Hong Kong can sustain its economic success with flexibility and commitment to service industry, says Swire chairman
Swire Pacific’s John Slosar says a flexible strategy can be helpful in overcoming difficult times
A light government touch, flexibility in business and the city’s strategic position with the mainland will allow Hong Kong to continue the economic success it has enjoyed over the past decades, despite short-term political turbulence, according to the chairman of conglomerate Swire Pacific.
“We are part of the second-largest economy in the world. This is a fantastic thing for Hong Kong. It gives us chance to take part in China’s economic growth,” said John Slosar, who is also chairman of Swire Pacific’s parent John Swire & Sons (Hong Kong). The UK-based conglomerate is a proven example of how to build success by taking advantage of the growing mainland Chinese economy and by adopting a flexible strategy to respond to the city’s changing economy.
John Swire & Sons established its Hong Kong office in 1870, four years after the firm set up its business in mainland China. Beginning in the shipping trade, building ships and refining sugar, the group diversified into aviation, beverages and property as the Hong Kong and mainland economies evolved over the decades.
“China was the biggest economy in the world. Only from 1800 to 1900, the West suddenly surpassed China for a time. But China is rapidly catching up now,” said Slosar.
In 2015, China’s economy grew 6.9 per cent, the slowest rate in 25 years, but one of the highest rates of growth among the world’s largest economies.
Opportunities will arise in the city as the central government pushes the One Belt One Road initiative and while the mainland economy is in a transition from industries into services.
The economic logic of One Belt One Road is clear, says Slosar, adding that history showed that economic growth was driven by increased trade and trade activities were generated by better and cheaper logistics.
“This is the idea of One Belt One Road, streamlining logistics, making them cheaper and easier. Economic history says this is a good idea,” he said.
Similarly, the mainland’s transition to a services economy will have benefits.
“That should be something that Hong Kong absolutely should take advantage of because we are a service economy.”
“We are all about finance services and legal services and professional services and all sorts of services.That is a huge opportunity,” he said.
“Swire is less involved in these areas. But transportation is a service in a way and we will continue to grow there, he said.
The group’s major businesses in Hong Kong are grouped under Swire Pacific, which is listed in the city, and consist of five core areas: property, aviation, beverages, marine services and trading and industrial. It is the largest shareholder of Cathay Pacific Airways and its sister airline Dragonair, now branded as Cathay Dragon. It owns the Pacific Place mall and property development in Admiralty and is the developer of the iconic Opus Hong Kong luxury apartment building in Mid-Levels.
While casting a vote of confidence in Hong Kong’s long-term future, Slosar raised his concerns over the short term.
“What I do worry about is things like filibustering. They are actually trying to stop progress. I think that is a big mistake,” said Slosar, referring to the delaying tactics over legislation adopted by opposition groups in the city’s Legislative Council.
“The world is not going to wait for Hong Kong, Hong Kong has to keep up with the world. Taking the position of filibustering is very internal. They forgot about the fact that Hong Kong has to compete with other places,” he said .
Slosar said the small percentage decline in economic growth could create a big impact in the long run.
If the economy grows 3.5 per cent compared with 2.5 per cent, the one percentage point difference does not sound like much in a year, according to Slosar. “But taken over 30 years, it becomes a huge amount of difference.”
Finding a consensus is the solution, though that is very difficult.
However, the current bumpy road does not change the group’s long-term confidence in the city.
In the face of growing competition from Singapore and Shanghai, Slosar believes in Hong Kong, praising its strategic position in China and the flexibility of Hong Kong’s people and companies.
“A key feature to become successful in today’s modern world is flexibility and the ability to change. Our economy is pretty flexible and is able to change,” said Slosar.
The group’s Quarry Bay development – Taikoo Place Redevelopment – was cited by Slosar as an example of how Hong Kong people and Hong Kong companies are being flexible.
It was originally a dockyard but later the ship building industry left Hong Kong, drawn away by competition from Japan, he explained.
Developed by its property arm Swire Properties, which was established in Hong Kong in 1972, Taikoo Place on Tong Chong Street in Quarry Bay is a decentralised office area with a hub of 10 interconnected grade-A office towers with a total gross floor area of over 6.64 million square feet.
Slosar said it would continue to expand, making it the nicest and best office district in Hong Kong, with an open-air plaza and restaurants.
Slosar said Swire can still find good young people from Hong Kong to join its workforce.
“Swire is an interesting company. We do not have management from outside, we train up our own management, a good chunk is from Hong Kong.”
‘We have a development programme that runs 15 years and that involves a lot of training. I came from the same programme when I joined in 1980.”
The secret to keeping young people motivated and in the company is actually two things, he said: One, treat them well and fairly and two, give them a picture of what they will become in the future.