the younger generation's work ethic?

BIO

George Chen is the financial editor and columnist at the South China Morning Post. George has covered China's financial industry and economic reforms since 2002. George is the author of Foreign Banks in China. He muses about the interplay between Shanghai and Hong Kong in Mr. Shangkong columns every Monday in print and online. Follow George on Twitter: @george_chen
 

Can small business survive these days? This may be a common question in a city like Hong Kong, where the so-called "real estate monopoly" can be blamed for almost everything.

Many of the city's small and privately owned shops and restaurants, run for decades by local families, have closed in the past few years, chiefly because of fast-rising rents in busy spots.

In their place, dozens of global luxury labels from Burberry to Dior have taken up more space, as they bet on the fast-increasing spending by more and more cash-rich mainland visitors.

Ordinarily, the opening of a big new luxury store in Hong Kong might not be news, simply because there are already way too many for a city that has only seven million residents.

But when a luxury store replaces a small old family shop, that will be a story the local newspapers love to print.

However, high rent is not always the reason for every local small firm's decision to cease business.

A recent survey indicated that many young people in Hong Kong want to retire at the age of around 40, but did not have a clear idea of how they might make their dreams of early retirement come true. Many are jealous of the so-called fu er dai, which literally means "the second generation of the rich" in Chinese.

But the problem for Hong Kong now is that even many "fu er dai" apparently do not know how to keep their family businesses healthy; or they may just have no intention to continue in the traditional family businesses.

So, what do we miss here? Let me tell you a story about Honolulu, where I spent my holiday last week.

When I was in Honolulu, I joined a local tour and got to know Sam, who is the boss of a small travel business. Aged about 30, Sam was born in Hawaii and later went to the west coast of the United States for various jobs.

He made some money, and though being far from rich, came back to Hawaii a few years ago and bought a mini-van to start his private tour company.

Probably Hawaii has more or less the same problems as Hong Kong (except for air pollution, of course). It is no secret that many of the high-end apartments and expensive villas in Hawaii are bought by non-locals, both rich people from the mainland cities in the US and other countries, including many from Asia.

Maybe because of the strong local culture and belief in "aloha", which means peace and love in the Hawaiian language, the locals do not usually complain too much.

Some young people, like Sam, go to bigger mainland cities in the US. But sooner or later, they come back, because Hawaii is their home.

Those young people who decide to stay in Hawaii for work, as Sam told me, often take one full-time day job and get a second part-time job at night, for example, a bartender at a hotel. After all, when you are young, you have enough reasons to be tough and work very hard at every opportunity.

For Hong Kong's own younger generation, especially the so-called fu er dai, is this "work hard" ethic what is missing to keep small businesses alive in the city?

george.chen@scmp.com

 

George Chen is the Post's financial services editor. Mr. Shangkong appears every Monday in the print version of the SCMP. Like it? Visit facebook.com/mrshangkong

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