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Moving Forward

Millennials should embrace Hong Kong as ‘a base to develop businesses in China and elsewhere,’ says Towngas director

The government should facilitate the city’s development as a hub to launch innovative companies, says Towngas Managing Director Alfred Chan Wing-kin

PUBLISHED : Wednesday, 04 May, 2016, 10:00pm
UPDATED : Thursday, 05 May, 2016, 12:16pm

Hong Kong is still a great place to launch new businesses and young people with innovative ideas should take advantage of the city’s talent pool and proximity to the mainland market and vast ­resources.

That’s the view of Alfred Chan Wing-kin, managing director of Hong Kong and China Gas (Towngas), Hong Kong’s oldest utility company, which has taken exactly that approach to maintain long term growth despite already having a dominant position in the city’s mature energy gas market.

“Hong Kong is still a city of good fortune with good rule of law and corporate governance despite its small domestic market,” he told the South China Morning Post. “It has a big talent pool of quality graduates and the unique advantage of being connected to both China and the world, where it has established business networks and market knowledge.”

“The government can be a facilitator for young people to use Hong Kong as a base to develop businesses in China and elsewhere.”

Although Hong Kong is not well-known for original and scientific innovations and was ranked 29th globally by United States-based think tank Information Technology and Innovation Foundation – behind other advanced Asia-Pacific economies but ahead of the mainland – on having policies conducive to innovation, Chan said the city’s people have shown their talent.

He pointed to the myriad of good inventions from secondary school students who won awards in the annual Hong Kong student science project competition, sponsored by the Innovation and Technology Commission.

Effort needed to tackle labour shortage in artisanal, technical and trades-related professions, says Towngas director

“Another example is Dajiang Innovations, or DJI, the drone maker started by a Hong Kong University of Science and Technology graduate,” he said.

DJI, established by electronic and computer engineering graduate Frank Wang in 2006 in Shenzhen, has become the world leader in civilian drones.

Chan said while entrepreneurs in labour and land-intensive manufacturing will still head north of the border to set up shop, for businesses that do not require a lot of land and labour, Hong Kong’s industrial buildings, which are not expensive to rent, can house innovative firms.

Towngas, which has established one of the largest city-gas distribution networks on the mainland as well as being the sole piped gas supplier in Hong Kong, has been making innovation in both products and business processes a high priority for years.

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It encourages and rewards engineers who come up with new products and ideas to improve customer service, reduce maintenance and boost efficiency, Chan said.

Examples include the application of a “non-scratch clamp” pipe fitting that prevents the firm’s huge network of steel gas pipes from being scratched and exposed to corrosion, and a tool connected to a vacuum cleaner and an electric drill for sucking up debris when gas-fired water heater installers drill into walls at customers’ homes.

Other initiatives cited by Chan included a “regeneration electric energy module” that converts heat energy in cooking burners into rechargeable electric energy and replaces disposable batteries, as well as the use of drones and robots for gas pipe inspections.

Besides innovation, Towngas has since 1994 been using Hong Kong’s talent and the company’s over 150 years of experience to expand its gas distribution, water supply and sewage treatment and other businesses on the mainland, which now account for just over half of its profit.

“Towngas has combined talent and experience from Hong Kong and the mainland to develop the mainland market,” Chan said.

“We hire many mainland staff who have studied and worked in Hong Kong ... they tend to have high academic achievements and are familiar with the mainland’s business environment.”

Towngas now has 21 million household gas customers on the mainland covering some 60 million residents, 10 times that in Hong Kong.

But it was not a smooth ride when it started its first gas joint venture in Panyu and Zhongshan in Guangdong province over two decades ago.

“It was not easy to work with state-owned enterprises,” Chan said. “For example, you cannot fire people even if you think they are inefficient or incompetent, we can only gradually change their culture and mindset by sending a few Hong Kong staff to work with them and organise training sessions for their staff in Hong Kong.”

Chan said Towngas’ mainland staff were initially reluctant to sell gas appliances, seeing it as a “nuisance” that may expose them to the risks associated with the appliances’ safety.

After the company introduced its regular free appliance safety check-up service for mainland customers, which it has offered for decades in Hong Kong, its mainland staff became more than happy to sell appliances and earn extra commission income.

“In the old days, our mainland staff’s job was only to read gas meters and collect money from customers,” Chan said. “Nowadays with the installation of self-read meters and the introduction of pre-paid smart gas consumption cards, they only need to do the regular safety inspections.”

The extensive relations with the government that Towngas built up during its business development have opened doors to other opportunities.

The company has ventured into the business of collecting combustible gas from plants that make the steel-smelting ingredient coking coal, as well as the conversion of coal tar oil into carbon materials, the conversion of agricultural waste into natural gas and fuel additives, and coal-to-chemicals projects.

Towngas has even launched a line of consumer bottled water as an extension from its water supply business, and uses its gas customer service teams to sell home insurance.

The company also plans to invest some US$100 million to build this year its first plant on the mainland, together with a mainland research institute, to commercialise technologies to turn agricultural waste into useful energy and chemicals.

Chan, who joined Towngas 24 years ago as general manager of marketing, will turn 65 this year. Asked if he plans to retire, he said top-level managers like him are not subject to the 60 or 65 retirement age limit.

“I still have the interest, and there is still plenty of business development work ahead of us. I want to have more time working with our team.”